Since banks cannot seize or block Bitcoin holdings, Lebanese citizens like Georgio Abou Gebrael view it as their bank. Since BTC is a better option due to the depreciation of the Lebanese pound, mining has expanded in the country.
Many Lebanese citizens have turned to cryptocurrencies due to hyperinflation, bank collapse, and monetary devaluation. Since the hydroelectric power from rivers is cheap, some residents have focused on Bitcoin mining to generate money.
Factors Leading the Lebanese Economy to Collapse
Lebanon was among the most developed countries in the Middle East before the 1970s but now faces many economic problems. Since 2018, the GDP has decreased by 40%, inflation has been around 160%, and the local fiat currency has dropped by over 90%.
A massive civil war that killed thousands of people and divided society caused the Lebanese economy to decline in the late 20th century. In addition to internal conflicts, the Middle Eastern country has fought the Israeli army several times.
Political figures blamed Syria for the death of Rafic Hariri, former Prime Minister of Lebanon, in a car bomb explosion in 2005. That caused another war, violence in the region, and an enormous wave of migration. Statistics reveal that around 14 million Lebanese citizens, twice the population, live abroad.
Given those factors, it is logical to know why the war-weary country faces such critical monetary issues.
The Advantages of Adopting Cryptocurrencies in Lebanon
The Lebanese citizens that decided to stay in their country sought alternatives to preserve their wealth amid the financial crisis.
Georgio Abou Gebrael, 27 years old, said he considered Bitcoin (BTC) a fraud when he first heard about it in 2016. However, the economic collapse in Lebanon led him to start viewing the pioneering cryptocurrency as a hedge.
Gebrael, an architect, lost his job in 2020 and could not withdraw money from his bank account. All Lebanese financial institutions prohibited their clients from conducting those transactions.
However, he was lucky to contact employers who would pay him in Bitcoin. For his first job, he made a car tire commercial for which he received USD 5 worth of BTC.
Although the above amount was insignificant, Gebrael wanted some assets that banks could not seize or block. He now accepts payments in Bitcoin for practically any work, saying the crypto asset has become his bank.
Ray Hindi, the CEO of L1 Digital AG, left his native country when he was 19 years old. He pointed out that banks have limited withdrawals, converting those deposits into bills.
Hindi explained that citizens could have taken out their money with a reduction of 15%, then 35%, and now 85%. However, they look at their bank statements and believe they will eventually be intact.
The Government Targets Unauthorized Cryptocurrency Mining Entities
Young Lebanese entrepreneurs also view the mining of cryptocurrencies as another attractive niche. Ahmad Abu Daher mines Bitcoin with hydroelectric power in a small mountain town 30 miles south of Beirut.
Abu Daher said he could harness power from the Litani River to get electricity for 20 hours daily at pre-inflation prices. He said he was paying a low rate while he got more US dollars through the mining activity.
Since the Lebanese pound (LBP) has lost value, holding Bitcoin seems a better option. Therefore, Abu Daher has thousands of machines in the Middle Eastern country.
The Lebanese government recently raided unauthorized entities and raised energy prices to stop cryptocurrency mining. That has led farm operators to comply with the law, using legal electricity and not damaging infrastructures.
By Alexander Salazar
