In a surprising turn of events, Libyan authorities recently raided an illegal cryptocurrency mining operation, shedding light on the country’s emergence as a regional mining hub, despite its ban on cryptocurrencies. The central bank of Libya had banned cryptocurrencies due to concerns about money laundering risks. However, the availability of cheap electricity has made the country an attractive destination for underground mining activities. This article explores the rise of crypto mining in Libya, the challenges it poses to the energy grid, and the government’s response to the situation.
Libya’s Cheap Electricity and Economic Constraints:
Libya stands out as a favorable location for crypto mining due to its remarkably low electricity prices. In September 2022, household electricity rates were as low as $0.01 per kilowatt-hour (kWh), while the global average during the same period was $0.17 per kWh. This stark difference has created an opportunity for some Libyans to engage in illegal crypto mining as a means of generating income, particularly in a country where economic opportunities are severely limited due to ongoing political divisions and conflicts.
Libya’s Contribution to Global Crypto Mining:
Despite being significantly behind major crypto mining players like Russia and the United States, Libya has managed to carve out a notable presence in the global mining scene. According to the University of Cambridge’s Bitcoin Electricity Consumption Index, between 2021 and 2022, Libya accounted for approximately 0.13% to 0.17% of the global average monthly hashrate. This indicates that even in the face of challenges, Libya’s mining activity surpasses that of some neighboring countries with larger populations.
Power Outages and Government Blame:
The energy demands of crypto mining have had a detrimental impact on Libya’s already fragile national electricity grid. The government has gone as far as attributing power outages to bitcoin farms, further exacerbating public frustration. Last year, prolonged power cuts lasting up to 24 hours triggered widespread protests in Tripoli and Benghazi, with citizens expressing discontent over the government’s handling of the situation. While the situation has improved since then, ongoing conflicts continue to pose a threat to the stability of the country’s electricity supply.
Government Response and Crackdown:
In an attempt to divert blame, Prime Minister Abdul Hamid Dbeibeh recently implicated illegal Bitcoin mining operations as a major drain on the country’s electricity network. He claimed that such activities were consuming between 1000 and 1500 megawatts of power. Prime Minister Dbeibeh emphasized the absence of authorities in allowing illegal mining operations to proliferate. This statement sets the stage for the government’s latest crackdown on crypto mining activities, as evidenced by the recent raid on an illegal mining operation.
Conclusion:
Despite the Libyan government’s ban on cryptocurrencies, the country has become an unexpected hotspot for underground crypto mining. Libya’s low electricity prices and limited economic opportunities have contributed to its emergence as a regional mining hub. However, the energy demands of mining operations have strained the national electricity grid and have been blamed for power outages, which further fuel public discontent. The recent raid on an illegal mining operation suggests that Libyan authorities are taking steps to address the issue and regain control over the energy infrastructure while enforcing the crypto ban.
