Libyan authorities clamp down on bitcoin mines

Libyan authorities recently busted the activities of illegal bitcoin mines in the country, leading to the closure of least four mines and the arrest of several Chinese nationals.  

The details 

• The Attorney-general's office explained via social media that a total of five mines were found in Libya’s northwestern region last week, which led to the arrest of 60 Chinese nationals and the seizure of several equipment. 
• The office detailed these discoveries and arrests with videos and pictures of the mines showing various huge computers. These computers were used to run the mines out of abandoned buildings. 
• A news report added that the attorney-general’s office would consult experts to determine the extent of damage the mines had caused to public interest. 

Key quote 

• The announcement read: 

“The General Prosecutor [is] investigating the incidents of cryptocurrency mining - Bitcoin and their representation - within the jurisdiction of the two courts of appeal: Tripoli; and Misrata. The Director of Public Order, within the jurisdiction of the Misrata Court of Appeal, conducted a judicial investigation, leading to the observation of the presence of … Chinese delegates at the inspection site.” 

Be smart 

• Bitcoin mining is the process through which new coins are minted. For that to happen, bitcoin miners compete to verify a transaction on the Bitcoin blockchain and add it to the long line of blocks. 
• To achieve this, miners need to use powerful and energy-intensive computers to solve a mathematical equation which is pivotal to securing a transaction on the blockchain. 
• The process is as energy consuming as it is lucrative. It is said that the verification process for a single bitcoin transaction takes 695 kilowatt hour (kWh) of electricity equivalent to the power consumption of an average United States household for 24 days. 

Why this matters 

• Bitcoin mining is officially illegal in Libya and the government has attributed it to the frequent power cuts in the country. However, other reports have claimed the war damaged infrastructure is responsible for the power cuts.
• Despite the ban, bitcoin mining is popular in the country. A report in 2021 stated that Libya accounted for 0.6% of worldwide bitcoin mining operations. 
• Libya is attractive for bitcoin mining due to its cheap electricity costs. Electricity is reportedly charged at $0.004 per kWh, which is 40 times cheaper than the average rate in the U.S.