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.
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Source: https://blockworks.co/news/bitcoin-mining-banned-kuwait