How Cheap Power Transformed Libya into a Bitcoin Mining Hub

Libya has emerged as an unexpected hotspot for Bitcoin mining, primarily due to its extremely low electricity costs and a complex legal landscape. Despite operating under a legal grey area, the country has attracted miners who exploit subsidized energy to generate substantial profits. However, this has led to significant power shortages and a crackdown by authorities, raising critical questions about the future of cryptocurrency mining in Libya.

Key Takeaways

Low Electricity Costs: Libya’s highly subsidized electricity enables even older, less efficient Bitcoin miners to be profitable.
Global Hash Rate Contribution: At its peak, Libya contributed approximately 0.6% of the global Bitcoin hash rate, surpassing many other nations.
Legal Ambiguities: While hardware imports are banned, there is no clear law against mining, placing it in a legal grey area.
Government Crackdowns: Authorities are increasingly linking illegal mining operations to power shortages, leading to intensified raids and prosecutions.

Libya's inexpensive, subsidized electricity has proven profitable for Bitcoin miners, allowing even outdated and inefficient machinery to remain in operation. During its peak periods, Libya is estimated to have generated about 0.6% of the global Bitcoin hash rate.

Mining here operates in a complex legal framework, with hardware imports banned but no clear legislation directly addressing the act of mining itself. Recently, authorities have associated illegal mining activities with power shortages and stepped up raids, resulting in criminal charges against miners.

In November 2025, for instance, Libyan authorities issued three-year prison sentences to nine individuals caught operating Bitcoin miners in a steel factory located in Zliten. The court ordered confiscation of their equipment and required the return of illegally generated profits back to the state. This case is part of a broader crackdown, which has extended from Benghazi to Misrata, even involving numerous Chinese nationals running large-scale mining operations.

This crackdown has emerged against a backdrop where, until recently, many were unaware of Libya’s burgeoning mining industry. In 2021, the country, known more for its oil exports and frequent blackouts, accounted for approximately 0.6% of the global Bitcoin hash rate, exceeding both other Arab nations and several European economies, as per estimates from the Cambridge Centre for Alternative Finance.

The rapid growth of the mining sector can be attributed to cheap, heavily subsidized electricity coupled with a lengthy period of legal ambiguity, allowing miners to expand faster than regulators could respond.

In the following sections, we will explore how Libya became a covert mining hub, the current strain on its power grid, and the implications of the government crackdown on Bitcoin mining in a fragile state.

Did you know? Since 2011, Libya has experienced the emergence of more than a dozen rival governments, militias, and power centers, creating significant periods where no single authority could enforce national energy or economic policies.

How Cheap Power Transformed Libya into a Bitcoin Mining Hub

The Economics Behind Low Electricity Costs

Libya's mining boom can be traced back to strikingly low electricity prices, estimated at around $0.004 per kilowatt-hour, one of the lowest globally. This pricing is made possible by substantial state subsidies for fuel and low tariffs, despite ongoing challenges such as grid damage, theft, and underinvestment.

From an economic perspective, these low costs create an enticing opportunity for miners. They buy energy at prices significantly below its actual market value and convert it into Bitcoin.

This situation drastically alters the hardware landscape. In regions with high electricity costs, only the latest, most efficient ASICs can remain profitable. In contrast, Libya allows even older machines, which would be deemed unusable in Europe or North America, to generate profits as long as they are powered by subsidized electricity.

This scenario attracts foreign miners willing to send in used technology while accepting the associated legal and political risks.

Regional analyses indicate that, at its peak around 2021, Bitcoin mining in Libya consumed roughly 2% of the country's total electricity output, equating to around 0.855 terawatt-hours (TWh) annually.

In stable electricity markets, such consumption levels might be manageable. However, in Libya, where rolling blackouts are commonplace, diverting such a significant amount of subsidized energy to privately owned server facilities creates serious challenges.

While the US, China, and Kazakhstan dominate the global mining map in terms of absolute hash rates, Libya’s unique positioning is notable, particularly given its small population, inadequate infrastructure, and low electricity costs.

Did you know? Libya loses nearly 40% of its generated electricity before it reaches consumers due to grid damage, theft, and other technical losses, according to the General Electricity Company of Libya (GECOL).

An Insight into Libya's Underground Mining Growth

In reality, Libya's mining environment looks quite different from the high-tech data centers in Texas or Kazakhstan. Reports from cities like Tripoli and Benghazi describe makeshift setups with rows of imported ASICs crammed into abandoned factories, warehouses, and fortified buildings, often located on city outskirts or in industrial zones where substantial electricity use raises fewer suspicions.

Did you know? To avoid detection, some Libyan operators are said to pour cement over portions of their setups to mask heat signatures, making it more difficult for authorities to identify their activities through thermal imaging.

The enforcement timeline underscores the rapid development of this underground economy. In 2018, the Central Bank of Libya declared virtual currencies illegal, warning against their use for money laundering and financing terrorism. However, by 2021, analysts estimated that Libya was responsible for approximately 0.6% of the global Bitcoin hash rate, the highest proportion within the Arab and African regions.

Crackdowns have revealed the extent of this growing industry. In April 2024, security forces captured over 1,000 devices from a single hub believed to be generating about $45,000 monthly. A year prior, authorities arrested 50 Chinese nationals and seized around 100,000 devices, marking one of Africa’s largest crypto raids.

In late 2025, prosecutors sentenced nine individuals to three years in prison for operating a covert mining farm inside a Zliten steel factory. Legal experts cited by local media suggest that miners are betting that the combination of extremely low electricity rates and fragmented governance will continue to keep them one step ahead. Even if larger farms are shut down, the vast number of smaller operations scattered throughout homes and workshops is more challenging to locate and collectively exerts considerable pressure on the power grid.

Effectively Banned but Not Clearly Illegal

On paper, Libya is a nation where Bitcoin should not exist. In 2018, the Central Bank of Libya (CBL) publicly stated that virtual currencies, including Bitcoin, are illegal, emphasizing that individuals using or trading them lack legal protection due to associated risks of money laundering and financing terrorism.

Despite this official stance, there remains no explicit law specifically criminalizing or licensing cryptocurrency mining. Legal scholar Nadia Mohammed pointed out that Libyan law has not directly prohibited mining activities. Instead, miners are typically prosecuted for ancillary issues, such as illegal electricity use, importing banned equipment, or utilizing profits for illicit activities.

While the authorities have attempted to close some loopholes, such as a 2022 Ministry of Economy decree banning the import of mining hardware, these machines still find their way into the country through grey and smuggling channels.

Moreover, the country's cybercrime laws define cryptocurrency as “a monetary value stored on an electronic medium… not linked to a bank account,” which implicitly recognizes digital assets without explicitly clarifying the legality of mining operations.

This regulatory ambiguity contrasts sharply with neighboring countries. For example, Algeria has outright criminalized all cryptocurrency activities, while Iran manages a mix of licensing and sporadic enforcement connected to its subsidized electricity and power crises.

Thus, Libya's miners find themselves in a reminiscent scenario of regulatory arbitrage. Though risky and often unwelcome, the activity is not directly prohibited, making it highly appealing to those willing to operate in secrecy.

The Energy Crisis: Sharing the Grid with Hospitals

Libya's Bitcoin mining surge taps into the same fragile power grid that supplies hospitals, schools, and homes, often teetering on the edge of failure. Before 2022, many regions in the country experienced blackouts lasting up to 18 hours daily, a dire situation exacerbated by war damage, cable theft, and chronic under-investment.

In this overwhelmed grid system, illegal mining farms introduce a constant demand for energy. Reports from Libyan officials and regional analysts estimate that, at its height, cryptocurrency mining consumed about 2% of national electricity output, translating to approximately 0.855 TWh annually.

The New Arab highlights that this energy is effectively being diverted away from hospitals, schools, and households in a country where many residents have adapted their routines around unexpected outages.

Officials have provided alarming estimates, suggesting that large mining operations can demand between 1,000 and 1,500 megawatts of power, comparable to the needs of several mid-sized cities. While these figures may be exaggerated, they underscore significant concerns regarding stable power supply. The incessant energy demands of mining have the potential to undo recent improvements and usher the network back into a state of rolling blackouts, especially during summer months.

Furthermore, a broader resource narrative connects the crackdown on crypto with escalating energy and water crises, where subsidized fuel, illegal connections, and environmental stress generate additional strain on the system.

In such a context, each revelation about secretive farms converting cheap energy into Bitcoin profits risks exacerbating public backlash, especially when local citizens face persistent outages while mining operations continue unabated.

Potential Paths Forward: Regulation, Taxation, or Shutdown?

Libyan policymakers are now divided on how to address an industry that is evidently real, is consuming public resources, yet exists in a legal vacuum. Economists, quoted in various local and regional discussions, argue the government should acknowledge the existence of mining and instead choose to regulate, measure, and tax it. They reference Decree 333 from the Ministry of Economy, which targeted the importation of mining equipment, as confirmation that authorities recognize the industry's scale and potential to bring in foreign currency and create job opportunities for Libyan youth.

Contrarily, bankers and compliance officers urge the opposite approach, contending that mining is too tightly linked to electricity theft, smuggling, and risks of money laundering to warrant normalization.

Unity Bank’s systems director has even called for stricter regulations from the Central Bank, highlighting that the rapid growth of cryptocurrency use — with an estimated 54,000 Libyans (about 1.3% of the population) already involved in crypto by 2022 — is outpacing existing security measures.

This debate extends beyond Libya's borders, as a similar pattern appears across parts of the Middle East, Africa, and Central Asia, where cheap energy, weak institutions, and a burgeoning mining sector coexist. Analysts from CSIS and EMURGO Africa suggest that without credible regulations and realistic energy pricing, mining can exacerbate power crises and complicate relationships with major lenders like the International Monetary Fund, even if it presents superficial opportunities for easy profit.

Ultimately, Libya faces a critical juncture: it must choose whether to move beyond ad hoc crackdowns and equipment bans to either integrate mining into its broader energy and financial strategies or to effectively shut it down altogether in a sustainable manner.