Helium’s IoT crypto network is barely keeping up in Lebanon

This did little to stop imports, and simply made hot spots more expensive. An importer, who wished to remain anonymous, told WIRED, “We get our machines through customs using other channels.” The other channels tended to be expensive.

The Helium website states that “mining of HNT is done by installing a simple device on your home or office window. That’s it. Seriously.”

In practice, it is far more complicated. A quick look at any Helium Telegram group or Discord server reveals endless discussion about radio frequencies, IP addresses, firmware updates and the correct placement of hot spots. These factors and more will all affect the amount of HNT that a hot spot will extract. “You can do everything perfectly and it still seems like luck,” says Manih. “We tried different cables, IP addresses, connection types. It’s impossible to know what this machine wants.”

The complexity of running a hot spot was beyond many who had believed Helium’s marketing and thought they were buying some kind of plug-and-play money printer. Even its popularity was a problem. One of the many factors that affect the profitability of hot spots is their density in a given area. Too few means less return. For many, this also means less return. “All kinds of people bought,” Saleh said. “Investors got involved and bought 50 or 100 machines to make farms. They made it harder for everyone.”

That meant that many people in Lebanon could not match the profits of the early adopters of Helium. The rewards issued to each hot spot come from a fixed amount pool. As more and more hot spots came online, the fixed reward pool was spread ever thinner. Many people had bought hot spots around or after the top of the crypto bull market, and got them online when the price of HNT fell along with the rest of the crypto market. From a bull market of $50 per token in 2021, HNT fell to less than $3.

The network also does not generate large revenues for Helium. In January, Helium’s total demand-side revenue (ie the fees paid by companies to actually use the network) was just under $14,000. In September, tax revenue was just $1,150.

The network and token have also come under growing criticism for tokenomics being heavily skewed in favor of insiders. In the early stages of the project, Helium employees and their collaborators reportedly collected more than a quarter of all HNT tokens mined, giving them a huge windfall, although the rewards declined for new users.

The zero point period on hot spots, previously measured in weeks, is now measured in years. Marcel Younes, who tried running a couple of hot spots despite some initial skepticism, sums up the feelings of many hot spot owners. “It’s an obvious scam,” he says. “Only created to enrich the first investors.” He has since unplugged his machines, judging them not to be worth the very small amount of electricity they consumed.

Some people still cling to hope that their investments will recover. Although it will be years before a Helium-powered drone delivers any burritos in Beirut – if it ever does – Saleh says he still has some faith in the project: “If it’s not Helium that manages to create this network, someone else will.” And he says there’s even still some demand for hot spots, though this is mostly because “the aftermarket has gotten so cheap. You can get one for $100 now.”