Libyan authorities are clamping down on illegal crypto mining.

On Thursday, local media outlets reported that as many as fifty Chinese nationals had been detained in relation to the raid on a crypto farm in the city of Zliten.

The latest bust follows the discovery by law enforcement of similar underground crypto farms in Misrata and Tripoli earlier in the week.

Footage circulating online appears to show a vast industrial building kitted out with rows of server racks that could be used to mine Bitcoin or other cryptocurrencies. According to the Italian newspaper Agenzia Nova, the Zliten farm was operating out of an abandoned iron factory.

The central bank of Libya has technically outlawed crypto due to perceived money laundering risks. But in recent years, the country has emerged as a hotbed of underground mining activity thanks to its cheap electricity.

According to one source, in September 2022, Libya’s household electricity prices were as low as 0.01 USD per kWh. The global average price during that period was 0.17 USD per kWh.

What’s more, economic opportunity is severely constrained in the war-torn and politically divided country. It is, therefore unsurprising that some Libyans turn to illegal crypto mining as a source of income.

In fact, the University of Cambridge’s Bitcoin Electricity Consumption Index has found that in 2021-2022, Libya accounted for between 0.13% and 0.17%of the global average monthly hashrate. 

Of course, that still places Libya far behind the largest Bitcoin miners in Russia and the U.S. But the country is nonetheless mining crypto at a far higher rate than some of its more populous neighbors.

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The energy demands of crypto mining are such that the Libyan government has even blamed bitcoin farms for failures of the country’s national electricity grid.

Power cuts are such a problem in Libya that demonstrations erupted in Tripoli and Benghazi last year. With outages lasting as long as 24 hours at a time, citizens hit the streets to protest the government’s handling of the situation.

And while the situation has somewhat stabilized since last year, ongoing conflict continues to threaten Libyans’ electricity supply.

Against this backdrop, Prime Minister Abdul Hamid Dbeibeh has attempted to divert blame by connecting power cuts to illegal Bitcoin mining. 

In November, he claimed the practice was draining between 1000 and 1500 megawatts from the Libyan electricity network. Moreover, he preempted the latest crackdown by arguing that the absence of authorities had allowed illegal mining to proliferate. 

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