Libya’s cheap, subsidized electricity created an environment conducive to Bitcoin mining within the country. The Cambridge Center for Alternative Finance reported that Libya accounted for around 0.6% of the global Bitcoin hash rate in 2021.
The firm also noted that the surge in BTC mining in Libya put it ahead of every other Arab and African state, and even above some European economies. Authorities began cracking down on Bitcoin mining activities late in the year after it strained the electrical grid.
Low electricity prices create arbitrage opportunities for Bitcoin miners
The report revealed that the surge in BTC mining activities was also driven by a long period of legal and institutional ambiguity. Libya has faced more than a dozen political regimes since 2011. The situation allowed miners to increase faster than the authorities could react.
The country’s electricity price is among the lowest globally, estimated at around $0.004 per kilowatt-hour. The lower prices are driven by the state’s heavy fuel subsidies and low tariffs.
Over the years, Libya’s electrical grid has faced damage, theft, and underinvestment. The General Electricity Company of Libya (GECOL) reported that such issues cause the country to lose about 40% of its generated electricity before it reaches homes.
The low prices create a significant arbitrage for miners, where they buy energy way below its real market price and convert it into Bitcoin. Miners in Libya could even feed subsidized power to older-generation machines and still generate a margin. The environment attracted foreign operators willing to ship used rigs and accept legal and political risk.
The Cambridge Center for Alternative Finance also reported that Libya may have consumed around 2% of its total electricity output during its peak in 2021. The figure accounts for approximately 0.855 terawatt-hours (TWh) a year. The report revealed that the U.S., China, and Kazakhstan remain the top globally in absolute hash rate.
Authorities convicted and sentenced nine people to three years in prison for operating Bitcoin miners inside a steel factory in the coastal city of Zliten. Prosecutors seized the miners and also forfeited the profits generated to the state.
The authorities have also conducted similar raids across Benghazi and Misrate in 2024 and have arrested several Chinese nationals who were operating industrial-scale farms. They confiscated more than 1,000 devices in Benghazi from a single hub alleged to be making more than $45,000 a month. Libya’s authorities also arrested 50 Chinese nationals and seized about 100,000 devices a year earlier.
Local media reported that operators believe they will remain a step ahead due to low electricity prices and fragmented governance. They also argued that the government take-downs won’t work because it will be hard to find the thousands of smaller rigs scattered across homes and workshops.
Bitcoin mining in Libya continues despite a warning issued by the Central Bank of Libya (CBL) in 2018, which deemed digital assets illegal in the country. The bank cited risks of money laundering and terrorism financing, and removed any legal protection for anyone using or trading crypto.
Despite a decree from the Ministry of Economy in 2022, which prohibits the import of mining hardware into Libya, there has been no change. The illegal mining farms also add a constraint on the country’s fragile grid, affecting schools, hospitals, and ordinary households. Local authorities revealed that large farms can draw 1,000-1,5000 megawatts of electricity, enough to power a mid-sized city’s demand.
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Source: https://www.cryptopolitan.com/libyas-subsidized-energybitcoin-mining/
