Coinspeaker
UAE Emerges as Leading Bitcoin Mining Hub in Middle East
The United Arab Emirates (UAE) is establishing itself as a key destination for Bitcoin (BTC) mining in the Middle East. With its pro-Web3 ecosystem, abundant energy resources, tax advantages, and business-friendly environment, the country offers an appealing choice for miners seeking growth and profitability.
In a lengthy Twitter thread on July 5, Jaran Mellerud, a business development associate at Luxor and crypto mining expert, gave insight on the latest developments in the UAE mining sector. According to him, the partnership between Zero Two, a blockchain infrastructure provider and a subsidiary of Abu Dhabi’s sovereign wealth fund, and the US-based mining firm Marathon Digital in May 2023 began the country’s journey into the global mining scheme.
Both companies partnered to launch two mining sites in Abu Dhabi. These facilities, equipped with a combined capacity of 250 megawatts (MW), will be powered by excess energy from Abu Dhabi grids, ensuring sustainability and efficiency. Earlier in 2021, Zero Two partnered with the local mining firm Phoenix Technology to strengthen its presence in the country.
UAE Combined Mining Capacity Estimated to Reach 400MW
As a significant player in the energy market, the UAE has proactively shifted its focus from traditional fossil fuels to renewable energy sources. Solar and nuclear power have emerged as key pillars in the country’s energy transition. The surplus of energy generated from these sustainable sources presents an opportunity for Bitcoin miners to tap into clean energy and contribute to the country’s green initiatives.
The West Asian country recently opened the biggest nuclear power plant in the Arab world, with a total capacity of 4 gigawatts, and is gearing up for expansion later this year. The expansion aims to increase the influx of nuclear energy demand for flexibility.
Mellerud revealed in the tweets that the UAE’s Bitcoin mining capacity is estimated to be around 400 MW, accounting for approximately 4% of the global hash rate. While countries like the United States, China, Russia, and Kazakhstan dominate the hash rate leaderboard, the UAE’s abundant resources and favorable environment position it as a rising contender in the global mining landscape.
He further noted that the country’s mining capacity could surpass 600 MW by the end of this year as the semi-governmental projects expand.
Tax Advantages and Regulatory Environment
Mellerud said one significant advantage for Bitcoin miners in the UAE is the country’s zero tax policy and lack of regulation regarding mining activities. Miners can register their operations in one of the UAE’s more than 30 free trade zones, enabling them to avoid corporate tax, value-added tax (VAT), and import duties.
This tax haven status provides a competitive edge for miners in the global mining industry, allowing them to optimize their financials and enhance profitability.
Aside from the 0% tax on Bitcoin mining activities, the country also has zero taxation on crypto gains, unlike other nations such as India, which imposed a 30% tax on all digital assets earnings.
