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

  • 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.


Google to pay $90 million to settle legal fight with app developers

Updated 01 July 2022

Google to pay $90 million to settle legal fight with app developers

  • Some 48,000 app developers are eligible to apply for the $90 million fund, if the court approves the proposed settlement

WASHINGTON: Alphabet Inc’s Google has agreed to pay $90 million to settle a legal fight with app developers over the money they earned creating apps for Android smartphones and for enticing users to make in-app purchases, according to a court filing.
The app developers, in a lawsuit filed in federal court in San Francisco, had accused Google of using agreements with smartphone makers, technical barriers and revenue sharing agreements to effectively close the app ecosystem and shunt most payments through its Google Play billing system with a default service fee of 30 percent.
As part of the proposed settlement, Google said in a blog post it would put $90 million in a fund to support app developers who made $2 million or less in annual revenue from 2016-2021.
“A vast majority of US developers who earned revenue through Google Play will be eligible to receive money from this fund, if they choose,” Google said in the blog post.
Google said it would also continue to charge a 15 percent commission to developers who make $1 million or less annually from the Google Play Store. It started doing this in 2021.
The court must approve the proposed settlement.
There were likely 48,000 app developers eligible to apply for the $90 million fund, and the minimum payout is $250, according to Hagens Berman Sobol Shapiro LLP, who represented the plaintiffs.
Apple Inc. agreed last year to loosen App Store restrictions on small developers, striking a deal in a class action. It also agreed to pay $100 million.
In Washington, Congress is considering legislation that would require Google and Apple to allow sideloading, or the practice of downloading apps without using an app store. It would also bar them from requiring that app providers use Google and Apple’s payment systems. 


 


SpaceX’s Starlink Internet gets US regulator’s nod for use with ships, boats, planes

Updated 01 July 2022

SpaceX’s Starlink Internet gets US regulator’s nod for use with ships, boats, planes

  • SpaceX has steadily launched some 2,700 Starlink satellites to low-Earth orbit since 2019
  • It has amassed hundreds of thousands of subscribers, including many who pay $110 a month for broadband Internet

WASHINGTON: The US Federal Communications Commission on Thursday authorized Elon Musk’s SpaceX to use its Starlink satellite Internet network with moving vehicles, green-lighting the company’s plan to expand broadband offerings to commercial airlines, shipping vessels and trucks.
Starlink, a fast-growing constellation of Internet-beaming satellites in orbit, has long sought to grow its customer base from individual broadband users in rural, Internet-poor locations to enterprise customers in the potentially lucrative automotive, shipping and airline sectors.
“Authorizing a new class of terminals for SpaceX’s satellite system will expand the range of broadband capabilities to meet the growing user demands that now require connectivity while on the move,” the FCC said in its authorization published Thursday, echoing plans outlined in SpaceX’s request for the approval early last year.
SpaceX has steadily launched some 2,700 Starlink satellites to low-Earth orbit since 2019 and has amassed hundreds of thousands of subscribers, including many who pay $110 a month for broadband Internet using $599 self-install terminal kits.
The Hawthorne, California-based space company has focused heavily in recent years on courting airlines around Starlink for in-flight WiFi, having inked its first such deals in recent months with Hawaiian Airlines and semi-private jet service JSX.
“We’re obsessive about the passenger experience,” Jonathan Hofeller, Starlink’s commercial sales chief, said at an aviation conference earlier this month. “We’re going to be on planes here very shortly, so hopefully passengers are wowed by the experience.”
SpaceX, under an earlier experimental FCC license, has been testing aircraft-tailored Starlink terminals on Gulfstream jets and US military aircraft.
Musk, the founder and CEO of SpaceX, has previously said that the types of vehicles Starlink was expected to be used with pursuant to Thursday’s authorization were aircraft, ships, large trucks and RVs. Musk, also the CEO of electric car maker Tesla Inc, had said he didn’t see “connecting Tesla cars to Starlink, as our terminal is much too big.”
Competition in the low-Earth orbiting satellite Internet sector is fierce between SpaceX, satellite operator OneWeb, and Jeff Bezos’s Kuiper project, a unit of e-commerce giant Amazon.com which is planning to launch the first prototype satellites of its own broadband network later this year. 

 


Bitcoin falls below $19,000, further shaking crypto markets

Updated 01 July 2022

Bitcoin falls below $19,000, further shaking crypto markets

Bitcoin dropped 6.1% to $18,866.77 at 2004 GMT on Thursday, putting the biggest and best-known cryptocurrency down $1,226.41 from its previous close and down 60.9% from the year's high of $48,234 on March 28.
Several big players in the cryptocurrency markets have had difficulties, and further declines could force other crypto investors to sell holdings to meet margin calls and cover losses.
Ether, the coin linked to the ethereum blockchain network, dropped 7.5% to $1,016.08 on Thursday, losing $82.38 from its previous close.
Both digital assets have struggled since U.S. based lender Celsius Network this month said it would suspend withdrawals. Bitcoin and ether were further rattled by the apparent insolvency of crypto hedge fund Three Arrows Capital, which a person familiar with the matter told Reuters has entered liquidation.
Many of the industry's recent problems can be traced back to the spectacular collapse of so-called stablecoin TerraUSD in May, which saw the stablecoin lose almost all its value, along with its paired token. (Reporting by Mrinmay Dey in Bengaluru and Hannah Lang in Washington; Editing by David Gregorio)

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Crypto rules to make Europe global leader as prices plunge

Updated 01 July 2022

Crypto rules to make Europe global leader as prices plunge

  • EU to subject cryptocurrency transfers to money laundering rules

RIYADH: Europe prepares to lead the world in regulating the cryptocurrency industry at a time when prices have plunged, wiping out fortunes, fueling skepticism and sparking calls for tighter scrutiny.

The EU took a first step late Wednesday by agreeing on new rules subjecting cryptocurrency transfers to the same money laundering rules as traditional banking transfers.

A much bigger move was expected as EU negotiators hammer out the final details late Thursday on a separate deal for a sweeping package of crypto regulations for the bloc’s 27 nations, known as Markets in Crypto Assets, or MiCA.

Like the EU’s trendsetting data privacy policy, which became the de facto global standard, the crypto regulations are expected to be highly influential worldwide.

The EU rules are “really the first comprehensive piece of crypto regulation in the world,” said Patrick Hansen, crypto venture adviser at Presight Capital, a venture capital firm.

Patrick Hansen, analyst

“I think there will be a lot of jurisdictions that will look closely into how the EU has dealt with it since the EU is first here,” Hansen said.

He expected authorities in other places, especially smaller countries that don’t have the resources to draw up their own rules from scratch, to adopt ones similar to the EU’s, though “they might change a few details.”

Companies issuing or trading crypto assets such as stablecoins face tough transparency requirements requiring them to provide detailed information on the risks, costs and charges that consumers face.

Providers of bitcoin-related services would fall under the regulations, but not bitcoin itself, the world’s most popular cryptocurrency that has lost more than 70 percent of its value from its November peak.

Russia probes 400 cases

The Federal Financial Monitoring Service of the Russian Federation is trying to detect around 400 cases in which cryptocurrencies are involved, the agency’s director, Yury Chikhanchin, revealed the number during a meeting with President Vladimir Putin.

Russian law enforcement authorities have already initiated 20 criminal cases related to digital assets, Bitcoin.com reported.

Chikhanchin acknowledged that Russians continue to actively use cryptocurrency platforms located outside the country.

“This phenomenon continues to exist. And only on two foreign sites, two exchanges, several hundred thousand Russian citizens participate in transactions worth tens of billions,” he said.

According to official data released earlier this year, the number of lawsuits related to cryptocurrency mining in Russia exceeded 1,500 in 2021.

$100 million crypto hack

Digital investigative firms have concluded that North Korean hackers are most likely responsible for an attack last week that took as much as $100 million in cryptocurrency from a US company, according to Reuters.

Cryptocurrency assets were stolen on June 23 from Horizon Bridge, a service provided by Harmony blockchain that transfers assets between blockchains. The hackers’ activity since then suggests they may be affiliated with North Korea, which experts say is among the most prolific cyberattackers.

The UN sanctions monitors say Pyongyang uses the stolen funds to finance its nuclear and missile programs.

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Fitch cuts view on global sovereign debt over rise in borrowing costs

Updated 01 July 2022

Fitch cuts view on global sovereign debt over rise in borrowing costs

LONDON: Credit rating agency Fitch downgraded its view on sovereign debt on Thursday on concerns about the rise in global borrowing costs and the potential for a flurry of new defaults.

Fitch, which monitors over 100 countries, said the Ukraine-Russia war was stoking problems such as higher inflation, trade disruptions and weaker economies which are all now hurting sovereign credit conditions.

“Rising interest rates are increasing government debt-servicing costs,” Fitch’s Global Head of Sovereigns, James McCormack, said, cutting the firm’s view on the sovereign sector to “neutral” from “improving.”

“Most exposed are emerging market (EM) sovereigns, but some highly indebted developed markets are at risk as well, including in the eurozone.” The number of countries seeing their credit ratings cut has begun to rise again this year as the pressures have built.

Most of the governments Fitch covers have either brought in subsidies or cut tax cuts to try to cushion the impact of surging inflation. But that carries costs.

“While modest fiscal deteriorations can be absorbed by the positive effects inflation has on government debt dynamics, such effects depend on the retention of low interest rates, which are now less certain,” McCormack said.

While commodity exporters will benefit from higher prices, those who have to import the bulk of their energy or food will suffer.

Gross external funding needs will be highest this year in both nominal terms and relative to foreign exchange reserves for EM sovereigns that are net importers of commodities, McCormack added.

“They now face tighter global funding conditions, and with a record-high share of sovereigns rated in the ‘B’ category or lower, it is likely there will be additional defaults.”

The list of countries either in default or whose financial market bond yields suggest they will be currently stands at a record 17.

Those 17 are Pakistan, Sri Lanka, Zambia, Lebanon, Tunisia, Ghana, Ethiopia, Ukraine, Tajikistan, El Salvador, Suriname, Ecuador, Belize, Argentina, Russia, Belarus and Venezuela.

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