BusinessLibyaPolitics

How Bitcoin mining aggravated deterioration in Libya

International reports and local news have revealed a thriving trade in Libya that is expanding in secret and generating huge sums of money for its practitioners, causing at the same time huge economic losses to the national economy, as it operates in a parallel market away from government control and leads to harming the most vital energy sector in the country: Mining; the digital currency that pushed Libya to the forefront of its producers at the Arab level.

What is crypto mining? What is the reason for its popularity in Libya? What is its impact on the national economy?

Libya is the ideal environment for digital mining. A digital currency or Cryptocurrency is a currency that adopts a virtual encryption system to be available only in digital form, and has no physical existence. It finds its field in trading via the Internet and is subject to complex mining operations. Mining here is a linguistic metaphor that refers to those who produce it through the use of computers, as these devices work on solving algorithms and decoding complex mathematical codes to turn into a financial balance registered digitaly on a card with a value stored by default and encrypted, and thus it becomes almost like it is impossible to fake their transactions or spend them twice.

But, why is Libya an ideal environment for Bitcoin mining? The process of saving and recording data in the block chain needs; computers with very high efficiency and effectiveness, and the process of mining one bitcoin on average takes about 10 minutes on the network to solve the complex program and process a block, while the process ends with using a large amount of electrical energy, and this is not considered expensive in Libya, where the price of household electricity does not exceed $ 004.0 per kWh, which is well below the world average price of $0.138 per kWh, as the price of electricity supplied to businesses is not much different as it doesn’t exceed US$0.008 per kWh with a global average of US$0.123 per kWh; Thus, Libya ranks second in the world in terms of cheap electricity, after Venezuela.

The availability of production tools, in addition to the lack of high scientific know-how, as much as the need for efficient devices, and an effective electrical provider, supported by weak government oversight, as well as the state’s inability to pursue miners in Libya, as all Bitcoin production units operate in Libya without a legitimate cover and far from the eyes of the authorities in the absence of monitoring and follow-up statistics for the activity of mining networks, which makes the country an ideal environment for these activities.

Bitcoin plunges Libya into darkness

Libya suffers from a steady deficit in electricity supply, which prompts the company to program hours of severe load shedding up to 12 hours, as the General Electricity Company produces an amount of 5,500 megawatts, a figure that is insufficient to cover consumption, which needs about 6,500 megawatts, which rises to 8,000 megawatts in summer, that is more than the total consumption of Tunisia and Jordan combined. Illegal mining could practically carry the burden of raising consumption values, especially after Libya ranked first in the Arab world, according to the American “Bloomberg” agency, which ranked Libya first in the Arab world by 0.13% and ninth globally in a list led by China, while the University Center monitored Cambridge Alternative Finance (CCAF) Libya owns 0.6% of the monthly quota for mining between September 2019 and April 2020.

These figures show high consumption values, especially that one mining process consumes 2.5 megawatts of electricity, and the process around the world consumes about 0.55% of global electricity production.

Fears of using Bitcoin to support terrorism.

The high technical and cryptographic characteristics of the digital currency are a suitable environment for people and entities that operate away from security agencies because the currency is decentralized, meaning that it is not under the control of governments and therefore not subject to any regulatory body or government organizations. The customer can transfer his regular money with these cryptocurrencies, and then, using the company’s systems, transfers it to another customer in another country. This system is characterized by high speed that precedes the speed of traditional bank transfer systems where the other customer gets his balance of digital money that he can either keep or transfer to ordinary money.

A report issued by the Philippine Research Institute for Peace, Violence and Terrorism showed that terrorist groups linked to “ISIS” conducted transactions in bitcoin. In Libya, which is experiencing a difficult security situation through which extremist cells are active, observers fear that these groups will exploit crypto currencies and turn Libya into a virtual bank to transfer and circulate funds financed by terrorism.

The Libyan Central Bank prohibits dealing in digital currencies.

The Libyan Central Bank followed in the footsteps of parallel banks around the world in banning and preventing the circulation of digital currencies, warning of the absence of the legal framework regulating them, which makes their dealers far from the necessary legal protection.

The justification cited by the Central Bank revealed the real fears of trading these currencies. According to the Tripoli Central Bank, institutions and companies are not allowed to deal with these currencies in an attempt to avoid the security and economic risks of dealing with virtual currencies, due to the possibility of using them in carrying out criminal activities and violating the laws such as money laundering and terrorist financing.

Tags

Related Articles

Back to top button
Close