Blame It on the Bitcoin: How Cryptocurrency Affects Libya's Electricity Grid
Libyans struggled to keep cool last summer amid rolling blackouts that lasted as long as 18 hours a day. As public outrage mounted , Libya’s internationally recognized prime minister Abdul Hamid Dbeibah has found a new culprit for the country’s power woes: “secret” Bitcoin mining operations he says are popping up across the country.
The popularity of Bitcoin mining—officially illegal in Libya—has skyrocketed in recent years. In 2021, Libyans reportedly mined about 0.6 percent of all of the Bitcoin in the world. That put Libya ahead of every country in the Arab world and Africa, and ahead of every European country but Norway. The reason is Libya’s low cost of electricity.
Bitcoin mining uses high-power computers to solve complex math problems in exchange for payment in newly minted coins. The requisite computational power sucks up a lot of energy. Mining a single Bitcoin can use electricity equivalent to what a typical U.S. household uses in nine years. Libya prices a kilowatt hour (KWh) of electricity as low as $0.004—1/40 the U.S. average of $0.16 per kWh and about 1/16 the price in China, the world’s largest producer of Bitcoin. And many Libyans don’t even pay their electrical bills amidst lax enforcement.
The government blames Bitcoin miners for the country’s poor electricity service. Globally, Bitcoin mining consumes an estimated 97 terawatt hours (TWh) of power a year—with Libya’s portion consuming about 2 percent of the country’s total output. Even so, the government says any increased demand has an outsized effect in a country already reeling from an electricity deficit.
Critics of the governments’ claims point out that Libya’s electricity problems long predate Bitcoin. Libya’s electrical generating capacity has declined since 2013, and the country can only meet 2/3 of peak summer demand. Even without Bitcoin, the capacity would fall far short.
The government may be part of the problem in more than one way. Some analysts have traced some Bitcoin mining activity to buildings housing official government offices.
This article is part of the series Mezze: Assorted Stories from the Middle East.