Kuwait Pulls Plug on Crypto Mining

For years, Kuwait’s ultralow power prices—about $0.029 per kWh—made the desert state a sleeper paradise for proof‑of‑work miners. What began as hobby rigs humming in hot apartments soon grew into warehouse‑scale farms, drawing a steady stream of ASICs from China and Russia after those nations clamped down.
Yet on 1 May, Kuwait’s Ministry of Interior flipped the script, sending inspection teams door‑to‑door to search for illicit rigs. Sixty suspects were questioned on day one; confiscations of graphics cards and industrial fans followed. Officials accused miners of “unlawful exploitation of electrical power” that worsens recurring blackouts and jeopardises public safety.

The timing is no coincidence. Kuwait’s population passed 4.6 million this year, and with May temperatures already brushing 39 °C (102 °F), the grid is straining under nonstop air‑conditioning. Power demand now outpaces the 17.3 GW peak recorded last summer, forcing utilities to import emergency generators and warn of rolling cuts.

Energy minister Dr. Jassim Al‑Othman framed the crackdown as triage: “Every megawatt counts. Unlicensed mining steals capacity that should cool hospitals and homes.” Kuwait’s parliament is drafting amendments that would criminalise commercial crypto mining, mirroring China’s 2021 blanket ban and the de‑facto moratorium in several Russian oblasts.

From haven to headache

Kuwait’s once‑laissez‑faire stance had drawn miners fleeing pricier locales. At $30,000 Bitcoin, a 100‑terahash rig in Kuwait could gross $5,000 annually after power—double the margins of a similar setup in Texas. But profitability came at a hidden cost: subsidised electricity that already sells well below generation cost, draining state coffers by an estimated $3 billion a year.

Local miners argue they are scapegoats for systemic under‑investment. “Yes, rigs pull juice, but the real load is old AC units,” says Ahmed Saad, a hobby miner whose six machines were seized. He claims miners would gladly pay industrial tariffs if legal pathways existed. Kuwait’s regulators, however, view the largely cash‑based mining economy as a money‑laundering risk on top of its kilowatt appetite.

Regional ripple effects

The ban will flush an unknown but sizable hash‑rate from the Gulf, likely migrating to Oman’s government‑sanctioned mining zones or to renewable‑rich sites in Kazakhstan—provided that nation’s own grid can cope. Hardware resale markets from Dubai to Doha are bracing for a flood of second‑hand Antminers.

Investor sentiment around Middle‑East mining plays is already shifting. Shares of London‑traded Gulf Hash PLC slid 8% after the announcement, while Dubai‑based Phoenix Technology says it is reevaluating a planned Kuwait joint venture. Analysts at FTI Consulting warn that subsidy‑driven mining hubs remain vulnerable to sudden policy reversals when summer demand bites.

Kuwait’s crackdown underscores a broader reality: cheap electricity alone no longer guarantees a safe harbour for proof‑of‑work operations. As climate stress and geopolitical shocks amplify, miners must balance power economics with regulatory durability—or risk seeing the lights shut off without warning.