The United Arab Emirates (UAE) is quickly establishing itself as a preferred Bitcoin mining destination in the Middle East. With over 30 free trade zones and a growing contribution to Bitcoin’s global hash rate, the country is attracting crypto-focused companies.
UAE’s Partnership with Marathon Digital and Zero Two
In May, Bitcoin miner Marathon Digital joined forces with Zero Two, the digital asset arm of Abu Dhabi’s sovereign wealth fund. This collaboration resulted in the establishment of two mining sites in Abu Dhabi. It also boasts of a combined capacity of 250 megawatts (MW).
Abu Dhabi, known for its energy efficiency and trade prominence, has become a focal point for various crypto mining activities within the UAE.
According to data from Hashrate Index, the UAE currently possesses a combined Bitcoin mining capacity of approximately 400 MW. This is equivalent to 4% of Bitcoin’s global hash rate. Notably, countries like the United States, China, Russia, and Kazakhstan hold the largest shares of global hash rate. However, the UAE has the potential to climb the ranks due to its available resources.
Shifting Focus to Clean Energy
As a significant player in the global energy market, the UAE has redirected its attention from traditional oil and gas reserves to solar and nuclear energy. Previously reliant on natural gas for electricity generation, the country is now witnessing rapid growth in the shares of nuclear and solar power. This transition positions the UAE to benefit from the surplus electricity generated by these clean energy sources.
Importantly, this electricity could be harnessed by Bitcoin miners.
Furthermore, the UAE experiences significant fluctuations in electricity demand between the hottest and coolest months. This usually results in substantial wastage of generated electricity. In 2021 alone, the country’s power and desalination plants wasted 20 terawatt hours, amounting to roughly $600 million. Bitcoin miners can play a pivotal role in reducing this wastage by utilizing the surplus energy.
Moreover, with Bitcoin mining favoring clean energy sources, the UAE can anticipate a considerable portion of its energy to originate from nuclear and renewable sources in the next decade.
Tax Benefits and Free Trade Zones
One of the key advantages for Bitcoin miners in the UAE is the country’s zero-tax policy. Miners can register their operations in any of the UAE’s 30+ free trade zones, enabling them to bypass corporate tax, value-added tax, and import duties. This provides a significant edge over operating in Western countries and attracts crypto-focused companies seeking a favorable business environment.
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