Author: Apocalypse on the Chain

Introduction: The "export industry" of blackout countries: How electricity turned into Bitcoin

On a summer night in Tehran, the heat wave is like an airtight net, making people almost breathless.

In the recurring power crises in recent years, the summer of 2025 became the most difficult moment for the Iranian capital city; that year, the city experienced one of the most extreme high temperatures in the past half century, with temperatures repeatedly exceeding 40 degrees Celsius. 27 provinces were forced to cut power, and many government offices and schools were closed. And at many local hospitals, doctors have had to rely on diesel generators to maintain power -If the outage lasts too long, ventilators in intensive care units could stop functioning.

But at the edge of the city, behind the wall, another sound is even sharper: industrial fans make a deafening roar,rows of Bitcoin mining machines are operating at full capacity; large and small LED indicators flash like a sea of stars in the dark night, and the electricity here is almost never cut off.

On the other side of the Mediterranean, in the North African country of Libya, the same scene plays out every day. Residents in the east are used to rolling blackouts of six to eight hours a day; food in refrigerators often goes bad and children have to do their homework by candlelight. But in an abandoned steel plant outside the city, smuggled in old mining machines work around the clock, converting the country’s virtually free electricity into bitcoins, which are then exchanged for 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 are sitting outside their mobile phone store. The store is only illuminated by emergency lights. The street is dark due to a power outage

Chapter 1: Power Run: When Energy Becomes a Financial Instrument

The essence of Bitcoin mining is an energy arbitrage game. Anywhere in the world, as long as the electricity price is low enough, mining machines can be profitable. In Texas or Iceland, mining farm owners carefully calculate the cost of each kilowatt hour of electricity. Only the latest generation of efficient mining machines can survive the competition. But in Iran and Libya, the rules of the game are completely different.

Iran’s industrial electricity prices are as low as $0.01 per kilowatt hour, and Libya is even more exaggerated – its residential electricity prices are about $0.004 per kilowatt-hour, one of the lowest in the world. Such low electricity prices are possible because the government heavily subsidizes fuel and artificially keeps electricity prices low. In a normal market, such electricity prices cannot even cover the cost of power generation.

But for the miners, it was paradise. Even old mining rigs that have been scrapped from China or Kazakhstan—equipment that has long been reduced to e-waste in developed countries—can still be easily profitable here. According to official data, Libya's Bitcoin computing power in 2021 once accounted for about 0.6% of the world's Bitcoin computing power, surpassing all other Arab and African countries and even some European economies.

This number may seem small, but in the context of Libya it seems extremely absurd. This is a country with a population of only 7 million, a grid loss rate of 40%, and rolling blackouts every day. At its peak, Bitcoin mining consumed approximately 2% of the country’s total electricity generation, equivalent to 0.855 terawatt hours (TWh) per year.

In Iran, the situation is even more extreme. The country has the world's fourth-largest oil reserves and the second-largest natural gas reserves, and theoretically should not be short of electricity. But because U.S. sanctions have cut off its access to advanced power generation equipment and technology, coupled with the aging power grid and chaotic management, Iran's power supply has been in a state of tightness for a long time. The explosive growth of Bitcoin mining is completely breaking this string.

This is no ordinary industrial expansion. This is a run on public resources -When electricity is treated as "hard currency" that can bypass the financial system, it no longer prioritizes supply to hospitals, schools and residents, but flows to mining machines that can convert it into dollars.

Chapter 2: Two countries, a history of mining in two countries

Iran: From "exporting energy" to "exporting computing power"

Under the pressure of extreme sanctions, Iran chose to legalize Bitcoin mining and convert domestic cheap electricity into digital assets that can be circulated globally.

In 2018, the Trump administration withdrew from the Iran nuclear deal and re-imposed "maximum pressure" sanctions on Iran. Iran was kicked out of the SWIFT international settlement system, unable to use U.S. dollars for international trade, its oil exports plummeted, and its foreign exchange reserves were depleted. In this case, Bitcoin mining just provides a side door to "energy realization": no SWIFT is required, no corresponding industry is required, only electricity, mining machines and a link to sell the coins are needed.

In 2019, the Iranian government officially recognized cryptocurrency mining as a legal industry and established a licensing system. The policy design looks very "modern": miners can apply for a license to operate mines at preferential electricity prices, but they must sell the mined Bitcoins to the Central Bank of Iran.

Theoretically, this is a win-win solution - the country exchanges cheap electricity for Bitcoin, and then exchanges Bitcoin for foreign exchange or imported goods; miners gain stable profits; and the grid load can be included in planning and supervision.

Reality, however, quickly went off the rails: the permission existed, and the gray was wider.

By 2021, then-President Rouhani publicly admitted that about 85% of Iran’s mining activities were without permission; underground mines have sprung up, from abandoned factories to mosque basements, from government office buildings to ordinary homes, and mining machines are everywhere. The deeper the electricity price subsidy, the stronger the arbitrage motive; the looser the supervision, the more electricity theft becomes a "default welfare".

Facing the reality of an intensifying power crisis and illegal mining consumption of more than 2 gigawatts, the Iranian government announced a temporary ban on all cryptocurrency mining activities for four months from May to September of that year. It is also the most severe nationwide ban since legalization in 2019.

During this period, the government organized large-scale raids: the Ministry of Energy, police and local authorities raided thousands of illegal mining sites, confiscating tens of thousands of mining machines in the second half of 2021 alone.

After the ban ended, however, mining activity quickly rebounded. Many confiscated mining machines were put back into use, and the scale of underground mines increased instead of decreasing. This "rectification" is regarded by the public as a short-lived performance: on the surface, it cracks down on illegality, but in fact it fails to touch the underlying problems, and instead allows some well-backed mining farms to take the opportunity to expand.

More importantly, multiple investigations and reports have pointed out that some entities closely linked to power agencies have intervened in the industry on a large scale, forming "privileged mining farms" that enjoy independent power supply and immunity from law enforcement.

When there is an "untouchable hand" standing behind the mine, the so-called rectification becomes a political performance; while the folk narrative is even sharper: "We endure the darkness just to keep the Bitcoin mining machines running."

Source: Financial Times

Libya: cheap electricity, shadow mining

Slogans on Libyan street walls condemned "the sale and purchase of relief supplies as illegal", reflecting the moral anger among the people caused by the unfair distribution of resources - similar sentiments are also quietly fermenting in the context of the misappropriation of electricity subsidies for mining.

Libya’s mining scenario is more like “barbaric growth in the absence of a system.”

Libya, this North African country (with a population of about 7.3-7.5 million and an area of nearly 1.76 million square kilometers, the fourth largest country in Africa) is located on the southern coast of the Mediterranean Sea, bordering Egypt, Tunisia, Algeria and other countries. Since the fall of the Gaddafi regime in 2011, the country has fallen into long-term turmoil: repeated civil wars, numerous armed factions, and severe fragmentation of state institutions have formed a state of "managerial fragmentation" (that is, the level of violence is relatively controllable, but unified governance is lacking).

What really drives Libya to become a mining hotspot is its absurd electricity price structure. As one of Africa's largest oil producers, the Libyan government has long subsidized electricity prices heavily, keeping them at $0.0040 per kilowatt hour - a price even lower than the fuel cost of generating electricity. In a normal country, this kind of subsidy is to protect people’s livelihood. But in Libya, it became a huge arbitrage opportunity.

So, a classic arbitrage model emerged:

• Old mining machines that have been eliminated in Europe and the United States are still profitable in Libya;

• Industrial areas, abandoned factories, and warehouses are naturally suitable for hiding high power-consuming loads;

• The import of equipment is restricted, but gray channels and smuggling allow machines to continue to enter;

Although the Central Bank (CBL) declared virtual currency transactions illegal in 2018 and the Ministry of Economic Affairs banned the import of mining equipment in 2022, mining itself is still not explicitly prohibited by national laws. Law enforcement mostly relies on peripheral crimes such as "illegal electricity use" and "smuggling", and is poorly executed in the reality of fragmented power, leading to the continued expansion of gray areas.

This state of "prohibition without end" is a typical manifestation of the fragmentation of power -Prohibitions by the Central Bank and the Ministry of Economic Affairs are often difficult to enforce in the eastern Benghazi or southern regions. Local armed forces or militia sometimes even acquiesce or protect mining sites, resulting in the wild growth of mining in gray areas.

Source: @emad_badi on X

What is even more absurd is that a considerable number of these mines are operated by foreigners. In November 2025, Libyan prosecutors sentenced nine people who operated mines at the Zlitan steel plant to three years in prison, confiscated equipment and recovered ill-gotten gains. In previous raids, law enforcement authorities have captured dozens of Asian citizens operating industrial-scale mining farms using old mining machines that were scrapped from China or Kazakhstan.

These old equipment are no longer profitable in developed countries, but in Libya they are still money printing machines. Because electricity prices are so low, even mining machines with the worst energy efficiency ratios can still make a profit. This is why Libya has become the resurrection place of the global "mining machine graveyard" - the electronic waste that was eliminated in Texas or Iceland has been given a second life here.

Chapter 3: Collapse of the Grid and Energy Privatization

Iran and Libya have taken two different paths: one is trying to incorporate Bitcoin mining into the state apparatus, and the other has allowed it to wander in the shadow of the system for a long time. But the end point is the same—grid deficits are widening and the political consequences for resource allocation are starting to show.

This is not a simple technical failure, but the result of political economy. Subsidized electricity prices create the illusion that "electricity is worthless"; mining provides the temptation that "electricity can be cashed in"; and the power structure determines who can cash in on this temptation.

When mining machines share the same power grid as hospitals, factories and residents, conflict is no longer abstract. The power outage damaged not only refrigerators and air conditioners, but also surgical lights, blood bank refrigeration and industrial production lines. Every moment of darkness is a silent examination of how public resources are allocated.

The problem is that the income from mining is highly "portable". Electricity is local and the cost is borne by society; Bitcoin is global and value can be transferred quickly. The result is a highly asymmetrical structure: society bears the burden of electricity consumption and outages, while a small number of people capture the benefits that can flow across borders.

In countries with sound systems and abundant energy, Bitcoin mining is usually discussed as an industrial activity; but in countries like Iran and Libya, the issue itself has changed.

Emerging industries, or resource plunder?

Globally, Bitcoin mining is regarded as an emerging industry and even a symbol of the "digital economy". But in the cases of Iran and Libya, it was more of an experiment in privatizing public resources.

If it is called an industry, it should at least create jobs, pay taxes, be regulated, and bring net benefits to society. However, in these two countries, mining is highly automated and creates almost no jobs; a large number of mines are illegal or semi-legal, with limited tax contributions. Even licensed mines lack transparency in their revenue flows.

Cheap electricity originally existed to protect people’s livelihood. In Iran, energy subsidies are part of the "social contract" since the Islamic Revolution - the government uses oil revenue to subsidize electricity prices, and the people accept authoritarian rule. In Libya, electricity subsidies are also at the heart of the welfare system left over from the Gaddafi era.

But when these subsidies are used for Bitcoin mining, their nature changes fundamentally. Electricity is no longer a public service but a means of production used by a few to create private wealth. Far from benefiting, ordinary people are paying the price—more frequent power outages, higher costs for diesel generators, and more fragile health and education services.

More importantly, mining does not bring real foreign exchange earnings to these countries. In theory, the Iranian government requires miners to sell Bitcoin to the central bank, but the actual implementation effect is questionable. In Libya, there is no such mechanism at all. Most Bitcoins are converted into U.S. dollars or other currencies through overseas exchanges, and then flow out through underground banks or cryptocurrency channels. These funds neither enter the national finance nor flow back to the real economy, but become the private wealth of a few people.

In this sense, Bitcoin mining is more like a new type of "resource curse". It does not create wealth through production and innovation, but uses price distortions and institutional loopholes to seize public resources. And it is often the most vulnerable who pay the price.

Conclusion: The true cost of one Bitcoin

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

The problem is not Bitcoin itself, but who controls the distribution of public resources. When this power lacks restraint, the so-called "industry" becomes just another form of plunder.

And those sitting in the dark are still waiting for the lights to come back on.