Welcome back to the Blockspace Newsletter!

In December, our Editor-in-Chief Colin Harper attended the Bitcoin MENA conference in Abu Dhabi. Here’s what he learned about what’s actually going on with the bitcoin mining industry in the Middle East.

Why bitcoin mining in the Middle East isn't so hot

At BTC Inc.’s latest conference, Bitcoin MENA in Abu Dhabi, United Arab Emirates, something was immediately apparent when you entered the expo hall – and it wasn’t just the uncanny mingling of thawb-garbed Arabs with suit-sporting Westerners.

It was that the exhibitor area was thronged with Bitcoin mining companies. 

 Roughly 40% of the conference’s sponsors and 29% of booth exhibitors were Bitcoin mining companies, BTC Inc. employee Tyler Laroche told Blockspace. 

Clearly, bitcoin mining was a huge selling point for the first year conference, and mining companies played no small part in bankrolling the event. Ever since the first large bitcoin mining projects emerged in the United Arab Emirates and Oman, the energy-rich Middle East has been hailed as a region ripe for hashrate expansion. 

But deploying mining sites at scale in the Middle East is easier said than done. The baking, desert climate can make operating ASIC hardware a pain, and miners who want to deal in size have to find partners in the government to operate above board. Otherwise, they risk operating in a grey area, if not outright illegally. 

The UAE offers cheap power for bitcoin mining – if you can get it

The United Arab Emirates came to the fore in the bitcoin mining world – for Western audiences, at least – in May 2023 when MARA announced its joint venture with Zero Two to develop 250 MW of immersion-cooled bitcoin mining sites in the UAE. 

This joint venture was the first publicized effort to build industrial-scale bitcoin mines in a region where retail mining has been popular for years (so much so that there are brick and mortar stores for bitcoin mining hardware). MARA’s partner, Zero Two, is backed by ADQ, a UAE state-owned investment and holding company.

Representatives from companies conducting business in the region told Blockspace that, if a mining firm wants to operate at scale in the UAE, they have to work with government-affiliated entities – otherwise, their access to power will be limited. 

“If you're a miner trying to build out in the region … you have to find a government partner,” Bitdeer Middle East Sales Director Sharif Allayarov told Blockspace. “It’s nearly impossible [for a private miner] to build a farm over 10 megawatts, but the government can get hundreds of megawatts,” he said.

 Brought to you by Luxor

Exclusive webinar: How to Boost Mining Profitability! Discover how you can optimize performance, cut energy costs, and maximize uptime with Luxor Firmware. 🗓 Jan 24, 11AM EST. Register now!

This dynamic has created something of a fragmented bitcoin mining business ecosystem in the region between the haves and havenots, where companies like MARA can access large blocks of power and concentrate their mining operation in a few sites, while other companies operate one to two megawatt sites scattered across the country. 

“What you'll see here in the UAE is tons of operators have ten, twenty sites across the desert,” Emmanuel Monterro, the CEO of UAE-based Terahash Solutions, told Blockspace, speaking to the difficulties miners face when accessing large blocks of power. “You have one megawatt sites, [one and a half], two megawatts, and they'll have them all across the desert.”

What’s more, the existence of these diffuse operations sometimes belie their legality. As Monterro put it, in the UAE as elsewhere, “there's wild wild west mining and then there's professional mining.” And a key draw for the cowboy operators in the UAE is the country’s agricultural electricity rate. Subsidized by the government, this power rate is an incredibly attractive $20/MWh (for reference, industrial-scale miners in the United States may secure power between $40-70/MWh), so naturally bitcoin miners jumped at the chance to tap it.

The only problem is they’re not supposed to access this rate without the government’s blessing, and so many miners started drawing power from this subsidy that the government issued an edict banning them from doing so. 

It’s probable that the government still allows MARA to access such a rate, although this is not totally clear. For Monterro’s Terahash Solutions, the edict was enough to make the company shutter its operations in the region, and he told us that it likely impacted the total hashrate operating in the region, even as some smaller miners have opted to stay and stomach the risk of operating in a grey zone. For instance, Allayarov said that the penalty for using this subsidy illegally is not very high, so some miners have continued to do so.

Allayarov went on to say that miners in the UAE will increasingly tap into oil and gas drilling sites that are currently flaring stranded gas.

Read the full article by clicking here.

Rumor Mill

Is home mining back?

Apparently, home bitcoin mining is en vogue again. We’ve been told that Canaan’s home mining models, the Avalon Mini and Nano 3S, are pretty popular — so popular that Canaan is increasing production for the next batch of these ASIC miners.

Recent Mining Pods