It takes a lot of money to keep a business going. Ahmad Abu Daher and his team of more than 40 employees from Lebanon and Syria are working around the clock to man thousands of machines.
We can't sleep Abu Daher said that they couldn't have any break. My team is still asleep. They don't sleep We work 16 hours per day and sometimes up to 19 hours.
Money has stopped making sense in a country where Abu Daher's voice competes with the sound of machines in the background, each crunching thousands of complicated math equations to produce a mix ofcryptocurrencies.
The world's elite used to flock to Lebanon's thriving banking sector. After decades of war, bad spending decisions by the government, and financial policies that the World Bank has compared to Ponzi schemes, the country's economy is in ruin.
Locals in bankrupt Lebanon buy groceries with tether as $1 is now worth 15 cents.
Mining equipment at one of Ahmad Abu Daher’s crypto farms in Lebanon.Since the beginning of the year, the local currency has lost more than 85% of its value, the minimum wage has fallen to $17 a month, and bank account balances are meaningless. ATMs are usually out of cash or completely offline when there is a nationwide power failure. Many locals tell CNBC that when they gain access to their accounts, they withdraw 15% of their original worth.
Two years ago Abu Daher jumped into the business. He and a friend started with three machines running on hydroelectric power in Zaarouriyeh, a town 30 miles south of Lebanon.
It was Abu Daher's idea to make money while sleeping or eating. Abu Daher claims to be online for 20 hours a day.
An architect by training, Abu Daher saw several other university students unable to find work after graduation, so he had to be proactive, teaching himself various technical tasks.
Ahmad Abu Daher repairing mining equipment in the basement of a home in Zaarouriyeh.The business of Abu Daher has been around for 26 months.
In 42 villages across the country, he has between 5 and 100 machines that run on hydropower, solar power, and fuel. Half of Abu Daher's monthly income comes from mining and the other half comes from selling machines and trading in cryptocurrencies.
Abu Daher told CNBC that the figure was pieced together from trading, mining, and selling machines, as well as cash, checks, and tether.
Abu Daher looks like a mining baron.
When Ahmad pulled up in a white Range Rover to greet us and take us for a tour of the town, he was kind of impressed by what he saw. I was his teacher when he was in college and I knew him before that. He looked like he was being treated well.
A few black swan events took place on Abu Daher's side.
The market for used mining rigs and cheap ones was flooded in May of 2021. As prices climbed, this happened.
Abu Daher and his team started to build out their own farms across Lebanon with rigs acquired from miners in China. It wasn't always easy to pay for those machines.
Due to sanctions in Lebanon, the banking system and the inability to use dollars or wire money,USD tether is a key middleman currency between people in the Chinese hardware market to buyers in Lebanon.
Detailed administrative and political vector map of Lebanon.Half of Abu Daher's equipment can be found in the hydro-rich Chouf range, and the other half can be found in the Beqaa Valley, which is close to the Syrian border. The problem with solar is that it doesn't produce enoughmegawatts to mine at scale.
People living in Lebanon needed stable money but lacked technical expertise and access to cheap and steady electricity, so Abu Daher began to host rigs for them.
The boss seems to be sharing his profits with his workers. All of Abu Daher's 40 employees get a formal salary ranging from $800 to $4,000 per month in U.S. dollars or tether. The blacksmith makes more than the minimum wage in Lebanon.
In some cases, he has programmed the machines to switch to mine whichever coin is the most profitable on the day. TeamViewer is used to remotely monitor and keep track of all this hardware.
Abu Daher said that each coin has its own equations. It might be the best coin to own today, tomorrow, and the next day. We want to have the most profit we can.
Around two-thirds of his customers are from Lebanon, with some mining for doge coin or lite coin as a way to get spending money for daily expenses.
Abu Daher is the custodian of the machines, housing them, cooling them, and providing electrical power and internet access. He gives them a cut of the mining proceeds if they charge him a fee. He is asked to broker the equipment sale and install it by others.
Ahmad Abu Daher and his friend began mining ether with three machines running on hydroelectric power in Zaarouriyeh, a town 30 miles south of Beirut in the Chouf Mountains. Abu Daher has since scaled his business to thousands of machines spread across Lebanon.Unlike the massive mining farms of Texas that stack hundreds of thousands of machines into buildings the size of multiple football stadiums, Abu Daher prefers to spread out his electrical footprint, divvying up his thousands of miners in places like stores, basement, and apartments. Rent is paid in cash by Abu Daher. Abu Daher runs 15ASICs in what used to be a barbershop.
The town does not look like a mining town at first glance, but then you see the storefronts that are replacing traditional businesses and you get a better feeling. El Chamaa of some of the mines in the Chouf range said that one of Ahmad's farms used to be a barbershop and still has a mirror inside.
He said that the mining farms were not as impressive as the ones he had seen on TikTok, but that they got the job done.
Abu Daher wants to educate the locals about mining so he can keep his business going.
We are trying to get people in each village to learn about mining. We can't cover all the machines we have by my team because we have a lot of machines
AntMiner L3++ miners running at one of Ahmad Abu Daher’s crypto farms in Mghayriyeh in the Chouf Mountains.Money ceased to make sense in Lebanon in October. After a season of unrest triggered by an ill-advised taxation scheme and years of economic mismanagement, banks first limited withdrawals and then shut their doors completely.
The root of hyperinflation was found. The local currency was pegged to the dollar for 25 years. The banks refused to keep up with the depreciation and offered lower exchange rates for U.S. dollars than they were worth.
Anti-government protesters take part in a demonstration against the political elites and the government, in Beirut, Lebanon, on August 8, 2020 after the massive explosion at the Port of Beirut.According to estimates from multiple locals and experts living across Lebanon, each "lollar" is paid out at a rate of 15% of its actual value.
The full market-rate exchange rate is still offered by banks. These are referred to as "fresh dollars".
The power of earning fresh dollars is a huge incentive for Lebanon to enter mining.
Rawad El Hajj, a 27-year-old with a marketing degree, tells CNBC that his 11 machines mine for litecoin and dogecoin.Three years ago, Rawad El Hajj got to know about Abu Daher's mining operation through his brother.
There isn't enough work in Lebanon.
Two miners were purchased by El Hajj, who lives south of the capital in a city called Barja.
We went bigger and bigger every month.
The distance to Abu Daher's farms makes El Hajj pay to host and maintain the rigs. He tells CNBC that his machines bring in about $360 a month for lite coin and doge coin.
Salah Al Zaatare is an architect living in the coastal city of Sidon. In March of this year, Al Zaatare started mining doge coin and lite coin. He has 10 machines with him. The machines of Al Zaatare are newer than those of El Hajj, so he makes more money.
Al Zaatare thinks it will be a good investment for the future.
Al Zaatare decided to invest his life savings into mining equipment last year after pulling all of his money out of the bank.
Myriam Harfoush, a 32-year-old French teacher living in Baakleen, about a 45 minute drive south of Lebanon, said that he doesn't have any problem living in Lebanon because he is getting fresh dollars from mining.
She told CNBC in a message that she took all of her money out of the bank at the beginning of the crisis and now has mining machines in Zaarouriyeh. Harfoush only spoke to CNBC in written messages on the messaging app.
You get the money if you can get the machine and the power. It's possible to produce cryptocurrencies in your local context with the right expertise.
Overhead power lines transmit hydroelectricity to the surrounding towns.Proof-of-work is a process in which miners around the world run high-powered computers that collectively verify transactions and simultaneously create new coins. Because the process requires a lot of electricity, miners look for the cheapest sources of power.
The most competitive pricing on electricity is offered by renewable sources.
Nic Carter, a partner at Castle Island Ventures, said that it was a way to convert a local resource into a global one. One of the classic resources which tend to have a supply-demand mismatch is hydro.
Carter says dammed hydro can better accommodate fluctuations in demand and grid needs.
Helium machine mounted on top of a house in Lebanon.Carter said, "You often see these stranded or underutilized hydro resources being monetized part of the time with bitcoin mining."
The hydropower project harnesses electricity from the 90-mile Litani River in southern Lebanon. He says he gets 20 hours of electricity a day.
Abu Daher said that they were getting fresh dollars through mining.
The government is cracking down on electrical shortages.
Police raided a small mining farm in the town of Jezzine in January and took away mining rigs. The authority that oversees the country's hydroelectric sites said that it was training its resources and draining electricity.
Abu Daher doesn't worry about being raided or the government's proposal to raise the price of electricity.
He said that they did not have any issues with the police because they were taking legal electricity.
Abu Daher says that he has set up a meter that tracks how much energy his machines have used, whereas other miners have hitched their rigs to the grid illegally and aren't paying for power.
Electricity harnessed from the Litani River transmits electricity to the Charles Helou power station, which provides enough electricity to power the mining farms in the area.A lot of other people are having problems because they are not paying for electricity.
Abu Daher wants to create a closed energy loop for his mining farms. He envisions a system in which the heat generated by the machines is harnessed and used to power the miners, as well as to heat homes and hospitals in the villages where the mines are located.
We used to buy mining machines instead of buying fuel. Abu Daher has a grand vision for the future of coin mining in Lebanon.
Ahmad Abu Daher repairing mining equipment in the basement of a home in Zaarouriyeh.
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