The United Arab Emirates (UAE) is betting on block reward mining and is now the biggest BTC mining hub in the Middle East, a new report says.
UAE has emerged as a major Web3, blockchain, and digital asset hub in recent years, with its friendly regulations attracting major players, including OKX, BitOasis, and SmartLedger. The country is also investing billion into blockchain adoption, with BSV blockchain among the leading networks with public and private enterprises.
As block reward mining firm Luxor Technologies reveals, the UAE is now one of the fastest-growing BTC mining destinations. In a recent report, Luxor revealed that at 4% of the global BTC hash rate, the country is the largest mining hub in the Middle East.
UAE’s foray into mining started in 2021 when the country’s sovereign wealth fund Zero Two (then known as FS Innovation) partnered with local miner Phoenix Technologies on a 200 MW hydro-cooled facility.
Earlier this year, U.S. miner Marathon Digital (NASDAQ: MARA) announced a partnership with Zero Two to establish a $400 million facility. The two are building two sites with a combined 250 MW capacity in Abu Dhabi, the largest emirate in the UAE.
Luxor reveals that while the state is leading large-scale mining, there are hundreds of smaller miners across the seven emirates. The UAE is currently estimated to have a mining capacity of 400 MW, which will shoot to 600 MW by the end of the year. This makes it the leader in the Middle East, ahead of Saudi Arabia, Qatar, and Kuwait.
Despite the growth, mining in the UAE is more expensive and complex than in most other countries. With most of it being a desert, the country records high temperatures for most of the year—annually averages 28 degrees Celsius (82 degrees Fahrenheit). This makes it critical for miners to invest significantly more in cooling their mining rigs.
When Marathon announced its project, it claimed to have deployed “a custom-built immersion solution to cool the ASIC miners,” coupled with proprietary software.
In addition, power costs in the UAE are higher than in other mining hubs. In peak seasons, industrial consumers pay up to $0.099 per kWh. In comparison, residential consumers pay $0.02, with agricultural power being the most subsidized at $0.012.
Even with the challenges, the UAE is likely to catch up with more prominent players like Kazakhstan and Russia as the government is investing billions to spur the growth of the blockchain industry.
Watch BSV Stories – Episode 4: The Middle East’s Blockchain Race
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.