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Inside the Hidden World of Egyptian Bitcoin Miners

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Egyptian Bitcoin Miners

Egypt’s unfavourable regulatory environment has made bitcoin adoption more difficult in the North African country. Nonetheless, Egyptians are secretly buying and selling the digital currency on peer-to-peer exchanges while a hidden network of cryptocurrency miners has emerged to take advantage of cheap energy to stealthily mine bitcoins.

Egypt’s Underground Bitcoin Mining Scene

Globally, people are using their computers to mine bitcoin. However, in Egypt bitcoin miners operate under a veil of secrecy. Bitcoin miners have established an underground network away from the public eye, with only a few even willing to speak to the media.

The bitcoin underground is fuelled by market regulators whose negative stance towards cryptocurrencies has made it difficult for bitcoin traders and miners to go about their activities. The Central Bank of Egypt refuses to accept digital currencies and recognizes only the Egyptian pound as legal tender. While transacting in cryptocurrencies such as bitcoin is not illegal, the authorities are seemingly willing to take action against any bitcoin-related activities within its jurisdictions.

Speaking to Cairo Scene under a pseudonym, Hussein, a bitcoin miner, argues the law is rather ambiguous when it comes to bitcoin and thus most people are concerned about being discovered.

“I believe what I’m doing is legal. When people get arrested for mining it’s usually because they’re caught with black market foreign currency exchange, or they’re forging money and they just happen to have mining rigs or bitcoin on them. The authorities see this and therefore associate cryptocurrency with illegal activity,” he stated.

Therefore, it makes sense that the mining community would adopt a defensive attitude. What is puzzling is bitcoin is not technically off-limits so why go to such great lengths to remain concealed? Hussein explains,

“The recent statements they’ve given say mining is not illegal, but it can get you into trouble for sure. I think the administration is trying to understand cryptocurrency, but they’re still in the process of learning more. I’m 99 percent sure that if they knew more about it, it’d be fully legalized in Egypt…. Legal like in Japan, the US, England, Europe, legal like in most countries.”

How is Bitcoin Mined in Egypt?

Bitcoin mining is the process where miners contribute their computing power to solve complex algorithms to confirm and process transactions on the bitcoin blockchain. For that, they are rewarded with fresh bitcoins. The higher the computing power the larger the reward. This is why mining farms have been created, hosting scores of computers with extra processing power to earn more bitcoins.

Currently, Ethereum is the most frequently mined cryptocurrency in Egypt on account of it being the most profitable mining option and its mining hardware being easily accessible locally. Bitcoin is usually mined through special hardware called ASICs whereas Ethereum is mined through graphics cards (GPUs), which is a standard for gamers and video editors who require heavy processing capabilities.

However, the reality of mining in Egypt is quite different from the usual set up found in other countries. Spread across the busy metropolis of Cairo are multitudes of hidden farms where digital currencies are mined every day. You will discover the people who participate in the mining are not your typical hackers or tech aficionados typing away late into the night.

A perfect example would be Hussein, who is a  former economics student, but decided to try his luck in the male-dominated bitcoin mining scene. A spot check across Egyptian digital currency interest groups on Facebook and Whatsapp also reveal very few women in the bitcoin space.

Having said that, despite the community being composed of different professions such as economists, doctors, entrepreneurs, and coders, they are united by the prospect of cashing in on bitcoin’s volatility, and the process of earning the worlds most valuable cryptocurrency through mining. The question then arises, why Egypt of all places?

Lower Mining costs in the Form of Cheap Electricity

The typical mining setup includes a PC working at all hours converting maths into money. The process requires a lot of energy in order to prevent the hardware from overheating and getting damaged; since the inbuilt PC fans are not enough to handle the heat produced by the constant heavy workload. Therefore, external fans and air conditioning are required to lower the temperatures in mining farms.

Surprisingly, as demanding as it can be to keep things cool in Egypt’s arid environment, the cost of electricity is cheaper compared to other developing economies. This has encouraged the local cryptocurrency mining boom due to the low overheads involved. Hussein points out,

“Until recently, energy was subsidized, and a lot of people don’t even pay for electricity, which is sad. But that’s part of why it’s more profitable to mine in Egypt… Yes, of course, I pay my electricity bill.”

For Mohammed, a Cairo-based Ethereum miner, the mining craze is fueled by more than just cheap electricity. He believes how you pay for the energy plays a significant role in making the endeavour more lucrative. “I think it’s better to mine in Egypt because you pay your energy bills in local currency, but you get your investment back in cryptocurrency.”

He explains that bitcoin, which acts as a digital asset, has retained value more reliably than the inflation-prone Egyptian pound. That combined with the cheap energy has led to some expats to consider moving back to Egypt.

Bassem is an Egyptian who presently resides in Qatar and runs a bitcoin mining farm. He owns a fleet of ASIC machines that are optimised to mine non-stop and churn out bitcoins. He started mining in Doha on account of the free electricity being provided but has now set his sights on returning to Egypt this year. He is not that worried about leaving behind the free energy as he calculates his farm will still make a good profit once he deducts electricity costs.

What are the Benefits of Cryptocurrency Mining in Egypt

For Egyptians, cryptocurrency mining has changed their financial fortunes. A case in point would be Hussein who developed an interest in digital currencies due to his economics background. He learnt about bitcoin through YouTube videos and started mining in 2012. He then quit his job and moved back to Egypt, something that would not have been possible without the income he receives from mining digital currencies.

“[Cryptocurrency mining] has enabled me to take the time to think about my future plans, rather than worry about monthly expenses. Especially in Egypt, by mining, you can make enough money to just live. Depending on market fluctuation, a one-time 50,000 LE investment in equipment can earn the equivalent of about $400 a month.”

Hussein who is also a cryptocurrency trader insists he has made more money on cryptocurrency than investing in real estate. The new coins he earns are converted to fiat currencies by trading them at the exchanges for a profit. But not only are individuals making money out of crypto mining, local hardware dealers are cashing in on the demand for mining hardware. According to Mohammed, hardware importers are not only making good money but a number of them have joined the bandwagon and taken up mining themselves. Hussein had this to add,

“Mining in Egypt is booming, but one issue is the equipment; when the price of Ethereum spiked, demand for GPUs was high and stores couldn’t stock enough of them… Getting GPUs in Egypt is kind of like getting drugs. It’s actually easier to get drugs than to get GPUs sometimes.”

On the debate by some critics from some Muslim countries who claim that cryptocurrencies might be haram if it is viewed as making money out of nothing, Hussein had this to say, “If the monetary system is haram, then sure, bitcoin is haram,” he began. “But in my opinion, it’s not. The trading aspect is definitely not; it’s a mutual agreement, and bitcoin is equal to money, which we already use. And you can actually see a lot of religious people mining bitcoin.”

While bitcoin mining may be unappealing for most due to the high energy requirements and the technological complexity, for Egyptian cryptocurrency miners the process is quite very rewarding.

Mohammed states,

“I believe in the future of cryptocurrency – nobody can refute it. It’s already happening now, some countries are already making bitcoin official. I hope that Egypt uses it eventually. They have to know that people here are using it now, that people believe in it and put their trust in it.”

Source: CairoScene.com

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Almost a Quarter of High-Tech Consumers in South Africa Now Own Cryptocurrency

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High-Tech Consumers in South Africa

A new study titled “Digital Lifestyle Measure report” conducted by MBIT found that 23 percent of high-tech consumers in South Africa own at least one cryptocurrency, with bitcoin being the most common holding. 

New Report Shows High-Tech Consumers Hold Crypto

In the”Digital Lifestyle Measure report” report, each level of tech consumer (high, medium, and low) was grouped according to DM segmentation. A high-tech consumer is identified and tagged as a “DLM5 consumer”, and for the low-tech consumers, a “DLM1 consumer” was used. 

To place each of the participants in the right groups, the survey made use of a question and answer (Q&A) method. Each person was categorised according to how well they were able to answer the provided questions. The questions mostly focused on their private digital lifestyle and technological gadgets they own and can operate well.

The result of this survey shows that only six percent of the low-tech consumers (DLM 1) own crypto, while 23 percent of high tech consumers own cryptocurrencies. The remaining percentage was then shared in the order: DLM 2: seven percent, DLM 3: twelve percent, and DLM 4: eight percent.

cryptoThe report also stated that of the DML5 population, about 42 perfect of them are of the notion that cryptocurrencies are here to stay. Same goes for 30 percent of the DLM 4 consumers group.

Conversely, 41 percent of the low-tech consumers (DLM1 consumers) did not know what cryptocurrencies are all about, according to IOL

From the DLM 3 consumer group, about 34 percent of them cannot say what the future looks like for cryptocurrencies but 26 percent of them claimed cryptocurrencies to be the “future of financial transacting.”

The report has further shown that high tech consumers who are continually paying for something electronically, are more likely to buy crypto in the long run.

Based on the google trends data, South Africa currently has the highest levels of interest in bitcoin across the world. Hence, it should come as no surprise that tech-savvy South Africans are the ones investing in digital currencies and tokens. 

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Ecobank Report: Most African Regulators Are Taking a “Wait and See” Approach to Cryptocurrency Regulation

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African Regulators

While there has been a substantial increase in the adoption of cryptocurrencies in Africa compared to three years ago, there has been minimal effort from African countries to try and regulate cryptocurrencies despite their increased use in various African nations according to a new report by Ecobank.

Ecobank tracked “the current state of cryptocurrency regulation in all markets in Sub-Saharan Africa” through the regulatory responses that have been issued by central banks or financial regulators. In the report, the pan-African bank found that most African regulators are taking a “wait and see” approach when it comes to cryptocurrency regulation.

The report stated: “Many African governments and regulators recognise both the risks and the potential positive impacts of cryptocurrencies, and some also appreciate the difference between cryptocurrencies and the underlying blockchain technology. But they have been reticent in authorising cryptocurrency transactions, and mostly remain apprehensive about the potential risks. African countries appear to be looking to their neighbours to regulate and innovate first, and learn from their mistakes, rather than being the first mover.”

The reported noted that the main reason why African governments were being skeptical about licensing the use of cryptocurrencies was their citizens getting overexposed to cryptocurrency investments and there being a future crash that would cause a ripple effect in the broader economy.

African Regulators’ Stance

African RegulatorsOut of the 39 jurisdictions surveyed, more than 21 countries in the region are yet to make a public declaration on the use of cryptocurrencies.

So far, there have been three countries that have taken a stance on cryptocurrency. Namibia tops the list having banned the commercial use of digital currencies. However, South Africa and Swaziland are the only two countries in Sub-Saharan Africa that have adopted “a generally favourable and permissive stance, but without full legality”.

The remaining countries fall somewhere in between and “refuse” to directly regulate cryptocurrencies claiming that bitcoin and other digital currencies “operate in the grey area between legality and illegality” and have issued warnings to their citizens and investors against using or investing in them. The bank also noted that conversations regarding the speculative nature and instability of cryptocurrency prices have overshadowed their benefits and the potential they bring.

The bank went ahead to note: “Unfortunately, the spectacular rise and fall in the traded value of cryptocurrencies has drowned out broader discussion on the potential benefits this new technology could bring. The transformational impact that could be delivered by tokenising products and services on the blockchain has been compared to that of the Internet. Crypto tokens and currencies could enable consumers to transact instantly, cross-border and for free, provide them with KYC-compliant digital IDs, and incentivise their behaviour and change the way they engage with governments & service providers.”

Ecobank will continue to track cryptocurrency regulation in Sub-Saharan Africa and provide regular updates that will reflect the regulation progress in the African nations.

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Paxful Continues #BuiltWithBitcoin Charitable Initiative in Africa with the Construction of a Second School

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#BuiltWithBitcoin

Peer-to-peer bitcoin exchange Paxful announced the newest chapter in its #BuiltWithBitcoin charitable initiative: the construction of a school in Rwanda – for students aged six to fifteen – in the Nyamata Sector of Rwanda’s Bugesera District. This will be the second bitcoin-funded school that Paxful has raised funds for.

bitcoinContinuing its partnership with NGO Zam Zam Water, Paxful has kickstarted the project with a $20,000 donation. The total construction cost of the school is estimated to be $100,000. The remaining balance, Paxful hopes, will be raised through its fundraising campaign.

Donations can be made via Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Dash.  Paxful will match all community donations until the $100,000 goal is met.

“The #BuiltWithBitcoin initiative is a testament to the power of cryptocurrency,” said Ray Youssef, CEO of Paxful. He added:

“We firmly believe that it can improve lives and make the world a better place.”

The planned school is expected to be almost twice the size of the first bitcoin-funded school and will serve up to 300 primary school students upon completion. Furthermore, the school will include a cafeteria, a 35,000-liter potable water well, solar panels for sustainability, and many other resources for the education and enjoyment of students, staff, and faculty, according to a company press release.

“Education is a crucial tool for helping those in developing nations increase their standard of living, so we are very pleased to partner with Paxful to serve these bright young students,” said Yusuf A. Nessary, founder and president of Zam Zam Water. He added:

“This is only a small glimpse into what we can and will continue to do with the power of cryptocurrency.”

Paxful began the #BuiltwithBitcoin initiative in 2017 to promote philanthropy and charity within the cryptocurrency industry. The company plans to construct 100 African schools, as well as donate money for wells and other projects.

To contribute to #BuiltwithBitcoin, send all donations to Zam Zam Water:

BTC (Bitcoin): 3Q5CESP85hhXTLSy2HDbSyNchb5Bi8D7ku
BCH (Bitcoin Cash): 15YGniLxo77kfMUWGoRNT6ShUQC93MvaXg

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