Libya’s Struggle with Unlawful Cryptocurrency Mining – CryptoMode

Libya finds itself grappling with an unprecedented wave of illicit cryptocurrency mining. A recent crackdown led to the apprehension of nearly fifty individuals of Chinese descent involved in a major cryptocurrency operation based in Zliten, a city on Libya’s coast. This event was reported by local media outlets last Thursday, marking a significant turn in the country’s escalating battle against unlawful digital mining.

Uncovering Underground Crypto Operations

This incident was not isolated, but a continuation of a series of discoveries by Libyan law enforcement agencies. Similar covert crypto farms were uncovered in Misrata and Tripoli earlier in the week. The increasing uncovering of such operations indicates the growing pervasiveness of this covert activity in the North African nation.

Visual evidence circulating on the internet reveals the extent of these operations. They showcase an enormous industrial edifice with rows upon rows of server racks potentially used for mining Bitcoin or other digital currencies. As per Agenzia Nova, an Italian daily, the Zliten operation was conducted from an unoccupied iron factory.

The Central Bank of Libya, citing potential money laundering risks, has officially outlawed cryptocurrency activities. However, despite this ban, Libya has emerged as a hotbed for underground mining, fueled significantly by the country’s inexpensive electricity.

The Attraction of Low-cost Electricity In Libya

A source indicated that in September 2022, Libya’s domestic electricity costs were a mere 0.01 USD per kWh, significantly lower than the global average of 0.17 USD per kWh during the same period. These low costs have propelled Libya to the forefront of underground digital mining activities.

The country, divided by political strife and devastated by warfare, offers limited economic opportunities. Consequently, it is unsurprising that some individuals resort to unlawful crypto mining as a potential source of revenue. The University of Cambridge’s Bitcoin Electricity Consumption Index revealed that between 2021 and 2022, Libya contributed between 0.13% and 0.17% of the global average monthly hashrate.

While this still places Libya significantly behind leading Bitcoin miners such as Russia and the U.S., it is mining at a considerably higher rate than some of its more populous neighbors.

The Energy Crisis and its Impact

The energy-intensive nature of cryptocurrency mining has led the Libyan government to point to these operations as a primary reason for the country’s national electricity grid failures. Power outages have become so frequent and prolonged in Libya that it has triggered protests in major cities such as Tripoli and Benghazi, with citizens expressing dissatisfaction with the government’s management of the crisis.

While the situation has somewhat stabilized since last year, the ongoing conflict threatens the stability of Libya’s electricity supply. Amidst this turmoil, Prime Minister Abdul Hamid Dbeibeh has attempted to deflect blame by attributing power cuts to illegal Bitcoin mining.

In a November statement, the Prime Minister alleged that these operations consumed between 1000 and 1500 megawatts from the Libyan electricity network. He further hinted at the imminent clampdown by suggesting that the lack of enforcement allowed illegal mining to flourish.

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