The Abu Dhabi Agriculture and Food Safety Authority of UAE recently issued an advisory prohibiting the use of farms for cryptocurrency mining, with fines of up to 10,000 UAE dirhams for non-compliance. The government agency views cryptocurrency mining as a misuse of farms for purposes other than their intended agricultural use, enforcing the prohibition to preserve the land for its original function. Cryptocurrency mining involves using computational power to validate transactions on blockchain networks and earn rewards, making it a lucrative but energy-intensive activity. The decision to restrict mining on agricultural land is likely influenced by the high energy consumption involved in the process.
Despite the prohibition on cryptocurrency mining on farms, the UAE has established itself as a supportive jurisdiction for Bitcoin mining, accounting for approximately 4% of the global hash rate in 2023. This makes the UAE one of the leading Bitcoin mining hubs in the Middle East, showcasing a favorable environment for crypto activities outside of agricultural contexts. While the UAE maintains a generally positive stance towards cryptocurrency, other countries in the region, such as Kuwait, have adopted stricter regulations by banning all cryptocurrency-related operations, including mining.
The UAE continues to be a crypto-friendly country, recording $25 billion in crypto transactions in 2022 and pursuing further investment by adopting regulatory policies conducive to cryptocurrency activities. The political stability and monarchy in the UAE have been cited as factors creating a favorable environment for crypto businesses, particularly in comparison to regulatory challenges faced in the US. The Middle East is experiencing a surge in crypto adoption, with the UAE leading the region in adoption per capita and expected to become a central hub for cryptocurrency talent, capital, and enterprises.
The growth in crypto adoption in the Middle East is attributed to evolving views on how cryptocurrencies align with Islamic beliefs, as attitudes change with increased regulation and understanding of the digital asset class. The average daily number of crypto traders in the region exceeded 500,000 in February 2024, with forecasts predicting a continued rise to 700,000 by the end of the year. The UAE is expected to increase its global crypto influence and attract more talent, capital, and enterprises in the cryptocurrency sector. Despite its larger population, Saudi Arabia has slightly higher peak daily active users in the crypto market, indicating a growing interest in digital assets across the region.
Overall, the UAE’s stance on cryptocurrency mining reflects a balancing act between supporting innovation in the digital asset space while also preserving farmland for agricultural use. With a favorable regulatory environment and increasing adoption of cryptocurrencies in the Middle East, the UAE is poised to become a central hub for crypto activities, attracting talent, investment, and businesses in the sector. It remains to be seen how the regulatory landscape will continue to evolve and impact the crypto industry in the region.
