Mining in the dark: how Lebanese crypto miners are dealing with the electricity crisis

Mining in the dark: how Lebanese crypto miners are dealing with the electricity crisis
Mining rigs at a gaming-turned-mining-lounge in Beirut. (Arab News/Maysaa Ajjan)
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Updated 31 July 2021

Mining in the dark: how Lebanese crypto miners are dealing with the electricity crisis

Mining in the dark: how Lebanese crypto miners are dealing with the electricity crisis
  • GPUs now mine $1-$5 of bitcoin every 4 hours vs. $10-$20 before power crisis
  • Mining rigs now powered by diesel

BEIRUT: Lebanese crypto miners are in trouble. Lebanon has plunged into near total darkness because of its recent electricity shortage crisis, leaving mining machines suspended mid-way in their operations and their owners writhing over their financial losses.

In the last two years, a growing number of Lebanese youths have turned to trading and mining cryptocurrency in a desperate attempt to gain financial freedom and secure the much-needed remittances of USD cash. This movement was spurred by distrust of the Lebanese banking sector, which has all but swallowed up people’s life savings.

Today, the electricity crisis constitutes a thorny problem for crypto miners who have invested a fortune in buying mining machines that were supposed to function 24/7, mining as many cryptocurrencies as possible.

“Before the electricity crisis, each GPU (Graphics Processing Unit) used to mine $10-$20 worth of bitcoin every four hours,” 34-year-old electrician Alaa Ayash, who is the co-owner of a gaming-turned-mining lounge in Mar Elias, Beirut, told Arab News. “Now they mine about $1-$5, almost a quarter of what they used to.”

What exactly happens when a mining machine is turned off due to an electricity shortage?

Put simply, mining is the process of getting rewarded for solving complex computational math problems with chosen cryptocurrencies such as bitcoin. The miners are actually being rewarded for completing a secure transaction using the blockchain. There is value to solving these problems because otherwise, there would be no way to securely exchange bitcoins. The transaction, however, stops when the electricity is cut off and there is a huge chance that the miners will not be rewarded with their bitcoins.

How are miners in Lebanon dealing with the electricity shortage?

Their first option is to rely on generators that run on diesel. These generators are effective in supplying the GPUs with electricity- until the diesel runs out, another thorny problem.

This comes after Lebanon has recently agreed to partially lift government subsidies on all kinds of fuel in a bid to ease their shortage. This also meant a significant increase in cost to the consumers who can no longer obtain fuel at the official exchange rate of 1,500 Lebanese pounds to the dollar, but instead must resort to the black market and bargain with fuel importers.

“One gallon of diesel used to cost around 30,000 Lebanese pounds,” said Ali Mortada, a Syrian janitor who is responsible for securing diesel to the building he works for. “Now it costs somewhere between 100,000 pounds and 150,000 pounds in the black market, if not more.”

“We used to pay 1,000,000 pounds monthly for the generator for our gaming lounge, with 12 GPUs included,” Ayash said. “Now we pay 3,000,000 pounds, sometimes more, because diesel is so expensive.”

Another issue that cannot be overlooked is the fact that crypto-mining is an overwhelmingly energy-hungry process that often consumes much more electricity than a generator can cover. In May, Iran blamed major power outages on illegal bitcoin mining and banned the latter after it was confirmed that 4.5 percent of all bitcoin mining this year has taken place in the Persian country. One wonders if Lebanese miners would share a similar fate.

Are there any substitutes for diesel when the fuel runs out?

There are two substitutes: UPS (Uninterruptible Power Supply) and computer batteries. The former device allows a computer to keep running for a short time when its primary power source is lost while providing protection from power surges. Meanwhile the batteries supply energy for two-to-three hours. Both devices can be purchased from local and international manufacturers (mainly China), but because of skyrocketing demand on behalf of crypto miners and dealers, they are constantly in short supply.

“Demand for UPS and batteries have certainly soared at our company,” said an employee who works at a Lebanese hardware manufacturing company. The employee wished to remain anonymous.

“We used to have orders of about three containers of UPSs per week, and now our orders are up to 12 containers a week. We can’t keep up with all that supply.” The employee added that she was worried that very high demand may translate to an increase in hardware prices, as was the case with GPUs in the last two years.

“Customers used to be able to import GPUs from the US for $300 in 2019. Now the prices are bordering $1,200 per GPU,” she said. “Everything is getting more expensive for mining. I wonder if it’s worth it.”

Indeed, if one were to add up the many costs of mining mentioned in this article and compare them to the meager income of $5 every four hours (as mentioned above), the numbers certainly don’t add up.

“I wish I wasn’t so hasty in my insistence to risk everything I have and give mining a shot,” said 28-year-old Sary Mohsen. Mohsen had sold two iPhones in order to buy two GPUs. “I joined a mining pool three months ago, right before bitcoin crashed, and things have been downhill ever since.”

Indeed, bitcoin’s decline in the past few months saw its value more than halve since its April peak of $63,745, falling below $30,000 on July 21. Bitcoin has since rebounded and was trading at $41,695 on July 31.

Another source of worry for miners who want to cash out but fear they will be missing out if bitcoin’s value rises again.

“I’m glad I cashed out my bitcoin when it was at its peak in [April],” a miner who goes by the gaming nickname Commando1 told The New Arab. “Today all bitcoin owners have no choice but to wait and hope bitcoin’s value rises again. I don’t envy their situation.”

If anything is keeping the youth in Lebanon hopeful about mining, it’s desperation and fear from the looming specter of unemployment and financial crisis. Whether all their efforts to keep their mining boat afloat turns out to be worth it, however, remains to be seen.


Rise in gas prices add to near-term inflation: Capital Economics

Rise in gas prices add to near-term inflation: Capital Economics
Updated 22 September 2021

Rise in gas prices add to near-term inflation: Capital Economics

Rise in gas prices add to near-term inflation: Capital Economics
  • European countries likely to be most affected

RIYADH: A surge in natural gas prices is expected to jack up inflation worldwide with Europe likely to be most affected, said a Capital Economics report.

The report said unreasonable and extreme weather conditions led to longer periods of cooling and heating and China’s rebound from the pandemic also boosted gas demand. On the other hand, extreme weather and the pandemic-related price collapse in 2020 hit US production and exports. Outages at several liquefied natural gas plants and Russia limiting exports via Ukraine for political reasons caused an imbalance in the supply and demand, which raised gas prices globally.

The most pronounced impact has been in the euro zone, where the rise in gas and electricity inflation has added 0.5ppts to headline CPI inflation since the start of the year.

“Since the start of Q2, the European (TTF) gas price has surged by 290 percent, Asia LNG spot prices are up 260 percent and US natural gas (Henry Hub) has nearly doubled,” the report said.

In the US, higher gas and electricity inflation has added just 0.2ppts to CPI inflation this year given the less pronounced rise in US gas prices and the lower weight of gas and electricity in the CPI basket. Japan has experienced a boost of 0.4ppts, as its gas imports are tied to long-term contracts indexed to oil prices. It’s a similar story in many emerging markets where gas prices tend to be tied to long-term contracts and/or indexed.

“We think natural gas prices will remain elevated for some time yet. Globally, but particularly in Europe, stocks are at historic lows and will take some time to rebuild even if we are right and supply picks up,” wrote  Jennifer McKeown, head of Global Economics Service.

The analyst, however, predicted that by Q2 2022 prices will be under sustained downward pressure.

Current prices will incentivize supply, particularly in the US where shale operations can ramp up relatively quickly. The situation will probably also hasten the approval of the Nord Stream II pipeline from Russia to Germany. Prevailing prices are likely to curb demand, the report said.

The passthrough is likely to be far smaller since governments are already acting to limit the effect on consumers.

According to McKeown, gas and electricity inflation is likely to surge by 16 percent to add an average of 0.3ppts to headline inflation in major advanced economies in the rest of this year, on top of the 0.3ppt boost which they have experienced already. “This should reverse next year, particularly given our expectation that gas prices will recede. But there are risks in both directions, and gas prices are notably volatile,” she said.

The report said there will be a drag on activity in most economies as higher utilities prices eat into the income available for discretionary spending. There could also be adverse consequences for the energy industry, particularly in countries where prices are regulated – most notably the UK, it added.


Almarai cuts emissions, increases use of solar power by 119%

Almarai cuts emissions, increases use of solar power by 119%
Updated 22 September 2021

Almarai cuts emissions, increases use of solar power by 119%

Almarai cuts emissions, increases use of solar power by 119%

JEDDAH: Saudi Arabia leading multinational dairy company Almarai has taken several steps to reduce emissions and increased the use of solar energy by 119 percent, according to its annual Sustainability Report 2020.

The Tadawul-listed company has reduced car fuel consumption in its sales, distribution and logistics department by 4 percent as compared to 2019. According to the report, clean energy accounted for 2.5 percent of the total power consumption, which is 4.4 percent within the sustainability strategy’s limits.

“Climate change can pose risks to agricultural production,” said Abdullah Al-Otaibi, head of corporate communication and public relations at Almarai. He said in order to fight climate change the company is taking measures to ensure sustainable growth.

Al-Otaibi said their energy strategy is based on solar power generation, increasing operational efficiency and energy monitoring efficiency, and improving the energy culture in pastures.


Saudi group wins Subway master franchise deal in UAE

Saudi group wins Subway master franchise deal in UAE
Updated 21 September 2021

Saudi group wins Subway master franchise deal in UAE

Saudi group wins Subway master franchise deal in UAE
  • In Europe, Middle East, and Africa, Subway plans to double its number of restaurants across the region in the coming years

DUBAI: Saudi Arabia’s Kamal Osman Jamjoom Group on Tuesday signed a master franchise agreement with Subway in the UAE as the restaurant brand seeks to expand its footprint in the region.

The deal marked the start of a new chapter for Subway in the UAE as it seeks to expand its footprint and remain competitive in the market.

“Subway is making bold and impressive changes to continue to grow its presence in markets around the world,” said Hisham Al-Amoudi, Group CEO of Kamal Osman Jamjoom Group.

“As Subway continues to expand internationally, we are focused on attracting well-established, large-scale operators in regions where they can leverage market expertise to help our brand thrive,” said CEO John Chidsey.

Established in 1987, Kamal Osman Jamjoom Group is a major franchise industry player in the Middle East with 675 stores across seven countries, making it one of the largest franchise networks in the region. They are a valued partner to some of the world’s most iconic brands, such as The Body Shop, LEGO, and Early Learning Center.

The group’s “deep knowledge of the Middle East and experience strengthening and expanding other global franchisee brands makes them the ideal partner in the UAE,” Mike Kehoe, EMEA president at Subway.

In Europe, Middle East, and Africa, Subway plans to double its number of restaurants across the region in the coming years and will continue to seek strong partners to support the brand on its journey.

The agreement will enable significant growth in the UAE in the coming years  including accelerated deployment of restaurant remodels — featuring a new, modern “Fresh Forward” design — as well as improved, consistent guest experiences, both on- and off-premise.


Saudi team’s performance at robotics summit to pave way for more progress

Saudi team’s performance at robotics summit to pave way for more progress
Updated 21 September 2021

Saudi team’s performance at robotics summit to pave way for more progress

Saudi team’s performance at robotics summit to pave way for more progress

RIYADH/JEDDAH: As the Saudi team secured sixth place in a contest at the World Robot Summit held in Japan, the chief of the Research Products Development Co. (RPDC) expressed optimism over Kingdom’s plan to promote artificial intelligence and build a strong robotics base in the Kingdom.

Abdulmohsen Al-Majnouni told Arab News that it was a major accomplishment as the Kingdom “is building its capabilities” to bring about the Fourth Industrial Revolution.

The company is owned by Taqnia, a subsidiary of the Public Investment Fund. Officials of the Research Products Development Co. led the Saudi robotics team, which competed with 16 other countries at the summit and qualified for the final contest.

“Inspired by the Kingdom’s Vision 2030, our national robotics team of young men and women, under the leadership of Dr. Nahid Sidki, the chief technology officer of RPDC, reached the final competition. The journey to the summit included qualification round of 119 international teams where 16 teams managed to reach the finals in the industrial challenge,” he said.

According to Saudi Minister of Communications and Information Technology Abdullah Alsawaha, advanced technology from the Fourth Industrial Revolution is expected to generate around SR1 trillion for the Saudi economy in new revenue streams.

The Kingdom will enjoy economic boosts from robotics, artificial intelligence, and wireless production models as it pushes for smarter cities and infrastructure.

“This accomplishment is inspiring to both our young men and women and to our leadership. We do not need to wait until 2030 to start achieving our targets. They are closer than many (people) think. With the government's support, we can start building amazing capabilities in robotics and AI and transform the Kingdom into a highly competitive economy,” said RPDC COO Dr. Mashal Al-Harbi. 

The secret to achieving the target, he said, is to find “passionate, dedicated and smart talent, engaging them in challenging projects for hands-on experience and supporting them with the needed resources and guidance to unlock their full potential.”

The World Robot Summit is supported by Japan’s Ministry of Economy, Trade and Industry; and the Energy Industrial Technology Development Organization. It aims to expedite the development of robotics and AI technologies to support the Fourth Industrial Revolution. 

“They open it up to the world to inspire young men and women to solve a very challenging problem. We managed to develop an innovative architecture to address the challenge and our talented team worked hard for almost two years despite the COVID-19 lockdown and the many challenges we faced,” said Sidki.

“The accomplishment is a reminder to our young talent that only through the dedication and hard work we can accomplish what others consider impossible,” he said.

“My message to Saudi young men and women is to follow your dreams and unlock your full potential and don’t let fear drive your ambition. Moving forward, we expect Saudi Arabia’s young talent to be major competitors in international AI and Robotics competitions,” the company’s chief technology officer said.


Egypt’s sovereign fund eyes investment in fintech sector

Egypt’s sovereign fund eyes investment in fintech sector
Updated 21 September 2021

Egypt’s sovereign fund eyes investment in fintech sector

Egypt’s sovereign fund eyes investment in fintech sector

RIYADH: The Sovereign Fund of Egypt is exploring investment opportunities in the fintech sector with a focus on small and medium projects, Ayman Suliman said in a CNBC Arabiya interview.

Talking about investments in other sectors, the chief executive officer of the fund said the tourism sector represents 20-20 percent of the fund's total investments.

Suliman also mentioned the fund’s plans to transform the historic Bab Al-Azab area in Cairo’s Salah Al-Din Al-Ayoubi Citadel into the first integrated innovation zone in the Middle East and North Africa.  

He said several projects in the health sector are also being studied such as the expansion of pharmaceutical exports.

“The health sector is a mainstay in the fund’s investment portfolio,” the CEO added.

The fund aims to attract private investments in Egypt’s underutilized assets and create wealth for future generations and boost the country’s economic growth.