UAE generate approximately 3.7% of the global bitcoin hash rate and are the fastest growing mining hub in the Middle East. This conclusion was made by experts from Luxor.
Analyst Jaran Mellerud and account manager Eric Vera in the course of the study estimated the power involved in the extraction of the first cryptocurrency at about 400 MW.
With an average device energy efficiency of 30 J/TH, miners in the UAE should generate 13 EH/s. The figure exceeds the performance of all countries in the region, experts noted.
According to them, mining in the Emirates has existed for several years in the form of small farms or installations located in houses. The rapid development of the industry began in recent years with the support of the Digital Assets of the Abu Dhabi Sovereign Fund.
In late 2021, Zero Two (then called FS Innovation) partnered with local Phoenix Technology to build a 650 MW hydro-cooled mining farm.
In February 2023, a division of the fund created a second joint venture – with the American Marathon Digital Holdings. As part of the partnership, the companies will build two immersion-cooled facilities in Abu Dhabi with a total capacity of 250 MW.
“Thus, all large-scale projects in the UAE have been led by Abu Dhabi Sovereign Wealth Fund in partnership with established industry players. In addition, almost all mining in the country takes place in this emirate, the largest and richest in energy,” the experts emphasized.
In their opinion, a number of factors can contribute to the further growth of the bitcoin mining industry in the UAE:
- support from the authorities;
- an excess of electricity;
- availability of capital;
- political stability and favorable business environment.
However, Mellerud and Vera also pointed to the main obstacle to the development of mining operations in the country – the climate. Average daytime temperatures range from 24°C in January to 42°C in August, with occasional peaks above 50°C.
This forces the use of water or immersion cooling and increases costs. Abu Dhabi uses desalinated seawater, the impact of which on miners has not been fully studied, experts said. Compressors have to be used to cool the immersion liquid, which increases power consumption. At the same time, it was precisely such solutions that experts called the most promising in the UAE.
The heat is not the only negative factor for mining in the UAE. A serious problem is the huge amount of dust and periodic sandstorms. These factors reduce the life of the equipment. Mellerud and Vera, again, consider the use of immersion cooling to protect installations to be the best option.
Luxor specialists also drew attention to the non-transparent situation with energy tariffs. With a subsidized price of electricity for the population ($0.02 per kWh) or agricultural enterprises ($0.012/kWh), it costs industrial enterprises $0.073-$0.099/kWh. This is a very high cost for mining, which means that the existing data centers have to conclude certain agreements, the experts emphasized. They assumed that Marathon would not start operations in the country at a tariff higher than $0.045/kWh.
“The UAE will become an increasingly important country for bitcoin mining over the next few years and can serve as an example for other countries in the Middle East,” the experts concluded.
Recall that in April, the UAE Securities and Commodities Authority began licensing crypto service providers.
The Binance bitcoin exchange called the country a “key point” for their business. Coinbase sees the jurisdiction as a strategic hub for overseas expansion.
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