Bitcoin mining in Lebanon earns this 22-year-old $20,000 a month

It takes a lot to keep a grassroots cryptocurrency mining business up and running in Lebanon. Ahmad Abu Daher says he and his team of more than 40 Lebanese and Syrian employees are working around the clock to man thousands of machines across the country.

“We can’t sleep. We can’t have any break,” the 22-year-old Abu Daher told CNBC at 2:36 A.M. Lebanon time. “All of my team are still awake. They don’t sleep. Our shift is working 16 hours per day, and sometimes, up to 18 or 19 hours.”

Abu Daher’s voice competes with the sound of machines whirring in the background, each crunching thousands of complicated math equations to produce a mix of crypto tokens – now a vital source of income in a country where money has stopped making sense. 

Lebanon once boasted a thriving and resilient banking sector that attracted the world’s elite. But after decades of war, bad spending decisions by the government, and financial policies that the World Bank has compared to a Ponzi scheme, the country’s economy is in ruin.

See also: In bankrupt Lebanon, locals mine bitcoin and buy groceries with tether, as $1 is now worth 15 cents

The local currency has lost more than 95{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} of its value since 2019, the minimum wage has plunged to $17 a month, pensions are virtually worthless, and bank account balances are just numbers on paper. Banks close without warning and ATMs are often either out of cash or entirely offline from nationwide blackouts. When locals are able to gain access to their accounts, many tell CNBC that they have grown accustomed to withdrawing money at 15{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} of its original worth. 

Against this backdrop, Abu Daher jumped into the crypto mining business a little over two years ago. He and a friend began with three machines running on hydroelectric power in Zaarouriyeh, a town 30 miles south of Beirut in the Chouf Mountains.

“When we started, it was our great idea to make money while sleeping or eating,” said Abu Daher. Nowadays, Abu Daher says he is online 20 hours a day.

An architect by training, Abu Daher saw several other university students unable to find work after graduation, so he realized he had to be proactive, teaching himself various technical tasks by watching YouTube videos.

It has been 26 months since Abu Daher first set up shop, and he says that business is thriving.

He now has about 400 crypto farms with between 5 and 100 machines each, in 42 villages across the country running on a mix of hydropower, solar power, and fuel. Abu Daher says that he pulls in about $20,000 a month, and typically, half of those proceeds come from mining and the other half from selling machines and trading in crypto.

When CNBC asked for crypto exchange statements and copies of bank balances to corroborate the estimate, Abu Daher said that the figure was pieced together from trading, mining, and selling machines, in a mix of transactions involving cash, checks, and tether, as well as multiple crypto wallets.

Abu Daher certainly has the trappings of a mining baron.

“When Ahmad pulled up in a white Range Rover to greet us and take us for a tour of the town, I was kind of impressed,” said Mohamad El Chamaa, a journalist at L’Orient Today who previously reported on Abu Daher’s crypto mines. “I had known him before Covid when he was a college student at the architecture department and I was his TA. It looked like the crypto business was treating him well.”

Abu Daher had a few black swan events on his side soon after he broke into crypto mining.

In May 2021, China expelled crypto miners, flooding the market with cheap, used mining rigs and reducing competition. This happened as cryptocurrency prices climbed toward all-time record highs.

Abu Daher mines for a mix of cryptocurrencies, including litecoin, dogecoin, bitcoin, and ethereum classic — and in some cases, he has programmed the machines to switch to mine whichever is the most profitable coin that day. He uses software called TeamViewer to remotely monitor and keep track of all this hardware.

“Each machine can mine many coins, and each coin has their specific equations,” explained Abu Daher. “Maybe today the best coin to mine is bitcoin, tomorrow it’s litecoin, and the day after that, it’s ethereum. We are always moving to have the most profit that we can.”

Around two-thirds of his customers are Lebanese, including some mining for bitcoin, dogecoin, or litecoin as a way to get spending money for daily expenses like fuel and food. One-quarter are Syrian, and the remaining 8{cfdf3f5372635aeb15fd3e2aecc7cb5d7150695e02bd72e0a44f1581164ad809} are a mix of people living in Egypt, Turkey, France, and the United Kingdom.

With some of his clients, Abu Daher is merely a custodian of the machines — housing them, cooling them, and providing steady electrical power and strong internet access. He charges a fee and in exchange, he gives them a cut of the mining proceeds in crypto. Others just ask him to broker the equipment sale and install it.

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, basements, and apartments, each with 10 to 20 machines, unless it’s a house where he can split up groupings of miners into different rooms. In exchange for the space, Abu Daher pays rent in cash. In what was once a barbershop, for instance, Abu Daher runs 15 ASICs.

“At first glance, the town does not look like much of what you would think a ‘mining’ town would look like, but then you look inside the storefronts that are replacing traditional businesses, and you get a better feeling. For example, one of Ahmad’s farms used to be a barbershop – there’s still a mirror inside and ads for beauty products – but make no mistake that it is a fully fledged mining farm,” said El Chamaa of some of the mines in the Chouf range.

He added that, “The mining farms themselves were not as impressive as the ones I’ve seen on TikTok, but my keen observation was that they get the job done either way.”

Now, Abu Daher is trying to educate the locals about mining, mainly because he needs the extra manpower to keep the business going.

“We are trying to let someone in each village learn about mining in the purpose to help us. We can’t cover all the machines we have by my team, because we have a huge amount of machines, and we are selling a huge amount of machines,” he said.

“It’s a way to convert a locally stranded resource (electricity) into a global commodity,” explained Nic Carter, a partner at Castle Island Ventures, which focuses on blockchain investments. “Hydro, especially run on the river, is one of those classic resources which tends to have a supply-demand mismatch.”

Dammed hydro can better accommodate fluctuations in demand and grid needs, whereas run-of-the-river hydro produces constantly, Carter tells CNBC.

“So you often see these stranded or underutilized hydro resources being monetized part of the time with bitcoin mining, as we saw infamously in Sichuan and Yunnan in China,” continued Carter.

Abu Daher taps into a hydropower project which harnesses electricity from the 90-mile Litani River that cuts across southern Lebanon. He says he is getting 20 hours a day of electricity at old pre-inflationary rates.

“So basically, we are paying very cheap electricity, and we are getting fresh dollars through mining,” continued Abu Daher.

But the government, facing electrical shortages, is starting to crack down.

In January, police raided a small crypto mining farm in the hydro-powered town of Jezzine, seizing and dismantling mining rigs in the process. Soon after, the Litani River Authority, which oversees the country’s hydroelectric sites, reportedly said that “energy intensive cryptomining” was “straining its resources and draining electricity.”

But Abu Daher tells CNBC he is neither worried about being raided — nor the government’s proposal to hike up the price of electricity.

“We had some meetings with the police, and we don’t have any problems with them, because we are taking legal electricity, and we are not affecting the infrastructure,” he said.

Whereas Abu Daher says that he has set up a meter that officially tracks how much energy his machines have consumed, other miners have allegedly hitched their rigs to the grid illegally and are not paying for power.

“Basically, a lot of other persons are having some issues, because they are not paying for electricity, and they are affecting the infrastructure,” he said.

Abu Daher, who has a knack for building creative designs to solve real-world problems, says that his next goal is creating a closed energy loop for his mining farms. He envisions a system in which the heat produced by the machines is harnessed and that geothermal energy is repurposed to power the miners, as well as to heat homes and hospitals in the villages where these mines are located.

“Instead of buying fuel to heat up our homes, we would buy mining machines. We produce heat to heat up our building, and at the same time, we produce money,” Abu Daher explained of his grand vision for the future of crypto mining in Lebanon.