In a startling turn of events, electric company Electricite du Laos (EDL) veers from its pro-crypto stance since 2021, announcing a significant cut to crypto mining firms’ operations. Local news links the decision to various factors, including the rising concerns on electricity production & environmental impact due to drought.
Laos grappled with a severe drought in the early part of the year, sparking an increase in electricity demand while hydropower stations struggle. Given that hydropower plants produce 95% of the country’s electricity, the drought has substantially impacted the energy sector. This forced Laos to prioritize other matters to handle the situation.
Additionally, EDL plans to elevate its energy production and boost output for export to Thailand’s Electricity Generating Authority, particularly with the impending dry season. On the other hand, the indebtedness of crypto firms, despite massive investments, further encouraged the decision. One member of the EDL team pointed out that crypto miners’ inability to “pay their outstanding balances” is a crucial contributor to this move.
While the reasons seem justifiable, the decision was not well received, especially by crypto enthusiasts. The recent bearish market outlook has made it more challenging for miners to keep their operations running.
It hasn’t been long since Laos embraced and made strides in regulating the crypto mining and trading industry, aiming to become a digital asset mining hub post China’s stringent clampdown on mining due to energy consumption and climate-related issues.
Laos authorities granted licenses for six firms to trade and mine popular cryptocurrencies like Bitcoin, Ethereum, and Litecoin. Crypto firms even got exemptions from import and transmission fees and received a minimum usage of 10 megawatts renewable every six years.
However, this recent announcement muddles the mining landscape, precisely at a time when jurisdictional concerns are mounting around the sector’s copious energy consumption. While legislators plan new taxes on miners, advocates defend with the traditional finance companies and gaming industry’s high-energy usage examples.
Recently, the US, under the Biden administration, proposed a 30% tax on crypto mining while the Sultanate of Oman invests over $650 million in the industry. Interestingly, this juxtaposition cements the uncertainty surrounding the worldwide direction towards adapting and implementing blockchain technology.