What just happened? Kuwait has declared cryptocurrency mining “illegal and unlicensed” as part of a broad crackdown to ease pressure on its strained power grid amid a worsening energy crisis. This firm stance contrasts sharply with neighboring Dubai, which continues to embrace the crypto sector, recently hosting a major international conference attended by prominent industry figures.

Kuwait has launched a sweeping crackdown on cryptocurrency mining, blaming the activity for worsening a power crisis that has led to rolling blackouts across the country as temperatures soar and air conditioning demand surges. The Ministry of Interior announced last week that it had begun a “wide-ranging” security operation targeting homes suspected of hosting crypto mining rigs, which officials described as illegal.

“These mining operations represent an unlawful misuse of electrical power … and may lead to outages impacting residential, commercial, and service areas, posing a direct risk to public safety,” the ministry said.

The government’s campaign has focused on the Al-Wafrah region in southern Kuwait. The Ministry of Electricity reported that around 100 homes were being used for mining, with some consuming up to 20 times the electricity of a typical household. Following the raids, energy consumption in Al-Wafrah dropped by 55 percent, according to a government statement.

Electricity in Kuwait is heavily subsidized and among the cheapest in the world, making the country an attractive destination for crypto miners seeking to maximize profits.

Kuwait’s power grid is under strain from multiple sources, including rapid population growth, urban expansion, rising temperatures, and deferred maintenance at power plants. Electricity is heavily subsidized and among the cheapest in the world, making the country an attractive destination for crypto miners seeking to maximize profits.

However, officials warn that the unchecked power consumption from mining rigs is pushing the grid beyond capacity, exacerbating the risk of blackouts as summer heat intensifies.

While cryptocurrency trading has been banned in Kuwait since 2023, mining has existed in a legal gray area, with no specific legislation until recent government action.

The Ministry of Interior has now declared crypto mining “illegal and unlicensed,” and warned that violators will face legal penalties. Authorities have identified over 1,000 suspected mining sites using abnormal electricity usage as a key indicator.

The crackdown is being coordinated at the highest levels, with Prime Minister Sheikh Fahad Al-Yousef and Minister of Electricity Dr. Subaih Al-Mukhaizeem overseeing operations. More than 60 individuals are currently under investigation, and the Ministry of Electricity has begun disconnecting power from properties linked to mining activities. Reconnection is only permitted after clearance from the Ministry of Interior.

Despite the government’s assertion that mining is a “major” factor in the power crisis, a source at the electricity ministry told Reuters it is not the only cause. Researchers at the University of Cambridge estimated that Kuwait accounted for just 0.05 percent of global bitcoin mining in 2022. Still, Alex de Vries-Gao, founder of Digiconomist, told Reuters, “It only takes a very small share of the total bitcoin mining network to have significant impact on the relatively small total electricity consumption of Kuwait.”