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Why Crypto Miners Flock to Dubai Despite Hot Weather
Dubai has quickly become one of the world’s crypto-hubs following the introduction of efficient digital asset-friendly regulation.
In this column, we will explore how the emirate, with daily temperatures rising to 42°C in the summer, features optimal conditions for crypto mining businesses.
Dubai: The New Crypto Hub
With high temperatures and humidity, it’s safe to say that Dubai’s climate is not the most optimal for operating delicate electronics, like the equipment needed for crypto mining.
However, many entrepreneurs – myself included –are building their mining centers in the emirate. And not without reason.
Passed in late February and enacted on March 11, Dubai’s Virtual Asset Law (VAL) has established an efficient, clear, and crypto-friendly regulation around the digital asset sector.
With the oversight of the independent Dubai Virtual Assets Regulatory Authority (VARA), the new framework transforms the emirate’s cryptocurrency industry from a legal gray zone into a fast-growing global hub that facilitates innovation and development with an open approach.
Furthermore, while the UAE plans to introduce a 9% federal corporate tax on business profits from June 2023 on taxable income above 375,000 AED ($102,000) outside free zones, this rate is much lower than what most nations charge, and it is well below the worldwide average of 23.54%.
In addition to low taxes, Dubai features one of the best labor forces globally, which comes in especially handy when you are building a technology company.
In terms of crypto mining, the UAE had the 13th cheapest cost of electricity out of the 190 countries analyzed by the World Bank in 2019.
As a result, while there are some challenges in terms of cooling and renewables usage, cryptocurrency mining can be highly profitable in Dubai if we use the right solutions (and this is also why the largest mining data center in the world launched in Dubai this year).
Tackling Hot Weather With Immersion Cooling
In many countries, the weather is suitable to leverage inexpensive air cooling to operate crypto mining equipment. Immersion cooling, where IT components and electronics are submerged in a thermally conductive and electrically insulating liquid or coolant, is rarely used due to its high costs and complex technological infrastructure requirements.
However, due to the high levels of heat and high humidity in Dubai, immersion cooling is the only cost-effective way to establish the operational activities of a mining data center in the emirate.
Strangely enough, immersion cooling is rarely considered when it comes to increasing the equipment’s hash rate. While it increases the service life of equipment due to reduced wear, this cooling practice enhances profitability by 150-200%.
Solar Energy and its Challenges for Miners
For a long time, crypto mining has been heavily criticized for its substantial energy usage and potential environmental impact. Fortunately, renewables like solar power can provide an effective and green solution to this issue.
And using solar energy has long been a reality in Dubai, as the world’s largest solar power plant is located here. At the same time, the UAE expects at least 20% of its installed electricity capacity to be from renewable sources by 2024.
However, one thing is to produce renewables, and another is to consume them as a blockchain business. For miners, the main obstacle to using solar energy is the cost of mining.
While miners need a continuous current supply, most solar panels can generate electricity for 16 hours a day and offer a usable capacity for businesses for only 8 hours a day. To solve this issue, mining firms have to invest heavily into building solar stations to expand capacity.
One way to tackle this challenge is by installing Tesla storage batteries to the solar panel infrastructure, making projects more attractive from an economic point of view.
Ilman Shazhaev, the founder of the Bitcoin mining-powered GameFi metaverse Farcana, the OneBoost digital asset management company, as well as international data centers in Malaysia, Russia, and China. Currently, Ilman is building a new data center in Dubai.
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