Laos may use hydroelectric power to provide electricity for mining, hoping to use cryptocurrency to solve economic problems.

In August this year, the Central Bank of Laos issued a announcement regarding cryptocurrency, stating that it is a high-risk asset often used for money laundering or financing terrorism, and warning the public against using these unregulated cryptocurrencies. However, this Monday, the Laotian government released a new notice indicating that they will start accepting cryptocurrencies.

Laos' New Announcement on Cryptocurrency

According to a notice issued by the Prime Minister's Office of Laos, six companies have been authorized to mine and trade cryptocurrencies such as BTC, ETH, and LTC, with most of these authorized companies being mining, railway, or construction companies. Various ministries, led by the Ministry of Post and Telecommunications, will also engage in discussions with relevant organizations such as the central bank and power companies to determine regulations and rules for the use of cryptocurrencies in Laos.

Laos' Economic Challenges

Over the past two years, due to the impact of the Covid-19 pandemic, Laos' tourism revenue has plummeted, significantly affecting the stability of the domestic economy. This has indirectly led to a sharp increase in Laos' external debt, which exceeded $10 billion by the end of 2020. The international credit rating agency Fitch has downgraded its ratings for Laos' bond market, with Fitch's ratings for various bonds in Laos between B- to C as of August this year, all considered "junk" grade.

Utilizing Hydropower for Mining

To address these economic challenges, Laos is turning to cryptocurrencies, leveraging its abundant hydropower resources. According to a report by the Financial Times, David Tuck, a partner at the business intelligence consultancy Lyriant Advisory, stated:

One of the key requirements for cryptocurrency mining is a significant amount of electricity. Laos has ample hydropower capacity, and the domestic demand for such power is low.

Recently, there have been concerns internationally about cryptocurrency mining causing pollution and having a high carbon footprint. If Laos can effectively utilize its advantage in hydropower generation for cryptocurrency mining with a goal of achieving "carbon neutrality," it may not be far-fetched in the future.