Libya, which has never been among the prominent digital economies and whose economy was known as rentier, topped the list of Arab countries in Bitcoin mining for 2022 according to the Cambridge Index of Electricity Consumption in Bitcoin Manufacturing, outperforming more stable and regulated countries.
Despite the investment opportunities offered by the sector, it faces a legal dilemma between its official prohibition and the absence of explicit legislation criminalizing it, while the low energy costs have driven unregulated networks to exploit it outside legitimate economic frameworks.
What is the true impact of crypto mining and trading on the economy and monetary and fiscal policy in Libya? What is the role of legislation and laws? And what about the risks of this virtual market?
Crypto exchange
Banker and crypto expert Imran Al-Shaibi explained that mining in Libya has become unprofitable because most of the devices that were previously used are now ineffective and are no longer able to keep up with the rapidly advancing technology in this field. He pointed out that there are a considerable number of Libyans who trade crypto, albeit in small amounts, through social media application rooms.
For his part, crypto investor Salem Huneidi, who runs a trading group on Facebook with more than 44,000 members, says that the interest in cryptocurrencies in Libya is fairly active, and is largely concentrated among young people.
He adds that there are many pages and experts who seek to raise awareness about this major financial transformation, which represents a qualitative shift away from the dominance of traditional banks, noting the attempts by systems and laws to restrict this transformation, which is based on the principle of financial freedom.
Khaled (a pseudonym) – the owner of a currency exchange company – believes that the demand for dealing in crypto has increased significantly during the past two years, and he explained that those who accept to buy digital currencies from his customers are two main categories:
- The first seeks to achieve quick profits without having deep experience in the market.
- The second category, however, tends towards long-term investment by regularly buying crypto and holding them for years.
Regarding withdrawals, Ahmed (a pseudonym) explained that crypto trading is done through individuals or cryptocurrency platforms, adding that his biggest profit so far has been around $5,000, as a result of an investment that lasted for more than 3 years in Ethereum.
Legal position
On the legal side, Dr. Magdi Al-Shabani, Professor of Law and member of the Scientific Council at the Center for Criminal Studies and Research affiliated with the Attorney General, confirmed that there is no explicit legal text that criminalizes mining and trading of crypto in Libya.
He pointed out in a statement that mining or dealing in cryptocurrencies – without the permission of the Central Bank of Libya, which is the only entity authorized to grant permission to practice – is not considered a major economic crime, but the person involved may face some charges and sometimes misdemeanors because he connected to the electricity grid in an illegal manner and depleted the electrical energy in large quantities, in addition to not obtaining permission to practice from the Central Bank.
Al-Shaabani pointed out that crypto mining and trading could become a crime if miners are found to be involved in smuggling migrants, fuel, and drugs using these currencies.
This means that those involved are dealing with illegal money outside the banking system and without oversight, which could be used for money laundering and financing terrorism. In such cases, the crime of mining would be more severe.
For their part, members of the House of Representatives, Abdul-Moneim Al-Arfi and Ali Al-Soul, considered that mining and crypto are new to Libya, and stressed that the House of Representatives is working on enacting legislation to regulate the process.
The first warnings were issued by the Central Bank of Libya, which in 2018 banned trading and dealing in crypto, highlighting the security and economic risks of dealing in cryptocurrencies, which may be exploited to carry out criminal and illegal activities such as money laundering and terrorism financing.
While the tenth definition of the Cybercrime Law, which was approved by the House of Representatives in September 2021, states that “electronic money is a monetary value stored on an electronic means that is prepaid, not linked to a bank account, and is widely accepted by those other than its issuer and is used as a payment tool for various purposes,” without explicitly criminalizing mining or trading.
Campaigns to seize and confiscate Bitcoin mining equipment
Over the years, security authorities have carried out extensive arrest and confiscation operations targeting networks that exploited the legislative vacuum and the low cost of energy.
In April 2024, the Security Directorates Support Unit in the Eastern Region seized more than a thousand Bitcoin mining devices in the Al-Salmani Al-Sharqi area of Benghazi. According to the unit, these devices were generating approximately $45,000 per month.
In June 2023, the Public Prosecutor’s Office uncovered a massive cryptocurrency mining network operated by 12 Chinese nationals in collaboration with Libyans in the city of Zliten.
During the raid on the site, security forces found equipment used for crypto mining, as well as high-voltage cooling systems. The investigation also led to the discovery of other locations in the cities of Tripoli and Misrata.
Mining drains electricity
Digital blogger Ali Al-Tawil, who is one of the miners, spoke in a post on Facebook about his mining since 2016 using 3 personal computers, with the application of “under-volting” technology to reduce electricity consumption and lower the temperature.
He explained in his post that the total consumption of these devices together “does not exceed the capacity of a small air conditioner, as they only draw 2.5 amps, which is less than the consumption of a water heater, and only about 10% of the consumption of a dishwasher,” according to his post.
Earlier in 2022, the head of the Government of National Unity, Abdul Hamid Dbeibah, confirmed that illegal crypto mining in Libya was straining the electricity grid, wasting between 1,000 and 1,500 megawatts of electricity in a single mining operation.
Al-Dabaiba based his speech on a study conducted by the Policy Center for the South, which revealed that the number of people who own cryptocurrencies in Libya is 1.30% of the total population in 2022, which is 54,000 traders based on that percentage.
The need to regulate crypto mining in Libya
The founder of the Libyan stock market, and economic expert Dr. Suleiman Al-Shahoumi, explained in his speech that Libya has mishandled the issue of trading and crypto mining, considering that the way the Libyan authorities dealt with this issue is illogical; because they interpret it as a serious issue that affects the local economy and monetary policy, which is far from that, according to him.
Based on the digital transformation and the adoption of cryptocurrencies as a tool to support the economy, Al-Shuhoumi recommended:
- Regulating mining and trading activities within a structured legal framework.
- Trading cannot be controlled because it is an open space, but it can be regulated and licensed.
- Preparing the infrastructure to create economic activity related to cryptocurrencies and their mining.
As for monetary policy, Al-Shuhoumi stressed that trading does not affect monetary policy, as it is outside the framework of control and is not subject to monitoring and control.
Serious repercussions
However, economic researcher Mohammed Drimish had a different opinion, as he believes that trading and mining crypto has serious repercussions on national income, the balance of payments, the gross domestic product, and the general rise in the price level.
Drimish explained that the entry of cryptocurrencies will create a negative impact in terms of controlling the prices of local currencies and their comparison to other currencies, because there is a new variable that will enter the Libyan market and the Central Bank cannot control it, which will cause conflict and contradiction between monetary, financial and political policies, in addition to affecting the value of the Libyan dinar.
In light of this heated debate, between those who see mining as a profitable business if it is placed within an organized framework under the umbrella of laws and legislation, and those who see it as harming the economy, undermining its recovery, and even supporting and financing terrorism, the issue of crypto mining in Libya remains a gray area between the absence of clear legislation and the growing need to keep pace with global economic developments.
