Energy grid operators are ignoring Bitcoin’s stabilization benefits to chase a wealthier, less flexible buyer
Former Binance CEO, Changpeng Zhao (CZ), not too long ago said that the UAE generates surplus energy so as to cowl “three days” of high demand annually, making Bitcoin a buyer of final resort for vitality that might in any other case go unused.
Stripping away the specifics, the logic holds: mining turns curtailed or stranded electrical energy into income when no different offtaker needs it.
The query for 2026 is not whether or not surplus might be mined, however whether or not that surplus is structural sufficient to contract, and whether or not miners can maintain their place as AI and high-performance computing push up the clearing value for agency provide.
The economics are simple. Electricity accounts for greater than 80% of miners’ cash operating expenses, in accordance to Cambridge’s Digital Mining Industry Report.
The similar report cites a median electricity-only value of round $45 per megawatt-hour and notes that surveyed miners curtailed 888 gigawatt-hours of load in 2023, roughly 101 megawatts of common withheld capability.
That curtailment determine helps the flexible-load thesis: miners can change off when grids want aid or when costs spike, making them helpful to utilities managing intermittency or congestion.
Geography tells the remainder of the story. While imperfect in methodology, the Cambridge Bitcoin Electricity Consumption Index Mining Map tracks the place hashrate concentrates, although the information carries caveats, similar to estimates lagging by one to three months, and VPN or proxy routing can inflate shares in international locations like Germany and Ireland.
Country attribution depends on geolocating IP addresses, a technique that’s delicate to routing conduct and topic to different inference limitations.
Within these constraints, the map exhibits mining distributed throughout jurisdictions with one factor in widespread: entry to energy that is both low-cost, stranded, or each.
Pakistan turns overcapacity into coverage
Pakistan made probably the most express wager. The authorities introduced plans to allocate 2,000 megawatts within the first section of a nationwide initiative break up between Bitcoin mining and AI knowledge facilities, with CZ named strategic adviser to the Pakistan Crypto Council.
The Finance Ministry framed it as a means to monetize surplus technology in areas with extra vitality, turning underutilized capability into a tradable asset.
Two thousand megawatts working repeatedly would generate 17.52 terawatt-hours yearly. With trendy mining fleets working at 15 to 25 joules per terahash, that energy may theoretically help 80 to 133 exahashes per second of hashrate earlier than accounting for curtailment, energy utilization effectiveness, or downtime.
The scale issues less than the construction.
What kind of contracts will miners signal, interruptible or agency baseload? Which areas get chosen, and the way sturdy is the coverage if tariffs rise or IMF strain intensifies?
Pakistan’s initiative indicators that “further electrons” can turn out to be a nationwide export, however execution will decide whether or not 2,000 megawatts materializes as a hub or simply a headline.
Surplus by design, not accident
The UAE’s alternative is not perpetual surplus, but it surely’s surplus-by-design.
Peak demand in Dubai reached 10.76 gigawatts in 2024, up 3.4% year-over-year, concentrated in summer season months when cooling dominates load.
The International Energy Agency (IEA) tasks that cooling and desalination will account for close to 40% of electricity demand growth within the Middle East and North Africa via 2035, with knowledge facilities explicitly named as one other rising load supply.
That creates a particular opening for miners: utilities construct techniques to deal with high summer season peaks however want year-round monetization, normalization, and grid stability throughout off-peak durations.
Miners win the place they’ll provide extra flexibility than AI or HPC consumers, similar to curtailment-ready hundreds that soak up energy others cannot take due to location, congestion, or dispatch constraints.
Bitcoin miners can change off instantly, whereas datacenters require steady operation, making curtailment and grid administration far more tough.
The area’s buildout traits favor baseload capability that outpaces seasonal demand, however the identical IEA outlook that flags knowledge facilities as a driver of demand means miners face direct competitors for the electrons they want.
The hub case relies on whether or not utilities worth dispatchable load sufficient to value it attractively, or whether or not agency offtake contracts with AI consumers crowd out mining altogether.
When surplus turns into contested
Paraguay illustrates what occurs when surplus energy attracts miners, solely to set off a backlash.
The nation’s hydro capability attracted operators looking for low-cost electrical energy, however tariff modifications repriced that benefit. Miners now reportedly pay between $44.34 and $59.76 per megawatt-hour plus taxes, and native business sources cited 35 firms ceasing operations after the rise.
Law No. 7300 tightened penalties for electrical energy theft linked to unauthorized crypto mining, elevating most sentences to 10 years and permitting the confiscation of kit.
Nevertheless, actual capital nonetheless flows in. HIVE accomplished Phase 1 infrastructure at a 100 megawatt facility backed by a fully energized 200 megawatt substation, signaling that some operators see sturdy economics even after repricing.
The rigidity is obvious: hydro surplus creates the preliminary draw, however as soon as miners scale, the state re-prices energy when it realizes they’re a concentrated, taxable offtaker, or native grid constraints and noise externalities construct political strain.
Paraguay’s trajectory exhibits how a hub can flip if social license breaks, making coverage sturdiness a first-order variable in any site-selection mannequin.
What really makes a hub
Mining hub viability in 2026 comes down to a components: delivered value per megawatt-hour occasions contract flexibility occasions coverage sturdiness, measured in opposition to what AI and HPC consumers are keen to pay, grid shortage, and foreign-exchange or import friction.
Three eventualities play out throughout these variables.
In the primary, curtailment gluts persist: renewables add sooner than grids can soak up, curtailment rises, and miners win as flexible offtake. Hydro- or seasonal-surplus jurisdictions with weak transmission, similar to Paraguay, or international locations explicitly monetizing overcapacity, similar to Pakistan, are the likeliest hubs.
In the second, AI outbids miners for firm power. Data facilities search long-term agency provide, pushing miners into interruptible, congestion-prone, or stranded pockets. Hubs emerge the place miners can entry interruptible pricing or “can’t-export” vitality slightly than prime agency capability.
In the third, political repricing or backlash reshapes the panorama. Governments elevate tariffs as soon as miners scale or when households see shortages or noise. Paraguay turns into the template: a hub flips when the economics that attracted miners get recalibrated by the identical state that constructed them.
The IEA’s framing issues right here. Global electrical energy demand is forecast to develop at a roughly 4% annual charge via 2027, pushed by industrial output, air-con, electrification, and knowledge facilities.
Renewable capability additions are accelerating, however grid integration lags. That lag creates the curtailment and congestion that miners can monetize, but it surely additionally means surplus is a transferring goal.
The hubs that survive 2026 aren’t simply cheap-power jurisdictions, but in addition locations the place curtailment or congestion is probably going to persist, regulation tolerates mining as dispatchable load, and miners can compete with or complement AI and HPC for electrons.
The guidelines
Six variables decide whether or not a jurisdiction turns into a mining hub or simply a headline.
Surplus kind is the primary. Is it hydro seasonality, stranded gasoline, flare mitigation, or nuclear baseload off-peak? Each has completely different persistence and contractability.
The delivered value and contract construction observe because the second variable. What’s the all-in value per megawatt-hour, and is the contract interruptible? Who bears congestion danger, and is there compensation for curtailment?
Then comes the ASIC import and logistics, similar to customs duties, transport lanes, spare components availability, and capital controls, all of which have an effect on speed-to-market and operational danger.
Policy sturdiness is the fourth variable: tariff repricing danger, licensing necessities, sudden bans, and theft enforcement decide whether or not a hub stays a hub.
Climate, cooling, and water additionally play a half. Air-cooling limits, immersion feasibility, and warmth or noise externalities constrain the place large-scale operations can function with out triggering native opposition.
The final variable is offtake competitors: AI and HPC demand progress is now explicitly mirrored in electrical energy demand forecasts. Hubs should assume competitors for “good electrons,” not simply low-cost ones.
Pakistan’s 2,000 megawatt plan is the clearest sign that governments see surplus electrical energy as an exportable asset class, with mining as one monetization path.
| Jurisdiction | 1) Surplus / curtailment kind | 2) Delivered $/MWh + contract construction | 3) ASIC import/logistics + FX | 4) Policy sturdiness | 5) Climate/cooling + water | 6) Offtake competitors (AI/HPC) |
|---|---|---|---|---|---|---|
| Pakistan |  Overcapacity framed as coverage (“areas with extra vitality”), however persistence/seasonality not but confirmed |
Price & phrases TBD (headline MW ≠ delivered $/MWh; key’s interruptible vs agency + curtailment comp) |
 FX/import friction possible (capital controls, transport/customs uncertainty) |
/ Execution danger (tariff politics + IMF scrutiny may drive repricing or gradual rollout) |
/ Hot local weather → increased cooling load/PUE until sited in cooler areas |
Direct competitors (initiative explicitly consists of AI knowledge facilities; agency energy might get bid up) |
| UAE (Dubai/GCC lens) | “Surplus-by-design” (techniques constructed for summer season peaks → off-peak monetization potential) |
/ Published tariffs are high; mining wants particular contracts/curtailment-ready pricing to work |
 Best-in-class logistics (ports, spares, finance; low friction scaling) |
Generally steady allowing surroundings (however vitality pricing is the swing variable) |
Extreme warmth makes cooling a first-order constraint; water/warmth externalities matter |
High competitors (knowledge facilities increasing; miners possible pushed to interruptible/constrained pockets) |
| Paraguay | Hydro surplus draw (Itaipú-style abundance is the core “hub” attractor) |
Still aggressive however repriced (tariff hikes + taxes; economics depend upon contract specifics) |
Landlocked/logistics add time/value; manageable however not “plug-and-play” |
Durability danger (tariff repricing + enforcement strain = hub can “flip”) |
More forgiving local weather than GCC; simpler cooling profile |
Lower AI/HPC bidding strain vs main metro markets (for now) |
Whether that path leads to 2026’s subsequent main hubs relies on execution, together with contract phrases, website choice, and whether or not the political consensus holds as miners begin consuming gigawatt-hours at scale.
CZ’s thesis about Bitcoin as a buyer of last resort is appropriate in precept. The observe is messier, contingent on grids that may’t soak up renewables quick sufficient, states that tolerate flexible hundreds, and miners who can keep aggressive as knowledge facilities bid up the value of agency energy.
The hubs that emerge would be the ones the place these situations align lengthy sufficient to construct infrastructure and signal contracts that survive the primary tariff revision or the primary summer season blackout.
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