Swiss minister says Facebook's Libra has 'failed' in current form

Yahoo – AFP, Julie JAMMOT, December 28, 2019

Swiss president and finance minister Ueli Maurer, pictured September 2019, has
called Facebook's planned Libra cryptocurrency a "failed" project (AFP Photo/
Johannes EISELE)

San Francisco (AFP) - The Swiss president and finance minister has delivered the latest blow to Facebook's planned Libra cryptocurrency, saying it has "failed in its current form," Swiss network SRF reported Friday.

"The central banks are not going to accept the basket of currencies" that Libra is supposed to be based on, Ueli Maurer, who is in his final days in the rotating presidency of the Swiss Confederation, Switzerland's federal council, told SRF.

Libra, a high-profile project of social network giant Facebook, is tentatively scheduled for a 2020 launch but has faced months of severe criticism from some of the world's most influential financial authorities.

In theory, Libra will be managed by a Geneva-based independent association linking several companies and non-profit groups.

But since early October, the online payment companies PayPal and Stripe, as well as Visa, Mastercard and others, have withdrawn from the project amid growing pressure from American and other regulators.

They have cited the potential for illicit uses of the currency and have underscored the battered reputation of California-based Facebook in matters of privacy and data protection.

French Finance Minister Bruno Le Maire, pictured October 2019, has expressed 

serious concerns about Facebook's Libra project (AFP Photo/Andrew 

CABALLERO-REYNOLDS)

Loss of 'sovereignty'

Countries and central banks -- for now the only entities legally permitted to issue currency -- have also expressed concern about a blow to their sovereignty.

In October, French Economy Minister Bruno Le Maire bluntly expressed his concerns, saying, "Libra is not welcome on European soil."

"We will take steps with the Italians and Germans, because our sovereignty is at stake," he said, speaking in Washington on the sidelines of the fall meeting of the World Bank and International Monetary Fund.

Earlier this month, a US Federal Reserve official expressed American reservations.

"Without requisite safeguards, stablecoin networks at global scale may put consumers at risk," Fed Governor Lael Brainard said in a speech in Frankfurt.

Cryptocurrencies to date have suffered from "staggering" losses due to fraud and theft, Brainard said.

Facebook chairman Mark Zuckerberg, pictured October 2019, has said the Libra 

cryptocurrency will not be launched until it receives all needed approvals (AFP Photo/

MANDEL NGAN)

'Serious concerns'

Stablecoins are a type of cryptocurrency designed to provide stability -- avoiding the wild swings of bitcoin and other cryptocurrencies -- by being pegged to relatively stable assets or currencies.

Libra is designed to make it easy for users of WhatsApp, a Facebook-owned messaging platform, to instantly send funds to friends or family.

The size of Facebook -- 2.2 billion people worldwide connect on at least one of its platforms, which also include Instagram, WhatsApp and Messenger -- would give it the potential to disrupt the global financial system, making it far harder for central banks to manage, Fed chairman Jerome Powell told US lawmakers in July. He expressed "serious concerns."

The Libra association declined to comment when contacted by AFP.

But in October, Facebook CEO Mark Zuckerberg testified before a congressional committee that Libra would not be launched until it received all necessary authorizations from the authorities.

In response to regulators' resistance, Zuckerberg last month opened the door to scaling back plans for Libra if it cannot win the needed approvals.

Twitter chief Jack Dorsey announces plans to move to Africa

The Guardian, Victoria Bekiempis, 29 Nov 2019

Tech executive declared plan to move temporarily in 2020 following a month-long visit to entrepreneurs on the continent

Jack Dorsey on Capitol Hill in Washington DC, on 5 September 2018.
Photograph: José Luis Magaña/AP

Twitter chief Jack Dorsey said this week that he plans to move to Africa for up to six months next year. The tech executive announced the planned move following a month-long trip visiting entrepreneurs on the continent.

“Sad to be leaving the continent … for now. Africa will define the future (especially the bitcoin one!),” Dorsey tweeted from Addis Ababa on Wednesday. “Not sure where yet, but I’ll be living here for 3-6 months mid 2020. Grateful I was able to experience a small part.”

Asked for comment, Twitter said in an email: “We’ve nothing to share beyond Jack’s initial tweet.”

Dorsey began traveling Africa on 8 November and visited Ethiopia, Ghana, Nigeria and South Africa, CNN reported.

In Ethiopia, he listened to startup pitches. In Nigeria, he had meetings with entrepreneurs and Ngozi Okonjo-Iweala, a Twitter board member who formerly worked as managing director of the World Bank.

Software developer Dara Oladosu, who created the Twitter bot Quoted Replies, which aggregates comments on tweets, received a job offer after meeting company executives, CNN said.

Dorsey also met bitcoin business owners in Ghana. Dorsey has expressed plans to integrate bitcoin use on Twitter and the payment app Square, according to CNN.

Africa’s tech industry is presently experiencing rapid growth. GSMA, a mobile services industry group, said there were 618 “active tech hubs” on the continent this year, up 40% from 2018. According to GSMA, Nigeria and South Africa have the most, with 85 and 80, respectively.

The Kenyan tech entrepreneur John Karanja launched BitHub, an incubator for cryptocurrencies, in 2015. Ethiopia’s government reportedly hopes that a tech-centric economy could create 3m jobs.

Dorsey’s African tour comes as social tech giants continue to face criticism over the spread of hate speech and misinformation online. Dorsey announced in October that Twitter would ban political advertising, putting pressure on Facebook to enact a similar policy.

Dutch media mogul wins case against fake bitcoin ad and Facebook

DutchNews, November 12, 2019

Photo: Depositphotos.com

Facebook has been ordered by a Dutch court to tackle fraudulent advertising for bitcoin which uses Dutch celebrities without their permission to promote crypto currencies. 

The case was brought by media tycoon John de Mol, with the backing of other television personalities such as Eva Jinek and Jort Kelder, whose faces were also used to promote fake bitcoin sales. 

More than 150 Dutch nationals were persuaded by the adverts to buy bitcoins and other crypto currency, losing a total €1.7m in the process. 

Judges in Amsterdam have now ruled Facebook cannot hide behind its role as a ‘neutral’ platform, and say they will fine it up to €1.1m unless the company takes action. 

‘The company, which has adverts as its primary source of earnings, takes too active a role [to be neutral],’ the court said in a press statement. ‘Facebook not only sets the prices, but has an active policy about which adverts appear on Facebook and Instagram.’ 

Cost 

The cost of filtering out fake ads is not a reason not to take action, the court said, and the fact that ads featuring De Mol have now largely gone shows that it can be done. ‘Facebook’s responsibility for its own advertising platform is too big and fake adverts have too much impact,’ the court said. 

Facebook has also been ordered to make the names of people behind the fake adverts known to De Mol’s lawyers. 

‘I hope this ruling will lead Facebook to take steps as quickly as possible so that innocent people can no longer be conned by fake bitcoin adverts,’ De Mol said in a statement. ‘My legal advisors and I will be following Facebook closely to see if it does take the necessary steps.’

Facebook's Marcus says Libra won't be controlled by a single company

Yahoo – AFP, October 20, 2019

Executives involved with Facebook's proposed Libra digital currency say they
will work with regulators to address their concerns (AFP Photo/Fabrice COFFRINI)

Washington (AFP) - Facebook executive David Marcus on Sunday tried to calm the fears of officials threatening to block its proposed digital currency, saying Libra won't be controlled by a single company.

The head of Facebook's Libra currency project sought to address the main issue raised by France's Economy Minister Bruno Le Maire: the potential for a company to have the power to undermine a government's control of its currency.

Marcus said it has been "very clear to us from the very beginning that a payment networks such as the Libra network shouldn't be controlled by one company."

Speaking at a forum, hosted by the Group of 30, he repeated the company's commitment to work with regulators to address their concerns.

He added that the Libra Association -- comprised of 21 companies -- will "welcome competition to benefit local access and strive for the lowest cost possible for consumers."

But, he cautioned, "the status quo is not an option any longer."

Central banks and government finance officials have long worried about the challenges posed by digital currencies, and the risk they can be used for money laundering and financing terrorism.

Libra is different from other digital currencies like Bitcoin because it would be a "stablecoin" tied to national currencies.

But Le Maire told reporters on the sidelines of the annual meetings of the World Bank and International Monetary Fund in Washington last week that European governments "will not allow a private company to have the same power, the same monetary power as sovereign states," and will take steps to block Libra from Europe.

Agustin Carstens, former Mexican central banker and longtime skeptic of digital currencies, agreed that technology can help provide access to the financial system to people who have been excluded.

But Carstens, now head of the Bank for International Settlements, said Sunday that the best course would be to "maximize the use of technology with what we've proven that works, that provides stability."

Marcus remained cautiously optimistic.

"We recognize that a change of this magnitude can't be operating without a great sense of responsibility," he said, but he added: "We can actually work together to solve these issues."

Group behind Facebook's Libra coin push meet in Geneva

RTL – AFP, 14 November 2019

Facebook had hoped backers of its Libra project would swell from an initial 28 to
"well over 100", but instead, several initial supporters have abandoned a
scheme which regulators say threatens the global financial system / © AFP/File

The Libra Association, created by Facebook to launch its new cryptocurrency, kicked off its first council meeting in Geneva on Monday, despite defections by previous supporters like Visa and Mastercard.

The meeting also comes as the planned Libra global currency faces swelling criticism from regulators, and reported warnings from the G7 group of nations that it poses a threat to the global financial system.

Following Monday's meeting, the non-profit association was due to announce its founding membership and provide more details on how it plans to proceed.

Last month, it voiced hope that the number of companies backing it when it opened for business would swell from an initial 28 to "well over 100" companies.

But instead the list has shrunk, after more of its initial backers abandoned the alliance amid swelling criticism from regulators around the world on the planned Libra global currency.

Credit card giants Visa and Mastercard, online marketplace eBay and digital payments firm Stripe each announced Friday they had changed their minds about being founding members of the association, following a similar recent announcement by digital payments firm PayPal.

Libra Association confirmed Friday that the companies would no longer be founding members, but said that it would continue building an alliance of businesses, social-good organisations, and others to implement the cryptocurrency.

Threat to financial stability?

The membership departures came after US senators sent letters to several financial firms noting that they could face "a high level of scrutiny from regulators" if they participated in the new currency plan.

French economy and finance minister Bruno Le Maire has warned that under current circumstances, Libra posed a threat to the "monetary sovereignty" of governments and could not be authorised in Europe.

Facebook executives have, however, claimed the new digital coin could help lower costs for global money transfers and help those without access to the banking system.

Facebook chief Mark Zuckerberg is set to testify at an October 23 hearing in the US House of Representatives on the Libra plan.

But in a fresh blow, a draft G7 report has outlined nine major risks posed by such digital currencies, according to the BBC.

The report, due to be presented to finance ministers at IMF's annual meeting this week, did not single out Libra but referred to "global stablecoins" with the potential to "scale rapidly" as posing a range of potential problems.

Stablecoins are seen as more steady than cryptocurrencies like Bitcoin, since they are pegged to traditional currencies such as the US dollar or the euro.

But the G7 draft report reportedly cautioned that such currencies could pose problems for policymakers setting interest rates, and could threaten financial stability if users suddenly suffer "loss of confidence" in the digital currency.

Randal Quarles, the head of the Financial Stability Board (FSB), which oversees regulation among G20 economies, also sent a letter to G20 finance ministers Sunday warning that "global stablecoins could pose a host of challenges to the regulatory community."

This, he wrote, was "not least because they have the potential to become systemically important, including through the substitution of domestic currencies."

"Stablecoin projects of potentially global reach and magnitude must meet the highest regulatory standards and be subject to prudential supervision and oversight," he insisted.

#UPDATE Facebook should not launch its global digital currency Libra until proper regulations are in place to handle the potential risks, the Group of Seven said https://t.co/bxC3TPd1wD pic.twitter.com/gM84FJ1yZ4

— AFP news agency (@AFP) 18 oktober 2019

PayPal cautious about future of Libra cryptocurrency

Yahoo – AFP, September 14, 2019

PayPal is part of the nonprofit Libra Association, which will oversee the
blockchain-based coin, maintaining a real-world asset reserve to keep its
value stable (AFP Photo/Handout)

San Francisco (AFP) - PayPal is cautious about the future of Facebook-backed cryptocurrency Libra, which is slated to debut with the pioneering digital payments firm as part of its oversight association.

International outcry is mounting over Libra -- with central banks, governments and regulators railing against Facebook's upstart cryptocurrency and questions over how it would be regulated.

The social media giant unveiled plans in June for Libra -- which will roll out in 2020 -- to be backed by a basket of currency assets to avoid the wild swings of Bitcoin and other virtual units.

"It's a non-binding commitment," PayPal investor relations vice president Gabrielle Rabinovitch said Thursday of the California-based company signing on to the Libra Association.

"And obviously, I think there's a lot of work to happen before we get to that point where it becomes something more than just a very exciting idea."

The nonprofit Libra Association, based in Geneva, will oversee the blockchain-based coin, maintaining a real-world asset reserve to keep its value stable.

Facebook envisioned Libra as a new global cryptocurrency, pledging to deliver a stable virtual money that lives on smartphones and could bring over a billion "unbanked" people into the financial system.

Hundreds of billions of dollars are transferred annually between migrants and loved ones in their home countries, and PayPal is a player in that sector.

"The goals and ambitions of Libra are very consistent with PayPal's overall ambitions in terms of serving the underserved; democratizing access to capital," Rabinovitch said.

"So we very much believe in the potential of Libra."

Could cryptocurrency dethrone the dollar?

MSN – Yahoo, 1 September 2019 

Chris J Ratcliffe Bank of England governor Mark Carney has suggested that a
virtual currency could one day replace the dollar as king of the foreign exchange market

Bank of England governor Mark Carney has suggested that a virtual currency, modelled on Facebook's Libra, could one day replace the dollar as king of the foreign exchange market.

The BoE chief aired vague proposals for a so-called "Synthetic Hegemonic Currency" at the recent Jackson Hole Symposium of central bankers.

Here is a brief assessment of why the greenback is losing its lustre and the outlook for Carney's proposed new digital currency, which would be supported by major central banks around the world.

Why dollar dominance?

The dollar has been the world's reference currency since the Bretton Woods agreement in 1944, when various key units were fixed to the value of the greenback. It has retained its global supremacy ever since, thanks to the economic and political clout of the United States.

"The dominant currency is always that of the world's biggest political power," noted Philippe Waechter, head of research at Ostrum Asset Management.

The dollar accounted for almost 62 percent of global foreign exchange reserves in the first quarter of 2019, according to the International Monetary Fund.

The European single currency was second with 20.2 percent, while China's yuan comprised only two percent despite the country's rise to the rank of the world's second biggest economy behind the US.

Why is greenback losing appeal?

Although the dollar has lost its sparkle owing to globalisation and the changing world economic order, gyrations in the US unit still impact economies elsewhere.

"US developments have significant spillovers onto both the trade performance and the financial conditions of countries even with relatively limited direct exposure to the US economy," Carney said at the recent bankers' meet in Wyoming.

Alastair Pike Don't expect the US to let its currency dwindle without a fight

When the greenback appreciates, so do repayments for many emerging nations because their debts tend to be denominated in dollars.

The BoE chief, who steps down in January, added: "In the longer term, we need to change the game."

Central bank role?

The public sector, in the form of central banks, could instead provide the best support for a new virtual currency, according to Carney.

"It is an open question whether such a new (cryptocurrency) would be best provided by the public sector, perhaps through a network of central bank digital currencies," he said.

Yet central bankers and world leaders alike remain anxious over the current crop of virtual currencies because they are unregulated.

US President Donald Trump himself has lashed out at Bitcoin and Libra for being "based on thin air" and having no standing or dependability -- unlike the dollar.

Commentators believe Washington is unlikely to allow the greenback to lose its cherished status as the world's premier reserve currency.

"The United States will simply not allow it to happen without a fight. Nobody in its position would," said Rabobank analysts.

What about Libra?

The BoE governor meanwhile made explicit references to Libra -- a future cryptocurrency unveiled by social media giant Facebook in June.

Carney avoided all mention of Bitcoin, which is the world's most popular digital unit but has been plagued by volatility.

Libra, which aims to launch in the first half of 2020, will be backed by a basket of currency assets to avoid the wild swings of bitcoin and other cryptocurrencies.

Yet Libra has also attracted the ire of central bankers owing to its origin in the private sector.

"Central banks are a little annoyed by this (Facebook) bid to privatise currency," said Agnes Benassy-Quere, a researcher at the Paris School of Economics.

Whereas Bitcoin is decentralised, Libra will be co-managed by 100 partner firms including Facebook itself.

Official world foreign exchange reserves, divided by currency, converted to US dollars, in the first quarter of 2019 @AFPgraphics pic.twitter.com/B73vkAA4Ec

— AFP news agency (@AFP) 1 september 2019

G7 ministers agree plan on digital tax but more work ahead

Yahoo – AFP, Stuart WILLIAMS, July 18, 2019

G7 ministers reached consensus on steps towards taxing the digital giants amid
differences between the US and France and Britain. (AFP Photo/ERIC PIERMONT)

Chantilly (France) (AFP) - Ministers from G7 top economies on Thursday reached consensus on steps towards an accord on taxing digital giants, an issue that has divided the United States and its allies Britain and France.

French Finance Minister Bruno Le Maire, who hosted the two-day meeting in Chantilly outside Paris, hailed the consensus as unprecedented, although US Treasury Secretary Steven Mnuchin insisted there was more work to be done.

The French parliament this month passed a law that would tax digital giants for income amassed inside a country even if their headquarters are elsewhere, a move the United States complained discriminated against US firms like Google, Apple, Facebook and Amazon.

Britain has announced plans for a similar tax and the G7 meeting in the tranquil French town -- usually famed for its horses rather than horsetrading -- was dominated by tough talks to find some common ground.

Le Maire said finance ministers and central bankers had reached an agreement "to tax activities without physical presence, in particular digital activities."

"This is the first time that G7 members agree in principle on this," he told reporters.

'Minimum tax'

France issued a statement saying the G7 had agreed a two-pronged solution -- confirming the principle of companies being able to accrue revenues outside their legal base but also on a minimum tax to be agreed internationally for their activities.

Ministers "fully supported a two-pillar solution to be adopted by 2020", the statement said.

"Ministers agreed that a minimum level of effective taxation... would contribute to ensuring that companies pay their fair share of tax," it said.

A French official, who asked not to be named, said the tax rate would have to be agreed in the future.

Forecasts for revenue the French government expects from its tax on tech 

giants, which it has said it will drop if an international deal is implemented

(AFP Photo/Thomas SAINT-CRICQ)

German Finance Minister Olaf Scholz said he was happy with the "progress" achieved and in particular with the reference to the minimum tax level in the final statement.

Further talks would now be needed in the wider context of the G20 group of top economies for an international agreement which would be overseen by the Organisation for Economic Cooperation and Development (OECD).

Scholz expressed hope that a full international consensus could be reached next year under the OECD.

'Step forward'

The French parliament's move infuriated President Donald Trump and the US had announced an unprecedented probe against France which could trigger the imposition of tariffs.

Mnuchin struck a slightly more cautious tone than his French counterpart Le Maire while making clear he was well satisfied with the talks.

"We made some significant progress at this meeting, there is more work to be done," Mnuchin told reporters, adding that ministers had made a "big step in the right direction".

He said the United States has "significant concerns" with the French law and planned British legislation and was pleased that both Paris and London would dump the domestic laws if an international agreement was forged.

"Everyone here wants to reach an acceptable international solution," said Mnuchin. "Creating certainty for global multinationals is very important," he added.

Tim Wach, managing director of global tax consultants Taxand, described the progress as "highly encouraging" and "significant steps" in building a fairer tax system.

“The G7 must avoid conflicting regimes across different countries," he said.

'Warning on Libra'

The G7 ministers had far less trouble agreeing a position on new cryptocurrencies such as Facebook's Libra, saying such new and untested digital money risked destabilising the international monetary system and were not ready to be implemented.

"They agreed that projects such as Libra may affect monetary sovereignty and the functioning of the international monetary system," the French statement said.

The other key issue at the meeting was finding a replacement for Christine Lagarde, who has led the International Monetary Fund since 2011 but has resigned to become head of the European Central Bank.

Le Maire's European colleagues at the G7 have decided he should lead the search for a candidate from Europe, although no shortlist has been fixed yet, said a European official.

France says G7 consensus to 'act quickly' on Facebook Libra currency

France24 – AFP, 17 July 2019

Facebook's move into cryptocurrency comes with the leading social network
moving toward CEO Mark Zuckerberg's vision of shifting away from being a "digital
town square" to small-group messaging and payments (AFP/File)

Chantilly (France) (AFP) - The G7 group of the world's most developed economies are worried about Facebook's planned Libra cryptocurrency and have a shared consensus about the need to act quickly, a French official said Wednesday.

Facebook last month unveiled its plans for Libra in an announcement greeted with concern by governments and critics of the social network behemoth around the world.

The issue was at the forefront of the minds of ministers and central bankers from the G7 group of most developed economies as they kicked off a two-day meeting in Chantilly outside Paris on Wednesday.

"On Libra, we had a very constructive and detailed discussion with a very large and shared consensus on the need for action," said the official, who asked not to be named.

"Concerns (were) expressed by all the participants about the current situation and the need to act quickly."

'Conditions not in place'

The finance ministers of France and Germany had earlier expressed serious reservations about Facebook's plans because of Libra's possible impact on global financial stability.

"The G7 finance ministers and central bankers who are here have serious concerns," said German Finance Minister Olaf Scholz.

"They want to be sure that all existing regulations are adhered to, and if they should be changed in the future, so that we can guarantee the stability of the international financial system," he added.

"We are talking about currency stability, security, data protection and democratic control," he added.

French Finance Minister Bruno Le Maire, who has warned about Libra repeatedly since the launch announcement, said "the conditions are not yet in place today for Libra to be introduced."

He said he hoped the G7 would consider the necessity of a "framework or a regulation" and also "what would be the conditions that would make such an instrument feasible."

"Today, we cannot accept that an exchange instrument comes into being when it does not respect any of the precautionary rules that all sovereign currencies are required to abide by."

Their comments echoed warnings issued on Monday by US Treasury Secretary Steven Mnuchin, who was also present at the meeting.

Mnuchin said Facebook must meet "a very high standard" before it moves ahead with Libra, adding that US regulators have already expressed concerns to the company.

He said that these kinds of virtual currencies have in the past been associated with money laundering and illicit activities.

"Whether they're banks or non-banks, they're under the same regulatory environment," Mnuchin told reporters at the White House.

Libra is widely regarded as a challenger to dominant global player bitcoin. Expected to launch in the first half of 2020, Libra is designed to be backed by a basket of currency assets to avoid the wild swings of bitcoin and other cryptocurrencies.

Cryptominers dreaming of rebound after price crash

Yahoo – AFP, Kevin TRUBLET, August 26, 2018

Two technicians inspect bitcoin mining at Bitfarms in Saint Hyacinthe, Quebec,
in this file photo taken on March 19 (AFP Photo/Lars Hagberg)

London (AFP) - Surrounded by the cryptocurrency mining "rig" that is taking over his bedroom, "Ali" lays bare the risks of his trade, revealing his profits "are a tenth of what they were".

Prices of cryptocurrencies have plunged since the heady heights of last year, slashing the profits of miners such as Ali.

"This is the worst possible time to invest," the young Lyon native, who preferred to keep his name secret, told AFP.

Ali still ekes out a profit and has amassed enough reserves to absorb around six months of losses, but the days of generating 15,000 euros (£13,580; $17,450) profit per computer seem long gone.

He acquired his first rig, an assembly of six graphics cards, in January 2017, and was just about to buy his seventh.

This investment totalled around 13,000 euros, soon paid off with his initial gains.

But the cryptocurrency boom at the end of 2017, of which Bitcoin was the best-known example, has multiplied the number of miners.

Many virtual currencies require that machines are connected to the network and miners are rewarded with units of currency when they create a new block, achieved by solving complicated mathematical problems.

However, the more units are mined, the more the currency is devalued.

'Not fair!'

"We were of course very uneasy about seeing our customers not getting what they expected," recently admitted Genesis Mining, a company that rents computing power.

It blamed the "downward trend" of prices and the "heavily rising difficulty" of mining since April.

The collapse of Bitcoin, which has lost two-thirds of its value since December and dragged many more cryptocurrencies in its wake, has not discouraged miners.

On the contrary, the power dedicated to Bitcoin mining has more than tripled since its peak prices, and the trend shows no sign of abating, according to the bitinfocharts site.

A "farm" consisting of more than 3,000 mining units was inaugurated in Russia last week, cutting profitability even further.

In mid-December, the reference unit for computing power, the THash/second, permitted the equivalent of $3.84 to be mined in one day, compared to only 25 cents today.

As a result, Genesis Mining offered its customers newer equipment to rent at a reduced price, halving maintenance costs, but the proposal was not greeted warmly.

"This is not fair! Your early customers helped you get to where you are now. Give us a free upgrade, we deserve it and you know it," tweeted one customer.

Electricity burden

Mining can also be expensive due to the huge amount of electricity required to earn units.

For example, the Antminer S9 -- a mining device dedicated to Bitcoin -- is worth more than 600 euros and consumes 1,600 euros of electricity per year.

Individuals, who generally focus on other virtual currencies that are easier to mine than Bitcoin, tend to rely on graphic cards to do the heavy lifting, which are less power hungry.

Those who get special rates on their electricity bills, such as EDF employee Philippe Vanbaelinghem, a miner for almost a year, can therefore exploit their "huge advantage" for monetary gain.

His staff discount allows him to reduce his bill by 80 euros per month, helping him generate around 140 euros in monthly mining earnings.

"Not everyone is equal on this," he admitted, pointing out that he could still have made a profit on standard tariffs when prices were high, but not now.

As a tenant, Ali's electricity bill is fixed each month, and he has not received any complaints from his landlord.

Other costs include technical faults, maintenance and the hours required to learn how to optimise equipment, meaning miners have little room to cut costs, despite market prices.

"As strong believers in the industry and its potential, we are certain the market will soon recover," said Genesis Mining.

Ali and Philippe are among the many miners who have incorporated speculation into their business model, hoarding some of their mined cryptocash.

Ali hopes to stop mining in four or five years.

With cryptos, "you have to expect everything," said 25-year-old.

Volcanic growth for bitcoin in chilly Iceland

The Jakarta Post – AFP, JÉRÉMIE RICHARD, Reykjavik, Iceland, March 28, 2018

Philip Salter, head of operations at Genesis Mining, poses inside the bitcoin factory 'Genesis
Farming' near Reykjavik, on March 16, 2018. At the heart of Iceland's breathtaking lava
fields stands one of the world's largest bitcoin factories at a secret location rich in renewable
energy which runs the computers creating the virtual currency. (AFP/Halldor Kolbeins)

At a secret location in the midst of one of Iceland's breathtaking lava fields stands a warehouse whose non-descript siding belies the fact it is ground zero in a digital gold rush for cryptocurrencies that is burning through more electricity than Icelanders' homes.

Iceland's combination of fire and ice not only makes it a stunning site to film parts of the medieval fantasy epic Game of Thrones.

It also offers a unique combination of cheap renewable energy and free air conditioning that is making it a promised land for those "mining" virtual currencies, including bitcoin, using powerful computers that are voracious users of electricity and throw off lots of heat.

And noise.

The din from shelves and shelves of computers whirring inside the 400-square-metre (4,300-square-foot) warehouse rivals a jet during takeoff.

Unlike the dollar and the euro, bitcoin is not issued by central banks. Instead it is "mined" or created in computer "farms" like this one.

It uses computers souped up with six graphics cards tasked with the heavy lifting of thousands of thousands of calculations needed to solve complex algorithms to process bitcoin transactions and be rewarded with bitcoins in exchange.

Read also: 50 Cent now millionaire thanks to bitcoin

Cheap and cool Iceland

"It's possible for everyone to do it at home. There is no one stopping you (and) there are no technical limitations," said Philip Salter, head of operations at Genesis Mining, told AFP.

Last year saw a meteoric rise of hundreds of virtual currencies led by bitcoin, which was fetching almost $20,000 per unit in December as both amateur and professional miners jumped onto the bandwagon.

Home miners often use an old computer, have no choice where they operate, and are lucky if they get a fraction of a bitcoin every now and then.

Professionals like Genesis Mining need to invest serious amounts to build and equip a facility like this one with a surface area a third of an Olympic-size pool, but which has a much greater chance of catching part of the 12.5 bitcoins created every ten minutes.

They can choose where to set up operations, however, and that choice can have a huge impact on their profits as the price of the electricity to power and cool the computers varies considerably from country to country.

Iceland is attractive for cryptocurrency mining because of its cheap electricity, which has the added advantage of being generated from clean geothermal energy.

At a 0.065 euros ($0.081) per kilowatt per hour before tax, the cost of electricity is nearly half the EU average.

This makes Iceland one of the most competitive nations in Europe after Serbia, Macedonia and Bosnia.

But Iceland also has an advantage in its average annual temperature is about five degrees Celsius (41 Fahrenheit), meaning mining farms can for most of the time just suck in cool air from the outside instead of running energy-hungry air conditioners.

The power usage efficiency "is really good in Iceland because of the natural cooling," said Johann Snorri Sigurbergsson, director of business development at Iceland's power company HS Orka.

Read also: Bitcoin trading: Addictive 'hobby' that could break my bank

Shocking rise in demand

A growing number of firms like Genesis Mining, which was previously based in Bosnia, have chosen to set up shop in Iceland, which means demand for electricity has shot up.

"The demand has been increasing exponentially, especially the last three months," said Sigurbergsson.

The increase has come as the price of bitcoin has plunged from its peak of nearly $20,000 to below $9,000 currently, with analysts saying that the price decline has made operating costs even more of a concern for miners.

Salter, who fears the growing competition in the sector, said bitcoin's "price isn't a very good indicator on how bitcoin mining industry is doing".

He may not have that much more competition from neighbours as Sigurbergsson said HS Orka "will not be able to supply all the demand" from miners wanting to set up operations.

He said his firm is "in the great position of we can pick and choose who we can do business with".

HS Orka estimates that Iceland's three largest bitcoin farming companies in 2018 will consume more electricity than the nation's 350,000 inhabitants.

Miners also have another worry: Even a virtual gold rush attracts real thieves.

Between December 2017 and January 2018, equipment worth an estimated 1.6 million euros was stolen.