The United Arab Emirates is being targeted by Bitcoin mining companies as a new Middle Eastern cryptocurrency mining hub. This is partially attributable to alliances formed earlier this year with significant mining companies and the digital assets division of Abu Dhabi’s sovereign wealth fund.
On July 5, Jaran Mellerud, a business development associate at Luxor and an authority in cryptocurrency mining, provided insight on the most recent changes to the mining industry in the United Arab Emirates.
He claims that Abu Dhabi’s entry into the global mining industry began in May 2023 with cooperation between the US-based mining company Marathon Digital and Zero Two, a blockchain infrastructure provider and a subsidiary of Abu Dhabi’s sovereign wealth fund.
Given its role as a recognized commercial hub and exceptional energy efficiency, Abu Dhabi is central to this increase in BTC mining within the UAE.
In collaboration with Zero Two, the sovereign wealth fund of Abu Dhabi’s digital asset division, Marathon Digital intends to build mining facilities there. These projects will significantly increase the country’s mining capabilities, with a total mining capacity of 250 megawatts (MW).
How the UAE is Championing Bitcoin Mining Revolution in the Middle East
The United Arab Emirates (UAE) is steadily establishing itself as the Middle East’s Bitcoin (BTC) mining hub. With over 30 free trade zones and an increasing contribution to the Bitcoin mining hash rate, the nation is recognized as a pro-Web3 location for enterprises focusing on cryptocurrencies.
One of the countries with the fastest-growing BTC mining infrastructure is the UAE, according to block reward mining company Luxor Technologies, which reports that the UAE now contributes 4% of the world’s BTC hash rate.
However, Mellerud added that due to the expansion of the semi-government projects, its capacity will probably top 600 MW by the end of this year. He stated, “Bitcoin miners in the UAE should produce about 13 EH/s, or 3.7% of the Bitcoin hash rate, at an assumed average energy efficiency of 30 J/TH.”
The first signs of this mining revolution appeared in late 2021, when Phoenix Technology, a nearby Bitcoin mining business, teamed up with Zero Two, the sovereign wealth fund of Abu Dhabi’s digital assets division.
Additionally, the UAE’s shifting electrical needs frequently result in energy waste. This otherwise squandered electricity can be used wisely by accommodating Bitcoin miners, improving the overall effectiveness of the domestic energy market.
Meanwhile, the UAE’s zero taxation policy and lack of mining activity regulation are two key advantages for Bitcoin miners. To avoid corporate tax, value-added tax (VAT), and import taxes, miners can register their activities in one of the more than 30 free trade zones in the United Arab Emirates.
In addition to having no taxes on Bitcoin mining operations, the nation also has no taxes on cryptocurrency gains, unlike other countries like India, which levied a 30% tax on all profits from digital assets.
