For the last two years, the market value of Bitcoin has been on a rollercoaster ride, the volatility leading institutional investors and regulators to question the cryptocurrency’s long-term viability. 

But look to the Gulf countries and a different story is taking shape: the United Arab Emirates and Oman are looking seriously at regulating digital assets while crypto firms are flocking to Dubai to set up shop. Oman, for its part, is betting big on cryptocurrency mining. Observers say a cooler climate in Salalah, in the south, compared to elsewhere in the desert nation, as well as business-friendly regulation and cheap energy could help it succeed. 

In August, the oil-rich country announced close to $800 million in investments in crypto-mining operations, including $300 million with Abu Dhabi-based Phoenix Group to develop a 150-megawatt crypto-mining farm with Green Data City, Oman’s first licensed crypto-mining entity, slated to go online next year. Weeks earlier, Muscat approved a $370 million farm operated by Exahertz International.

Oman is looking to diversify beyond fossil fuel revenues under its “Vision 2040” economic agenda, which focuses on the buildout of modern energy and telecommunication infrastructure that aims to attract foreign investment and create knowledge-worker jobs. 

“Crypto might be uniquely suited to Oman’s policy style to diversify its trading partners and sources of non-hydrocarbon income,” Sam Blatteis, CEO and co-founder of the MENA Catalysts, a government relations firm for tech companies, told The Circuit. 

Over the last decade, crypto mining has gone from a basement-type operation distributed over individual computers to large centralized mining pools that require large capital investment and sophisticated machines to solve ever-harder-to-attain matches to cryptographic solutions. 

This is energy-intensive work.

Oman offers some of the cheapest electricity in the world, costing only around 5 cents per kilowatt hour, compared to 23 cents in the U.S. This significantly lowers the operational costs for crypto mining. A medium-sized crypto-mining operation in Oman could save millions of dollars in electricity costs compared to operating in the U.S., which is home to over a third of all crypto mining globally. 

The move will not be without controversy as crypto mining is often derided for not being environmentally friendly. Bitcoin mining generates 21 to 53 million tons of carbon per year, according to an analysis by Massachusetts Institute of Technology.

Sheikh Mansour Bin Taleb Bin Ali Al Hinai, chairman of Oman’s Authority for Public Services Regulations, commented in a press statement about his government’s support of Bitcoin mining facilities: “This initiative aligns with our goal to diversify our economy, integrating modern technologies while upholding our commitment to ethical and sustainable practices.” 

The country is aiming for at least a third of energy production to be from renewable sources by 2030. 

But energy isn’t the only focus. Stability matters, too, according to those who have chosen to do business in Oman.

“In previous years, the mining industry was only focused on finding the lowest prices of electricity, and this led to disasters in unstable countries like China, Kazakhstan, Russia and Paraguay,” Olivier Ohnheiser, CEO of Green Data City in Muscat, told The Circuit.

“Even the U.S. is threatening the mining industry with taxes and higher electricity prices in the next few years. So, now, with the consolidation of the industry under publicly listed mega-miners, the priority is stability. Most miners prefer to have 50% of their operations as a maximum in the U.S., and 50% diversified elsewhere. Oman is one of the best places, if not the best place, for that.

“Oman offers long-term stability and fixed prices of electricity in the long run,” Ohnheiser continued. “The country is stable and is known to respect its commitments.”

Jad Kharma, CEO of Exahertz, the other crypto mining operator with an Omani license, agrees. 

“This is Switzerland of the Middle East,” he said of government stability. “I felt safer as a foreign investor to put my hands in the hands of the people that are shaping the future for the country” than in other countries in the region.

Plus, Kharma likes the quality of life in Salalah, the microclimate in southern Oman where the crypto mining takes place. It’s often many degrees cooler than elsewhere in the Arabian Gulf: an actual oasis. 

The oasis has Jaran Mellerud’s attention. An associate at Luxor, a Seattle -based company that develops crypto-mining technologies, he traveled to the UAE and Oman over the summer to check out the mining operations underway and evaluate if either country has the potential to take up significant market share in the near future. 

“Bitcoin mining is a very simple way of monetizing excess electricity,” he told The Circuit. “If there is a place that has a lot of excess electricity, but has no other way of quickly putting it to use, Bitcoin mining is a very efficient way of attracting investment into that area, for example in southern Oman, with all this excess electricity.” 

Oman has the advantage in the region for other reasons other than an excess of cheap energy. Solid government support and a relatively cooler climate are other main drivers. 

“The only way to mine Bitcoin in a scalable and legally sustainable way in Oman is by closely cooperating with the government. Miners need licenses and are also expected to provide significant benefits to the community. In return, they get tax benefits and access to loads of competitively priced electricity.”

Mellerud predicts that Oman will become an increasingly important destination for Bitcoin over the next couple of years and could, together with the UAE, take the Middle East’s total share of the Bitcoin mining network to above 15%.