The global energy landscape is rapidly evolving, bringing both challenges and opportunities. At the nexus of this transformation lies the intricate relationship between energy grid operators, the growing Bitcoin mining industry, and the soaring energy demands of artificial intelligence (AI) and high-performance computing (HPC). For years, Bitcoin mining has been hailed as a potential grid stabilizer, acting as a "buyer of last resort" for otherwise unused or curtailed electricity. However, as we approach 2026, a critical question arises: Can Bitcoin miners maintain their strategic position against the wealthier and often less flexible demands of AI and HPC?
Changpeng Zhao (CZ), former CEO of Binance, recently highlighted the UAE's situation, where surplus power is generated to cover just a few days of peak demand each year. This excess capacity presents a clear opportunity: Bitcoin mining can convert what would otherwise be wasted or "stranded" electricity into valuable revenue. This principle extends globally, wherever power is abundant, inexpensive, or challenging to transmit. The real challenge for 2026 isn't merely the existence of surplus, but whether this surplus is consistent enough for long-term contracts, and if miners can withstand the economic pressure from AI and HPC, which are pushing up prices for stable energy supplies.
The Economic Benefits of Flexible Energy Demand
For Bitcoin miners, the economics are straightforward: electricity accounts for over 80% of their cash operating expenses, according to Cambridge's Digital Mining Industry Report. The report also cites a median electricity-only cost of around $45 per megawatt-hour. Crucially, in 2023, surveyed miners curtailed a significant 888 gigawatt-hours of load, equivalent to approximately 101 megawatts of average withheld capacity. This curtailment figure is central to Bitcoin mining's value proposition for grids.
Miners possess the unique ability to power down quickly when grids are under stress or prices spike, offering utilities a valuable tool for managing intermittency, relieving congestion, and ensuring overall stability. This flexible load characteristic was vividly demonstrated during events like the arctic blast in Texas, where Bitcoin miners voluntarily reduced operations to free up power for residential and critical services. This contrasts sharply with traditional data centers, which typically demand continuous, uninterruptible power, making large-scale curtailment difficult without service disruption. Geographically, mining operations tend to concentrate in areas with access to power that is either very cheap, stranded, or both.
Pakistan's Bold Move: Monetizing Overcapacity
Pakistan has made one of the most explicit national commitments to monetizing its energy surplus. The government announced plans to allocate 2,000 megawatts in the first phase of a national initiative, split between Bitcoin mining and AI data centers. With CZ advising the Pakistan Crypto Council, the Finance Ministry framed this as a strategy to turn underutilized generation capacity in energy-rich regions into a tradable asset. Two thousand megawatts running continuously would generate 17.52 terawatt-hours annually, theoretically supporting a massive amount of hashrate.
While the scale is impressive, the structure of these contracts is key. Will miners sign interruptible agreements, offering much-needed grid flexibility, or seek firm baseload commitments? The selected regions and the long-term durability of the policy, especially if tariffs change or international financial pressures intensify, will determine if this 2,000-megawatt vision materializes as a hub or just a headline. Pakistan's initiative clearly signals a national recognition that "extra electrons" can become a valuable national export.
The UAE: Engineered Surplus for Stability
In contrast to accidental overcapacity, the UAE's energy surplus is largely by design. Dubai's peak demand, reaching 10.76 gigawatts in 2024, is concentrated in the summer months due to extensive cooling needs. The International Energy Agency (IEA) projects that cooling and desalination will drive nearly 40% of electricity demand growth in the Middle East and North Africa through 2035, with data centers also named as a rising load source. This creates an opening for miners: utilities build robust systems for summer peaks, but need year-round monetization and load normalization for off-peak grid stability.
Miners excel where they offer greater flexibility than AI or HPC buyers. Their ability to handle curtailment-ready loads, absorbing power others cannot due to location, congestion, or dispatch constraints, is a distinct advantage. However, the same IEA outlook that flags data centers as a demand driver means miners face direct competition for electrons. The UAE's success as a mining hub depends on whether utilities value dispatchable load enough to offer attractive pricing, or if firm contracts with AI buyers crowd out mining entirely. Bitcoin miners can switch off instantly, making them ideal for grid management, unlike continuous data center operations.
Paraguay's Cautionary Tale: When Abundance Turns to Backlash
Paraguay illustrates what happens when surplus power attracts miners, only to trigger a powerful backlash. The country's abundant hydroelectric capacity initially drew operators seeking cheap electricity, but subsequent tariff changes eroded this advantage. Miners reportedly now pay significantly higher rates, leading to 35 companies ceasing operations after the increases. Furthermore, Law No. 7300 tightened penalties for electricity theft linked to unauthorized crypto mining, raising maximum sentences to 10 years and allowing equipment confiscation.
Despite these challenges, capital continues to flow in, with HIVE completing Phase 1 infrastructure at a 100-megawatt facility. This suggests some operators still see durable economics even after repricing. The tension is clear: a hydro surplus initially draws miners, but once they scale and become a concentrated, taxable consumer, the state often re-evaluates pricing. Local grid constraints and noise externalities can also create political pressure. Paraguay's trajectory demonstrates how a hub can falter if its social license breaks, making policy durability a critical factor in site selection.
Crafting Tomorrow's Mining Hubs: A Formula for Success
The viability of a Bitcoin mining hub in 2026 hinges on a formula: delivered cost per megawatt-hour multiplied by contract flexibility, and further by policy durability. These factors must be weighed against what AI and HPC buyers are willing to pay, prevailing grid scarcity, and foreign exchange or import friction. Three primary scenarios are likely to unfold:
- Persistent Curtailment Gluts: Renewables outpace grid absorption, leading to rising curtailment. Miners thrive as flexible offtakers. Jurisdictions with hydro or seasonal surpluses and weak transmission, or those explicitly monetizing overcapacity (like Pakistan), are prime candidates.
- AI Outbids Miners for Firm Power: Data centers, seeking long-term firm supply, push miners into interruptible, congestion-prone, or stranded pockets. Hubs emerge where miners can access attractive interruptible pricing or "cannot-export" energy.
- Political Repricing or Backlash: Governments raise tariffs once miners scale, or when households face shortages or noise. Paraguay is a template: a hub flips when its initial economic appeal is recalibrated by the state.
The IEA forecasts global electricity demand to grow by roughly 4% annually through 2027, driven by industrial output, air conditioning, electrification, and data centers. While renewable capacity accelerates, grid integration lags, creating monetizable curtailment and congestion. However, surplus is a moving target. Successful hubs beyond 2026 won't just offer cheap power, but also persistent curtailment or congestion, regulatory tolerance for mining as dispatchable load, and the ability for miners to either compete with or complement AI and HPC for electrons.
The Six Pillars of a Durable Mining Hub
For a jurisdiction to become a lasting mining hub, six variables are critical:
- Surplus Type: Is it hydro seasonality, stranded gas, flare mitigation, or nuclear baseload off-peak? Each has different persistence and contractability.
- Delivered Cost and Contract Structure: What is the all-in price per megawatt-hour? Is the contract interruptible? Who bears congestion risk, and is there compensation for curtailment?
- ASIC Import and Logistics: Customs duties, shipping lanes, spare parts availability, and capital controls all affect speed-to-market and operational risk.
- Policy Durability: Tariff repricing risk, licensing stability, sudden bans, and theft enforcement determine a hub's longevity.
- Climate, Cooling, and Water: Air-cooling limits, immersion feasibility, and heat or noise externalities constrain large-scale operations without local opposition.
- Offtake Competition (AI/HPC): With AI and HPC demand explicitly forecast, hubs must assume competition for "good electrons," not just cheap ones.
Pakistan's 2,000-megawatt plan is a clear signal that governments view surplus electricity as an exportable asset class, with mining as one monetization path. However, whether this path leads to 2026's major hubs depends on execution, including contract terms, site selection, and sustained political consensus as miners scale to consume gigawatt-hours.
CZ's thesis about Bitcoin as a buyer of last resort is correct in principle. The practice, however, is far more complex, relying on grids that cannot absorb renewables fast enough, states that tolerate flexible loads, and miners who can remain competitive as data centers drive up the price of vital electrons.
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