How Libya’s almost-free power turned into a Bitcoin mining headache

Libya was never supposed to be a Bitcoin mining story. The country is better known for oil exports, power cuts and overlapping governments than high-density data centers. Yet by 2021, estimates from the Cambridge Centre for Alternative Finance put Libya at roughly 0.6% of global Bitcoin hash rate – ahead of every other Arab or African state and even some European economies.

The path from blackouts to a mining hotspot runs through one number: the cost of electricity. Some local estimates put Libyan power at around $0.004 per kWh, among the cheapest anywhere in the world. That price is only possible because the state heavily subsidizes fuel and keeps tariffs far below the real cost of generation and transmission.

For miners, that kind of pricing is pure arbitrage. You are effectively buying energy far under market value and converting it into Bitcoin. In high-cost markets, only the newest, most efficient ASICs can survive. In Libya, older-generation machines that would be scrap metal in Europe or North America still throw off a margin, as long as they are plugged into subsidized power.

Cheap electricity is only half the story. Since 2011, Libya has cycled through rival governments, militias and competing “administrations” that all claim some piece of the state. In that environment, national-level energy and financial policy is hard to design and even harder to enforce. While the central bank warned against “virtual currencies” back in 2018, there is still no clear statute that directly criminalizes mining itself.

That legal grey zone has been the miners’ opportunity. Hardware imports are technically banned by a 2022 decree, but rigs continue to arrive through grey channels and smuggling routes. On the ground, mining clusters don’t look like Texan industrial parks. Local reports describe rows of ASICs hidden in abandoned steel plants, warehouses and fortified compounds on the edge of cities – close enough to tap heavy power lines, far enough to avoid attention. Some operators reportedly go as far as pouring concrete over parts of their setups to blur the heat signature on thermal cameras.

At its peak around 2021, analysts reckon Libyan miners may have been consuming roughly 2% of national electricity output, or about 0.855 TWh per year. In a rich, overbuilt grid that might be tolerable. In Libya, which still loses an estimated 40% of generated power to theft, damage and technical losses, that extra load lands on a system already running hot. Every megawatt that vanishes into a covert farm is a megawatt that never reaches homes, hospitals or water pumps.

Unsurprisingly, the grid operator has started to push back. Over the past two years, security forces have raided sites from Benghazi to Misrata, seizing hardware and publicizing headline numbers on the energy consumed. One 2024 bust in Benghazi reportedly netted more than 1,000 devices from a single hub thought to be earning around $45,000 per month. Another operation targeted foreign-run farms, with authorities claiming they confiscated tens of thousands of machines and arrested dozens of Chinese nationals.

The latest turn came in late 2025, when prosecutors quietly secured three-year prison sentences for nine people caught running miners inside a steel factory in Zliten. Their hardware was seized and profits ordered returned to the state. The message from Tripoli is clear: even if the law still hasn’t caught up with the sector, enforcement will treat large-scale miners as power thieves first and crypto operators second.

Legally, Libya sits in an uncomfortable middle ground. The central bank insists Bitcoin is “illegal,” but there is still no dedicated mining law. Courts tend to reach for adjacent charges – illegal electricity consumption, importing banned equipment, or using proceeds for money laundering – instead of prosecuting mining directly. That stands in contrast to regional peers like Algeria, which has opted for explicit criminalization, and Iran, which flips between licensing and crackdowns depending on the state of its own subsidized grid.

Behind the legal details is a simple allocation problem. Mining in fragile states taps the same subsidized fuel and stressed cables that keep basic services running. When a single covert farm can draw the equivalent of a town’s load, the trade-off becomes politically hard to ignore. Every story about a fortified warehouse turning cheap public power into private Bitcoin income risks inflaming public anger in a country where many people still plan their day around sudden blackouts.

For miners, Libya is a textbook example of what “cheap power” actually means once you zoom out from the spreadsheet. Rock-bottom tariffs and weak institutions can turn yesterday’s hardware into a cash machine – right up until the state, lenders or foreign partners decide that arbitrage is politically unsustainable. At that point, mining farms move from “grey zone” to “raid target” very quickly.

The question for Libyan policymakers is whether to keep playing whack-a-mole with underground farms or admit that the industry exists and bring it into the light. A licensing regime with metered loads and realistic tariffs could, in theory, turn a headache into a source of tax and foreign-currency income. But doing that requires a level of institutional capacity and trust that Libya does not yet have. Until then, miners operating in fragile grids should assume that subsidized power is never truly “free” – and that the bill may arrive in the form of a police raid.