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.


Turkish industry copes with abrupt cut of gas flow from Iran

Gas flares from an oil production platform at the Soroush oil fields in the Persian Gulf, south of the capital Tehran. (REUTERS file photo)
Gas flares from an oil production platform at the Soroush oil fields in the Persian Gulf, south of the capital Tehran. (REUTERS file photo)
Updated 25 January 2022

Turkish industry copes with abrupt cut of gas flow from Iran

Gas flares from an oil production platform at the Soroush oil fields in the Persian Gulf, south of the capital Tehran. (REUTERS file photo)
  • Authorities should have taken necessary steps beforehand, energy expert tells Arab News
  • Record high losses for manufacturing facilities and disruption in export commitments feared

ANKARA: Following a decision by Iran to cut gas flows to Turkey last week, Ankara began ordering gas-fuelled power plants to decrease their gas use by 40 percent as of Monday.

The sudden move emphasized the need to diversify energy suppliers for the country. Households, schools and hospitals are, for now, exempt from the measures.

Iran’s natural gas consumption recently hit a record high at about 692 million cubic meters per day in households, commercial and smaller industries mainly because of harsh winter conditions, but the country cited a gas leak in a Turkish station for the disruption of exports to Turkey for up to 10 days.

Turkey is no exception to the record highs of daily gas consumption, which reached around 288 million cubic meters on Jan. 19.

Turkey is almost fully dependent on imported gas from Iran, Azerbaijan and Russia, while Iran alone provided about 16 percent of the country’s natural gas needs last year.

The decision worried several industrial representatives, as it did not discriminate between sectors with cold storage rooms or furnaces.

FASTFACT

Turkey is almost fully dependent on imported gas from Iran, Azerbaijan and Russia.

“Such a gas cut means greater financial loss for some key sectors such as glass, medicine and ceramic factories as well as those producing meat and dairy products,” Mehmet Ogutcu, a former diplomat and currently the president of London Energy Club, told Arab News.

The sectors that use the most electricity, namely the iron and steel sector, and the clothing industry, are expected to record high losses and will face disruption in export commitments.    

“The production could be at risk if the interruption continues to grow in the coming days,” Ogutcu said.

“It will damage the economy and industrial production especially at a time when exports and production were accelerating.”

Companies in industrial zones were notified of the three-day restriction on Friday and will be allowed to use gas only on allotted days.

The prospect of electricity cuts to industrial sites is also on the horizon, and might affect households as well, although gas prices have become discouraging for citizens, as they increased by 25 percent for residential use and 50 percent for industrial use in January.

Turkey’s domestic gas consumption rate increased from 48 billion cubic meters to 60 billion in a year, while there are some 18 million natural gas subscribers across the country.

“I have repeatedly warned about a potential outage for the last six months. It also happened in the European countries,” Ogutcu said.

“Turkey should have taken necessary measures beforehand when the first signs appeared.”

According to Ogutcu, Turkey either had to decrease gas demands and simultaneously develop plans to increase energy efficiency, or develop alternative energy resources like liquefied natural gas.

Turkey imports LNG from the US, Morocco, Qatar and Nigeria, but it still remains much more expensive than natural gas imports for Ankara.

About a third of Turkey’s natural gas needs are currently met through LNG deliveries.

“There are ongoing projects in the Black Sea for gas discoveries with some drilling testing. But it will take at least seven or eight years to reap the benefits of that project,” Ogutcu said.

Turkey’s 405 billion cubic meter gas discoveries in the Black Sea were accepted as the largest offshore gas discovery in the world in 2020.

Similar gas supply cuts have happened in the past, but did not result in power outages in the industrial sector on such a great scale.

Experts emphasized the need to learn lessons from this latest crisis and to design alternative energy sources.

Turkish President Recep Tayyip Erdogan recently announced that Turkey is still interested in transporting Israeli gas to Europe — a potential step to diversify much-needed gas sources.

Last week, a blast in the southeastern province of Maras resulted in another disruption in the flow of crude oil through the Kirkuk-Ceyhan pipeline.

“In the past decade, Turkey has succeeded in further diversifying its energy sources with more energy suppliers, the growing use of LNG and renewables,” Gallia Lindenstrauss, a senior research fellow at the Institute for National Security Studies in Israel, told Arab News.

“The first unit in the Rosatom-built nuclear power plant in Akkuyu is expected to be operational in 2023 and Turkey has discovered gas reserves in the Black sea that will be another future source of energy.”

According to Lindenstrauss, the problem today is less related to the issue of diversification and more to the sharp devaluation of the Turkish lira alongside rising energy prices, which translates into difficulties for the purchase of LNG.

“Obviously, Turkey would also benefit if it were able to sign contracts to import gas, or be a transit route for gas, from the Eastern Mediterranean, but this has not been possible until today mainly because of political reasons,” she said.

Even in the unlikely scenario that neighboring states overcome the hurdles between them, Lindenstrauss thinks that it is still only part of the solution to Turkey’s growing energy needs, and short-term energy shortage problems from time to time will be a recurring problem.

This year, Turkey’s natural gas storage capacity has reached 3.8 billion cubic meters.


Kuwait estimates 74.2% decrease in deficit according to a budget draft report

Kuwait estimates 74.2% decrease in deficit according to a budget draft report
Updated 24 January 2022

Kuwait estimates 74.2% decrease in deficit according to a budget draft report

Kuwait estimates 74.2% decrease in deficit according to a budget draft report
  • The Kuwaiti Ministry of Finance expects a budget deficit decrease by 74.2 percent from previous year

Riyadh: The Kuwaiti Ministry of Finance submitted on Monday a budget draft report for 2022-2023 fiscal year, with an expected deficit of 3.1 billion dinars ($10.26 billion), decreasing 74.2 percent from previous year, according to a Reuters report citing a ministry statement. 

The report also stated that the OPEC member country expects oil income of 16.7 billion dinars during the fiscal year ending in March 2023, an increase of 83.4 percent from 2021-2022.

Total revenues are estimated at 18.8 billion dinars and expenditures at 21.9 billion dinars in the 2022-2023 fiscal year.


Tesla countersues JPMorgan over contract affected by Musk tweet

Tesla countersues JPMorgan over contract affected by Musk tweet
Updated 24 January 2022

Tesla countersues JPMorgan over contract affected by Musk tweet

Tesla countersues JPMorgan over contract affected by Musk tweet
  • Tesla Inc. fought back on Monday against JPMorgan Chase & Co over a disputed bond contract

NEW YORK: Tesla Inc. fought back on Monday against JPMorgan Chase & Co over a disputed bond contract, countersuing the bank for seeking a “windfall” following Chief Executive Elon Musk’s notorious 2018 tweet that he might take his electric car company private.

In a court filing, Tesla accused JPMorgan of “bad faith and avarice” for claiming it was owed $162.2 million after unilaterally changing the terms of warrants it received when Tesla sold convertible bonds in 2014.

By changing the terms, “JPMorgan dealt itself a pure windfall,” Tesla said in its countersuit filed in Manhattan federal court.

“JPMorgan pressed its exorbitant demand as an act of retaliation against Tesla both for it having passed over JPMorgan in major business deals and out of senior JPMorgan executives' animus toward Mr. Musk,” it added.

A bank spokesman, Brian Marchiony, said in an email: “There is no merit to their claim. This comes down to fulfilling contractual obligations.”

The countersuit escalates the battle between the largest U.S. bank and world’s most valuable car company, which have done little business with each other since the disputed contract.

Warrants give holders the right to buy company stock at a set “strike” price and date.

In its Nov. 15 lawsuit JPMorgan said Musk’s Aug. 7, 2018 tweet that he might take Tesla private and had “funding secured,” and his abandoning that plan 17 days later, created share price volatility to justify lowering the strike price on its warrants.

JPMorgan accused Tesla of defaulting because it failed to hand over shares or cash when the warrants expired in June and July 2021, by which time Tesla’s share price had risen about 10-fold.

In its countersuit, Tesla accused JPMorgan of having “put its thumb on the scale” to demand even more money, after already receiving a “multibillion-dollar payout” because of the soaring stock price.

Musk’s tweets resulted in a U.S. Securities and Exchange Commission civil lawsuit that ended in $20 million fines against both him and Tesla and forced him to give up Tesla's chairmanship.

Tesla’s lawsuit seeks unspecified damages.


IKTVA contributed $100bn to Saudi Arabia economy: Aramco Chairman

IKTVA contributed $100bn to Saudi Arabia economy: Aramco Chairman
Updated 24 January 2022

IKTVA contributed $100bn to Saudi Arabia economy: Aramco Chairman

IKTVA contributed $100bn to Saudi Arabia economy: Aramco Chairman

RIYADH: IKTVA has contributed around SR375 billion ($100 billion) into Saudi Arabia’s economy since its inception in 2015, Chairman of Aramco, Yasir Al-Rumayyan spoke at IKTVA 2022 Forum and Exhibition on Monday.

Capital expenditure attracted by the program’s investments were estimated at $7 billion which created a competitive industrial base enabling the Kingdom to export to more than 40 countries, according to his statement.

Larger volumes and more varied products labeled ‘Made in Saudi Arabia’ are being created now in the Kingdom, as the localization of goods by IKTVA is creating a supportive ecosystem to the Kingdom’s industrialization efforts, he added.

One of the program’s achievements is establishing a hub to pioneer new technologies and services in the non-metallic industry, which is expected to contribute $10 billion to the Kingdom’s GDP by 2030, Al-Rumayyan said. Whereas Aramco suppliers have quadrupled their R&D spend in the Kingdom, from $21 million to $91 million, providing a catalyst for innovation within the Kingdom.

Fifty percent more Saudis were employed by IKTVA, making one out of every four people working in Aramco’s supply chain a Saudi. The number of female employees working in the supply chain more than doubled, he added.

The program aims at reaching Vision 2030 goals of economic diversification and industrialization by focusing on both conventional sectors including energy, chemicals and mining, as well as emerging business sectors including Fourth Industrial Revolution technologies, logistics and services. 


Dubai stocks sees biggest fall in over a month after Houthi attack intercepted

Dubai stocks sees biggest fall in over a month after Houthi attack intercepted
Updated 24 January 2022

Dubai stocks sees biggest fall in over a month after Houthi attack intercepted

Dubai stocks sees biggest fall in over a month after Houthi attack intercepted
  • Most stock markets in the Gulf ended lower on Monday

Dubai: Most stock markets in the Gulf ended lower on Monday, in line with global shares, while the Dubai index saw its biggest fall in over a month as the United Arab Emirates intercepted another attack by the Houthis.

Dubai’s main share index declined 2 percent, dragged down by a 3.5 percent drop in blue-chip developer Emaar Properties and a 1.9 percent fall in top lender Emirates NBD.

The United Arab Emirates on Monday said it had foiled another Houthi missile attack following last week’s deadly assault on the Gulf state as the Iran-aligned group takes aim at the safe haven status of the region’s tourism and commercial hub.

The Abu Dhabi index eased 0.1 percent, with conglomerate International Holding losing 0.6 percent.

 “Global markets are set to remain sensitive to fresh policy clues out of the Federal Reserve this week. Since the start of the new year, risk assets have been realigning with the more aggressive Fed rate hikes expected for 2022,” said Han Tan, chief market analyst at Exinity Group.

Saudi Arabia’s benchmark index fell 0.6 percent, hit by a 1.3 percent fall in Al Rajhi Bank and a 2.5 percent decline in Saudi National Bank.

The Saudi market continued its correction, after hitting its highest in over 15 years earlier this month, as investors try to secure their gains, said Wael Makarem, senior market strategist at Exness.

Crude prices, a key catalyst for the Gulf’s financial markets, rose on elevated geopolitical risks in Europe and Middle East.

Outside the Gulf, Egypt’s blue-chip index decreased 0.3 percent, with Commercial International Bank losing 0.4 percent.

SAUDI ARABIA     down 0.6% to 12,068
ABU DHABI                down 0.1% to 8,701
DUBAI                  down 2% to 3,147
QATAR                up 0.3% to 12,523
EGYPT                  down 0.3% to 11,616
BAHRAIN              down 0.3%  to 1,810
OMAN                   down 0.5% to 4,202
KUWAIT               down 0.2% to 8,000