Low-cost Libya becomes regional centre for energy intensive bitcoin mining operations
Living conditions and the economic situation in the nation continue to deteriorate, and the Central Bank of Libya warned citizens that cryptocurrencies, such as Bitcoin or Ethereum, carry considerable risk.
The rising popularity of bitcoin mining is believed to be linked the incredibly low cost of electricity in Libya.
Mining bitcoin requires huge amounts of computational power, which in turn requires large amounts of electricity.
According to the University of Cambridge Center for Alternative Finance, between September 2019 and April 2020, Libya accounted for 0.6 percent of the average monthly share of hashrates.
"The hashrate refers to the total combined computational power that is being used to mine and process transactions on a Proof-of-Work blockchain, such as Bitcoin and Ethereum," according to Coindesk.
An average of 0.6 percent of all bitcoin mining operations worldwide were taking place in Libya.
While this is a small percentage, it makes Libya the most prolific country in the entire Arab region and Africa.
In an eight month period, Libya ranked 9th in the world tables, which China led with an average of 71.7 percent monthly share of hashrates.
It also represents a bigger share than every country in Europe apart from Norway, which had an average monthly share of 0.87 percent of all hashrates.
Despite the existence of bitcoin mining operations in Libya, the practise remains illegal in the country.
"Sharia scholars have agreed on the illegality of this currency, due to the anonymity of its source and the absence of controls in determining its value, and central banks around the world do not recognise it due to the anonymity of the issuer and its influence on the monetary policy of central banks," financial analyst Adel Al-Kilani told The New Arab’s sister publication Al-Araby Al-Jadeed.
Cryptocurrencies have risen in popularity in recent years but remain closely associated with illegal transactions, such as drugs, guns, forged documents, and even illegal pornography.
However, greater attention is being paid to the virtual currency by legitimate financial organisations, and some central banks are beginning to explore how they can cash in on bitcoin's growing popularity.
One Libyan investor, Abdul Rahman Suleiman Bin Saleh, told Al-Araby Al-Jadeed, that cryptocurrencies and bitcoin mining operations could represent an economic opportunity for Libya.
Read more: How does Biden view Turkey's role in Libya's uncertain future?
"It is possible to benefit from digital currencies and for Libya to become a global centre for mining if the necessary infrastructure is provided," he said.
And according to, Ahmed Aboulsen, the director of the Centre for Economic Studies, the acceptance of cryptocurrencies in Libya would open the door for citizens to transfer funds without going through a supervisory body or bank.
This would meant they would avoid paying transfer fees or being subject to the differences in currency exchange rates, and other costs imposed by traditional channels.
He also noted that the virtual currency could be of particular interest to migrant workers who are looking to send remittances home.
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