UPDATE: It happens even if Location is the only permission active. Site address is of format "one.two.three.com", if it helps reproduce the issue.

I am having the same problem. On a little homemade page that I keep open all the time. Every now and then - several times a day - Firefox asks me to log in again, and after that my location setting is changed to blocked. I have tried to enable it in permissions/location/exceptions, but it gets reset to blocked again. Enabling or disabling the tracking protection for that site seems to have no effect. In my case Location is the only permission. The site uses simple authentication (.htpasswd on Apache)

Edit: I originally posted a similar question https://support.mozilla.org/en-US/questions/1416453