Bitcoin Mining in Iran and Libya Amid Power Crises

Introduction: The "Export Industry" of Power-Blackout Nations: How Electricity Becomes Bitcoin

The summer nights in Tehran were sweltering, with waves of heat like an airtight net, making it hard to catch one's breath.

In the power crises that have recurred in recent years,The summer of 2025 becomes the most difficult time in this Iranian capital city;That year, the city experienced one of the most extreme heatwaves in nearly half a century, with temperatures repeatedly breaking 40 degrees Celsius. As a result, 27 provinces were forced to implement power rationing, and numerous government offices and schools were shut down. In local hospitals, doctors had to rely on diesel generators to maintain power—If the power outage lasts too long, the ventilators in the intensive care unit may stop working.

But at the city's edge, behind walls, another sharper sound emerges: the deafening roar of industrial fans, rows of Bitcoin miners operating at full capacity; large and small LED indicator lights flicker in the dark like a sea of stars,And the electricity here has almost never been cut off.

A North African country at the other end of the Mediterranean Sea.LibyaThe same scenario plays out every day. Residents in the eastern regions have long become accustomed to power outages lasting 6 to 8 hours each day; food in refrigerators often spoils, and children have to do their homework by candlelight. Yet, in the abandoned steel plant outside the city, smuggled old mining machines operate day and night, converting the country's nearly free electricity into Bitcoin, which is then exchanged for U.S. dollars through cryptocurrency exchanges.

This is one of the most absurd energy stories of the 21st century: in two countries ravaged by sanctions and civil war, electricity is no longer just a public service, but is treated as a hard currency that can be "exported."

Image description: Two Iranian men sit outside their mobile phone store, with only an emergency light illuminating the interior, as the street is in total darkness due to a power outage.

The essence of Bitcoin mining is an energy arbitrage game. In any location around the globe, as long as the electricity cost is low enough, mining machines can be profitable.In Texas, USA, or Iceland, mining operators meticulously calculate the cost of every unit of electricity, and only the latest generation of highly efficient mining machines can survive the competition. However, in Iran and Libya, the rules of the game are entirely different.

Iran's industrial electricity price is as low as 0.01 U.S. dollars per kilowatt-hour, and even more striking is Libya, where the electricity price is approximately 0.004 U.S. dollars per kilowatt-hour, making it one of the lowest electricity prices in the world. Such low electricity prices are made possible because the government provides massive subsidies for fuel and artificially suppresses electricity rates. In a normal market, such low prices would not even cover the cost of power generation.

But for miners, this is paradise. Even old mining machines that have been phased out in China or Kazakhstan-- devices that have long become e-waste in developed countries -- can still easily generate profits here. According to official data, Libya's Bitcoin computing power once accounted for about 0.6% of the global total in 2021, surpassing all other Arab and African countries, and even exceeding some European economies.

This number may seem small, but it appears extremely absurd in the context of Libya. It is a country with a population of only 7 million, a power grid loss rate as high as 40%, and daily scheduled power outages. At peak times, Bitcoin mining consumes about 2% of the country's total electricity generation, equivalent to 0.855 terawatt-hours (TWh) annually.

The situation is even more extreme in Iran. The country possesses the world's fourth-largest oil reserves and the second-largest natural gas reserves, and theoretically should not suffer from power shortages. However, due to U.S. sanctions that have cut off access to advanced power generation equipment and technology, combined with an aging power grid and poor management, Iran has long experienced tight electricity supply. Now, the explosive growth of Bitcoin mining is pushing this strained system to the breaking point.

This is not just ordinary industrial expansion. It is a run on public resources—When electricity is treated as "hard currency" that can bypass the financial system, it is no longer prioritized for hospitals, schools, and residents, but instead flows to mining machines that can convert it into U.S. dollars.

Iran: From "Exporting Energy" to "Exporting Computing Power"

Under extreme sanctions pressure, Iran has chosen to legalize Bitcoin mining, converting its low-cost domestic electricity into globally tradable digital assets.

In 2018, the Trump administration withdrew from the Iran nuclear deal and reimposed "maximum pressure" sanctions on Iran. Iran was expelled from the SWIFT international settlement system, making it impossible for the country to conduct international trade in U.S. dollars, leading to a sharp decline in oil exports and the depletion of foreign exchange reserves. In this situation,Bitcoin mining conveniently provides a backdoor for "energy monetization."No need for SWIFT, no need for a correspondent bank, just electricity, mining machines, and a channel to sell the coins.

In 2019, the Iranian government officially recognized cryptocurrency mining as a legal industry and established a licensing system. The policy design appeared quite "modern": miners could apply for licenses and operate mining facilities at discounted electricity rates.But the mined Bitcoin must be sold to the Central Bank of Iran.

In theory, this is a win-win solution for three parties: the country exchanges cheap electricity for Bitcoin, which can then be exchanged for foreign currency or imported goods; miners earn stable profits; and the grid load can be planned and regulated.

However, reality soon veered off course:The license exists, and the gray area is broader.

In 2021, then-President Rouhani publicly acknowledged that about 85% of Iran's mining activities were unlicensed; underground mining operations sprang up everywhere, from abandoned factories to basements of mosques, government offices, and even private homes, with miners present in every corner.The deeper the electricity price subsidy, the stronger the arbitrage incentive becomes; the looser the regulation, the more stealing electricity resembles a "default benefit."

Faced with an escalating electricity crisis and the reality of illegal mining consuming over 2 gigawatts, the Iranian government announced a temporary nationwide ban on all cryptocurrency mining activities from May to September of that year, lasting four months. This was the strictest national ban since the legalization of cryptocurrency mining in 2019.

During this period, the government organized large-scale crackdowns: the Ministry of Energy, police, and local authorities raided thousands of illegal mining operations, seizing tens of thousands of mining machines only in the second half of 2021.

However, after the ban ended,Mining activities have quickly rebounded. Many seized mining machines have been put back into use, and the scale of underground mining operations has not decreased but instead increased.This "rectification" was seen by the public as a short-lived performance: on the surface it targeted illegal activities, but in reality it failed to address deeper issues, instead allowing some well-connected mines to expand their operations.

More importantly, multiple investigations and reports have indicated that certain entities closely associated with the authorities have extensively intervened in this industry.Privileged mining operations have emerged, enjoying independent power supply and immunity from law enforcement.

When "untouchable hands" stand behind the mine, so-called rectification becomes merely a political performance; meanwhile, the grassroots narrative is more pointed:"We endure the darkness, only to keep the Bitcoin machine running."

Source: Financial Times

Slogans on the walls of streets in Libya denounce "the illegal trading of relief supplies," reflecting the public's moral outrage over unfair resource distribution. Similar sentiments are quietly brewing in the background, as electricity subsidies are diverted for mining activities.

Libya's mining scenario resembles "savage growth in the absence of institutional frameworks."

Libya, a North African country with a population of approximately 7.3 to 7.5 million and an area of nearly 1.76 million square kilometers (making it the fourth largest country in Africa), is located along the southern coast of the Mediterranean Sea, bordering countries such as Egypt, Tunisia, and Algeria. Since the fall of the Gaddafi regime in 2011, the country has experienced prolonged instability: repeated civil wars, a proliferation of armed factions, and a severe fragmentation of state institutions, resulting in a state of "managed fragmentation" (where the level of violence remains relatively controlled, but unified governance is absent).

What truly makes Libya a hotbed for mining, however, is its absurd electricity pricing structure. As one of Africa's largest oil producers, the Libyan government has long provided massive subsidies for electricity, keeping the price as low as $0.004 per kilowatt-hour—cheaper than the fuel cost of power generation. In a normal country, such subsidies would be intended to ensure the well-being of its citizens. But in Libya, they have become a huge arbitrage opportunity.

Thus, a classic arbitrage model emerges:

• Old mining machines that have been phased out in Europe and America can still be profitable in Libya;
• Industrial zones, abandoned factories, and warehouses are naturally suitable for hiding high-power-consuming loads;
• The import of equipment is restricted, but gray channels and smuggling continue to bring the machines in;

Although the Central Bank of Libya (CBL) declared virtual currency transactions illegal in 2018 and the Ministry of Economy banned the import of mining equipment in 2022, mining itself has not been explicitly prohibited by national law. Law enforcement primarily relies on peripheral charges such as "illegal electricity use" and "smuggling," but due to the fragmented nature of authority, enforcement remains weak, leading to the continued expansion of a legal gray zone.

This state of "prohibited yet not eradicated" is a typical manifestation of fragmented power—The ban imposed by the central bank and the Ministry of Economy is often difficult to enforce in eastern Benghazi or southern regions. Local armed groups or militias sometimes even tacitly permit or protect mining operations, leading to rampant, unregulated mining in a legal gray area..

Source: @emad_badi

Even more absurdly, a considerable portion of these mining operations are run by foreigners. In November 2025, Libyan prosecutors sentenced nine individuals operating a mine within the Zliten Steel Plant to three years in prison, confiscated their equipment, and recovered their illegal earnings. In previous raids, law enforcement had already arrested dozens of Asian citizens running industrial-scale mining operations, using old mining machines discarded by China or Kazakhstan.

These old devices have long been unprofitable in developed countries, but in Libya, they are still money-making machines.Because electricity prices are so low, even the least energy-efficient mining machines can still be profitable. This is why Libya has become a resurrection site for the global "mining machine graveyard"—electronic waste discarded in Texas or Iceland finds a second life here.

Iran and Libya have taken different paths: one has attempted to integrate Bitcoin mining into the state apparatus, while the other has long allowed it to operate in the shadows outside the system. Yet, they arrive at the same destination—expanding electricity grid deficits and the political consequences of resource allocation are beginning to emerge.

This is not merely a technical failure, but a result of political economy.Subsidized electricity prices create a false impression that "electricity is cheap"; cryptocurrency mining, on the other hand, offers the temptation of "converting electricity into money." The power structure determines who can actually turn this temptation into reality.

When mining machines share the same power grid with hospitals, factories, and residents, the conflict becomes tangible. Power outages damage not only refrigerators and air conditioners, but also operating room lights, blood bank refrigeration, and industrial production lines. Every blackout becomes a silent review of how public resources are allocated.

The problem is that the profits from mining are highly "portable." Electricity is local, and its costs are borne by society; Bitcoin is global, and its value can be quickly transferred. The result is an extremely asymmetric structure:Society bears the cost of electricity consumption and power outages, while a few individuals reap the benefits that can be transferred across borders.

In countries with sound institutions and abundant energy, Bitcoin mining is typically discussed as an industrial activity; however, in countries like Iran and Libya, the nature of the issue itself changes..

New Industries or Resource Exploitation?

Globally, Bitcoin mining is seen as a new industry, and even a symbol of the "digital economy." However, in the cases of Iran and Libya, it resembles more of an experiment in the privatization of public resources.

If it is to be called an industry, it should at least create employment, pay taxes, comply with regulations, and generate net benefits for society. However, in these two countries, mining is highly automated and creates almost no jobs; many mining operations are either illegal or semi-legal, contributing little in taxes. Even licensed mining operations often lack transparency regarding the flow of their profits.

Cheap electricity was originally intended to ensure the well-being of the population. In Iran, energy subsidies have been part of the "social contract" since the Islamic Revolution—the government uses oil revenues to subsidize electricity prices, while the people accept authoritarian rule. In Libya, electricity subsidies are also a core component of the welfare system left over from the Gaddafi era.

However, when these subsidies are used for Bitcoin mining, their nature undergoes a fundamental transformation. Electricity is no longer a public service, but rather a means of production used by a few to generate private wealth. Ordinary people not only fail to benefit from this, but instead bear the costs—more frequent power outages, higher costs for diesel generators, and more fragile healthcare and education services.

More importantly, mining has not brought these countries real foreign exchange revenue. In theory, the Iranian government requires miners to sell their Bitcoin to the central bank, but the actual enforcement of this policy is questionable. In Libya, there is no such mechanism at all. Most of the Bitcoin is converted into U.S. dollars or other currencies through overseas exchanges and then channeled out through underground money transfer systems or cryptocurrency networks. These funds do not enter the national treasury or flow back into the real economy, but instead become private wealth for a select few.

From this perspective, Bitcoin mining resembles a new form of "resource curse."It does not create wealth through production and innovation, but rather exploits price distortions and institutional loopholes to siphon off public resources. The ones who often pay the price for this are the most vulnerable groups.

In a world where resources are increasingly scarce, electricity is no longer merely a tool for lighting up the darkness, but has become a commodity that can be converted, traded, and even plundered. When a country exports electricity as a "hard currency," it is essentially consuming the future that should be used for people's livelihood and development.

The issue is not with Bitcoin itself, but with who holds the authority to allocate public resources. When this power is unconstrained, the so-called "industry" becomes merely another form of plunder.

And those sitting in the darkness are still waiting for the lights to come on again.

"Not everything that is confronted can be changed, but nothing can be changed until it is confronted."