"The United Arab Emirates is emerging as the prime destination for bitcoin miners in the Middle East," wrote Jaran Mellerud on Twitter.
"The UAE emerged on the global bitcoin mining map in early 2023 when Marathon Digital announced a joint venture with Zero Two, the digital asset arm of Abu Dhabi's sovereign wealth fund."
"All large-scale mining projects in the UAE have been led by this sovereign wealth fund in partnership with established industry players like Marathon."
"Also, virtually all mining activity in the country occurs in Abu Dhabi, the biggest and most energy-rich of the seven emirates."
"Split between the mentioned semi-governmental projects and countless small-scale amateur deployments, the UAE’s operational bitcoin mining capacity is likely around 400 MW - or 4% of Bitcoin's global hashrate."
"As an OPEC member and the seventh-biggest oil producer globally, the UAE is a major player in the global energy markets."
"Historically, virtually all of the country’s electricity has been generated by natural gas, but the shares of nuclear and solar are growing rapidly."
"The UAE just opened the largest nuclear power plant in the Arab world. The three commissioned reactors have a total capacity of 4 GW, generating an estimated 19% of the country’s electricity. When the final reactor comes online later this year, the total capacity will be 5.4 GW."
"The influx of nuclear will increase the need for demand flexibility since nuclear power cannot easily be adjusted according to the demand."
"Luckily, bitcoin miners are uniquely flexible electricity consumers and can thus provide much-needed demand flexibility to the UAE grid."
"In addition to its nuclear project, the UAE plans a massive solar buildout in its vast, sunny deserts. The country’s biggest solar project has an operational capacity of 1.6 GW and will become one of the world’s largest at 5 GW by 2030."
"Being location-agnostic and interruptible electricity consumers, bitcoin miners can set up operations directly at these solar farms to offtake this electricity."
"The UAE uses combined power and desalination plants to desalinate seawater. These plants must run at a continuous capacity throughout the year, even though electricity demand fluctuates tremendously between the hottest and coolest months. This leads to massive electricity waste."
"In 2021, the UAE's combined power and desalination plants wasted 20 TWh, equal to approximately $600 million."
"Bitcoin mining fixes this. Bitcoin miners can increase the utilities' revenues by monetizing this previously wasted electricity."
"The UAE is a tax haven. Bitcoin miners can register in one of the country’s more than 30 free trade zones and avoid corporate tax, VAT, and import duties. This is an enormous advantage in a global, cut-throat competitive industry like bitcoin mining."
"Currently, there is no specific regulation in place for bitcoin mining. Thus, all miners, except for the big semi-governmental projects, currently operate in a legal gray zone. The sector will likely be regulated soon, with the government creating a licensing scheme."
"Harsh operating conditions is the biggest challenge for UAE bitcoin miners. A monstrous combination of burning heat, high humidity, salty air, dust, and periodic sandstorms makes for a challenging existence for the country’s bitcoin mining operations."
"Hydro or immersion cooling dampens the effects of heat and dust, making them preferable cooling solutions in the region. Hydro cooling poses more challenges than immersion since the UAE lacks freshwater."
"Overall, the UAE will become an increasingly important bitcoin mining country over the next couple of years and could provide a case study for other Middle East countries to follow."