Marathon Digital Holdings (NASDAQ: MARA) is launching the first large-scale block reward mining operation in the Middle East.
First announced in January, the operation is a joint venture between Marathon and Zero Two, a Web3 company launched in 2022 by Abu Dhabi’s $160 billion sovereign fund ADQ. At the time, the two said the 250MW operation would cost $406 million.
The two entities have now revealed more details about the operation, which will be operated by the newly-formed joint venture company, Abu Dhabi Global Markets JV Entity (ADGM).
ADGM will operate two sites: The larger 200MW site will be in Masdar City in Abu Dhabi while the smaller 50MW site will be in the port zone of Mina Zayed. The two companies pledged to rely on excess energy produced in Abu Dhabi to power their operations. They will also purchase clean energy certificates to offset any non-sustainably produced power.
Zero Two will be the majority shareholder with 80% ownership; it will also contribute 80% of the startup capital which could be in cash or equipment and infrastructure. The mined BTC will be distributed bi-monthly per the ownership stakes.
Despite being a digital asset and blockchain hub, the Middle East has not seen significant BTC mining activities. With over 80% of the region being a desert, the Middle East averages 28 degrees Celsius (82 degrees Fahrenheit) in annual temperatures. With mining being a heat-intensive activity that thrives in cold regions, air-cooling the mining rigs in this desert climate would cost an arm and a leg.
Marathon and Zero Two say they have solved the challenge. The two have developed “a custom-built immersion solution to cool the ASIC miners and implemented proprietary software to optimize their performance.” A pilot project has been a success, they say.
The partnership with Zero Two “is consistent with our ethos of operating at the forefront of the technology curve,” commented Fred Thiel, the Marathon CEO. Thiel took over in early 2021 after the company booted out former CEO Merrick Okamoto in a controversial move that ended in a $24 million settlement.
The Abu Dhabi operation is expected to launch later this year with a hash rate of approximately 7EH/s.
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