I did not know that there was a group within Libertarianism that holds the Confederate States of America (CSA) up as a good example of limited government in North America. This is not necessarily considered a good or correct interpretation as Doug Mataconis explains at his blog, Below the Beltway.
One issue the CSA faced as it organized was a lack of cooperation among the states which made it harder to get armies set up. This led to the U.S.'s ability to seize important areas and resources. So it contributed somewhat to its defeat.