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Laos’ state-owned electricity distributor announced it would suspend electricity supply to cryptocurrency mining operations within the country. The decision stems from a combination of factors, including the struggle to meet power demands amidst drought conditions, impending export commitments to Thailand, and the failure of mining firms to settle outstanding debts.
Crypto Mining in Laos
In September 2021, Laos introduced a public-private pilot program to explore cryptocurrency mining and trading. The move was intended to take advantage of China’s crackdown on mining activities as many industrial-scale miners sought alternative locations for their operations.
At the time, the country authorized six companies, including construction groups and a bank, to begin mining and trading cryptocurrencies such as Bitcoin, Ethereum, and Litecoin. It also announced that government ministries would work with the Bank of Laos and Electricité du Laos to regulate the industry.
One of the key factors that attracted crypto miners to Laos was the availability of cheap electricity. Laos has many rivers and waterfalls, and hydropower is one of the country’s primary sources of electricity.
Laos Suspends Electricity to Crypto Miners
Last week, Électricité du Laos (EDL), the state-owned electricity distribution company, announced that the country is cutting off electricity to crypto miners. The agency cited several reasons for this move, including the ongoing struggle to generate sufficient power due to drought conditions.
The announcement explained that Laos experienced a severe drought in the first half of 2023, increasing electricity demand. Hydropower plants, which account for 95% of the country’s power generation, struggled to meet these heightened needs in extreme heat, forcing the country to suspend electricity supply to crypto miners.
In addition to serving domestic requirements, Laos plans to export significant volumes of electricity to the Electricity Generating Authority of Thailand (EGET) to support the Thai power grid during the upcoming dry season next year. This has further limited local supply capacities.
Authorities in Laos have also emphasized the cryptocurrency mining operations’ failure to repay mounting debts as a critical factor in the suspension. “Another reason we must suspend supplying electricity to cryptocurrency mining businesses in Laos is that they are unable to pay their outstanding electricity bills,” an EDL employee told Laotian Times.
The Bank of Laos, for its part, stopped providing loans to cryptocurrency companies in January 2023 to reduce financial risks and safeguard the commercial banks’ stability while promoting credit accessibility for the production sector.
Laos Aims to Become the “Battery of Southeast Asia”
Laos is one of Asia’s biggest exporters of hydroelectricity, already supplying electricity to several countries, including Thailand, Vietnam, Cambodia, Myanmar, Malaysia, and even Singapore. The country has massive hydropower potential thanks to its mountainous terrain and network of rivers.
With over 26,000 megawatts of installed capacity and plans to more than double that figure, the country is aggressively developing its renewable resources. Laos aims to transform into the leading exporter of clean electricity in Southeast Asia, or what some dub the “Battery of Southeast Asia.”
Major dams like Nam Theun 2 generate large amounts of low-cost electricity mainly destined for neighboring Thailand and Vietnam. The country is also working on other projects, including the Luang Prabang dam, which will have an installed capacity of 1,460 megawatts — more potent than Laos’ other dams.
Notably, revenues from power sales to partner countries contribute significantly to Laos’ gross domestic product (GDP). According to an October 2022 report, the power sector’s contribution to Laos’ GDP is approaching 15%.
What are some potential alternative destinations for crypto miners in Laos? Let us know in the comments below.