‘Cheapest country to mine bitcoin’ just banned the practice altogether

The Gulf country previously showed reluctance towards crypto, but local regulators have now banned bitcoin mining outright

article-image

Jes Romero/Shutterstock modified by Blockworks

share

Kuwait’s capital markets regulator banned bitcoin mining this week as they reiterated prohibitions on crypto activities.

The prohibition came down via an official circular released on Tuesday. Kuwaiti authorities had previously only expressed disapproval of crypto payments.

As early as 2017, the local regulator had warned banks and other intermediaries that crypto wasn’t legal tender and prohibited institutions from handling digital assets.

Kuwait is now reinforcing restrictions on institutions and other payment services touching crypto, but so far it seems to have stopped short of outright criminalizing interactions with crypto for individuals.

Still, regulators stated the use of crypto as a form of payment is strictly prohibited, and residents are advised against engaging in any transactions involving cryptocurrency.

But until now, the regulatory status of crypto mining had been ambiguous. The recent circular changes that.

Kuwait shuns crypto as neighbors open arms

Bitcoin mining is a resource-intensive process, requiring specialized equipment and substantial energy consumption — so low energy costs can greatly impact profitability.

Gauging realistic costs of mining bitcoin is difficult. Large-scale operations are often vertically integrated with their own power sources, or have specialized deals for cheaper rates, which can bring down costs.

Still, estimates have previously dubbed Kuwait the most affordable location to mine bitcoin (BTC) worldwide. One roundup suggested the cost of mining in Kuwait was just $1,400 per BTC in 2022 compared to more than $18,000 in Texas (bitcoin was worth more than $40,000 at the time).

Local reports indicated some crypto miners had exploited Kuwait’s low electricity tariffs by disconnecting home cooling devices in favor of mining rigs to avoid drawing suspicion with high electricity usage. 

The Ministry of Electricity and Water reportedly took measures to curb such practices, including cutting off power supplies.

Bitcoin mining aside, Kuwait regulators emphasized that they’re banned from granting licenses to entities for the purpose of offering crypto services as a commercial enterprise. 

The capital markets authority warned that any violation of this regulation would be subject to penalties in accordance with the rules pertaining to money laundering and terrorist financing.

In contrast, neighboring Dubai has taken a more inclusive stance towards crypto, positioning itself as an attractive destination for the digital asset ecosystem. 

At the beginning of the year, Dubai’s “crypto zone” had already attracted over 500 crypto companies.

More specific to mining, major outfit Marathon recently pledged to open two facilities in nearby Abu Dhabi.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template.png

Research

RTK networks are critical to enabling a world of ubiquitous autonomous drones, vehicles, and industrial robots. We believe the GEOD token enables both a cost and product advantage for the GEODNET RTK network, which will allow it to out-compete multi-billion dollar incumbents Trimble and Hexagon.

article-image

As EIP-4844 “blobs” transform the economics of Ethereum layer-2s, a growing debate pits long-term scalability against immediate ETH value

article-image

Prosecutors argued that FTX co-founder Gary Wang cooperated in their case against former FTX CEO Sam Bankman-Fried

article-image

The two largest crypto exchanges respectively run the second- and sixth-largest Solana validators

article-image

MicroStrategy’s bitcoin buying has exploded — it now holds 1.7% of the asset’s circulating supply

article-image

The MiCA era will reward the prepared and punish the rest

article-image

The market is, presumably, confused about what a Trump win means for the social media company