Miners Eye Middle East as Next Region for Growth

The
Biden
Administration’s

proposed
30%
tax
on
electricity
use
for
digital
asset
mining
operations
is
raising
concerns
among
crypto
miners
that
they
could
be
priced
out
of
operating
in
the
U.S.
market
communities.

Crypto
miners
in
the
United
States
represent
over

29%
of
the
total
nodes
on
the
Bitcoin
network.
But
that
percentage
may
fall
if
costs
increase
and
other
locations
become
more
attractive.

One
emerging
option
is
the
Middle
East
region,
where
taxes
tend
to
be
lower,
energy
is
often
bountiful,
and
environmental
regulation
is
generally
less
onerous.

The
Oman
government
has
invested
more
than
$800
million
in
crypto-mining
operations.
The
UAE’s
400
megawatts
of
Bitcoin
mining
is
about
4%
of
the
global
Bitcoin
mining
hashrate,
according
to
data
from
the

Hashrate
Index.
Migration
to
the
energy-rich
region
could
favor
U.S
miners,
backers
in
the
region
claim.

“Compared
to
the
U.S.,
the
south
of
Oman
has
a
few
geopolitical
advantages
that
are
unique.
It
is
very
good
for
connections,
as
it’s
next
to
submarine
cables
landing.
It
has,
low
[cost]
electricity,
reduced
political
risk,
and
favorable
weather
conditions
for
data
centers,”
said
Olivier
Ohnheiser,
CEO
of
Green
Data
City,
an
Oman
crypto-mining
firm,
told
CoinDesk
during
Bitmain’s

World
Digital
Mining
Summit
in
Oman
at
the
end
of
March.

Green
Data
City
last
year
struck

a
$300
million
deal
with
Phoenix
Group
–
the
largest
digital
asset
mining
firm
in
the
UAE
–
to
set
up
a
150-megawatt
crypto
farm
in
Salalah,
southern
Oman.
The
plant,
for
Bitcoin,
Litecoin,
and
other
POW
crypto
assets,
is
set
to
be
completed
later
this
year
.
Salalah
reaches
highs
of
27
degrees
centigrade
(81
degrees
F)
in
summer
months,
but
that’s
relatively
cool
compared
to
the
rest
of
the
Middle
East),
and
the
region
has
access
to
cool
ocean
water
and
is
underpinned
by
Green
Data
City’s
operational
mining
license.

Also
in
2023,
Digital
Marathon
(MARA)
and
the
Abu
Dhabi
sovereign
wealth
fund-backed
Zero
Two
signed
a

$406
million
joint
venture
to
build
the
first
immersion-cooled
Bitcoin
mining
plant
in
the
Middle
East
region.
While
temperatures
in
the
desert
are
a
drawback,
particularly
in
the
summer
months
when
highs
of
50
degrees
centigrade
are
not
unusual,
the
cooling
technology
allows
the
mining
equipment
to
function
optimally
even
in
challenging
environments.

The
United
States’
continued
regulatory
crackdown
on
crypto
business
might
also
boost
regional
growth
for
the
Middle
East.

Kyle
Shneps,
Director
of
Public
Policy
at
Foundry,
a
U.S.-based
crypto
mining
firm,
expects
a
drop
in
crypto
mining
in
the
U.S.
if
the
electricity
tax
bill
is
passed.

“A
30%
tax
on
the
electricity
used
by
bitcoin
miners
would
assuredly
kill
the
industry
in
the
United
States.
It
would
be
unprecedented
to
have
such
attacks
on
the
electricity
used,
and
I
think.
It
sets
a
really
dangerous
precedent,”
he
said.

In
a
similar
vein,
Darin
Feinstein,
founder
of
mining
firm
Core
Scientific,
believes
that
the
bill
could
hurt
the
U.S.
economy.

“This
is
a
tax
question
I
believe.
I
do
not
believe
this
has
any
likelihood
of
passing,
but
if
it
did
it
would
simply
weaken
the
American
footprint
on
the
most
important
asset
in
our
lifetime.
Investment
and
technology
would
simply
leave
our
shores
for
more
hospitable
environments,”
he
said.

With
the
looming
taxation
bump
and
reduced
block
rewards
due
to
the
recent
Bitcoin
halving
in
April,
miners
are
grappling
with
changed
economics.
Seyed
Mohammad
Alizadehfard
(Bijan),
Co-Founder
and
Group
CEO
at
the
Phoenix
Group,
cites
this
as
another
factor
that
could
influence
the
choices
of
U.S.-based
miners.

“At
any
given
point
of
price,
when
you
carve
supply
in
half,
the
price
needs
to
appreciate
or
it
will
be
very
hard
for
Bitcoin
miners
with
high
electricity
prices
or
older
generation
machines.
If
this
[U.S.]
bill
passes,
some
mining
firms
could
migrate
to
places
like
the
Middle
East
where
such
laws
don’t
exist
yet,”
he
said.

But
Skybridge
Capital’s
Anthony
Scaramucci,
a
former
White
House
comms
director,
believes
the
United
States
remains
a
hotbed
for
digital
assets,
including
mining.

“Despite
regulatory
uncertainty,
the
U.S.
offers
an
ecosystem
that
is
ripe
for
innovation
and
growth,
with
many
of
the
leading
crypto
firms
and
projects
already
here,”
he
told
CoinDesk.

If
the
new
electricity
tax
bill
for
digital
asset
mining
passes,
U.S.-based
miners
have
two
options,
cling
to
the
U.S.
market
and
make
the
numbers
work,
or
find
a
new
home.