Electricite du Laos (EDL), the state-run power distribution company, has made a significant announcement regarding crypto mining firms in the country. In a departure from its previously pro-crypto stance, the company has decided to cut ties with these firms. The decision comes as a result of various factors, including concerns over electricity production and climate issues related to the method used to generate electricity during a drought.

Laos has experienced drought conditions in the first half of this year, combined with rising temperatures, which have resulted in increased consumption demands. However, hydropower stations have struggled to meet this demand, causing a significant shift in priorities for the country. Approximately 95% of Laos’ total electricity is generated by hydropower plants, which have been hindered by the recent drought.

In response to the situation, EDL aims to increase its electricity production and bolster output for export to the Electricity Generating Authority of Thailand (EGAT) in preparation for the upcoming dry season. The head of EGAT has also emphasized the need for Laos to enhance its production due to the impact of the drought on the country’s exports.

Another factor contributing to the decision to sever ties with crypto firms is the inability of these firms to pay their debts, despite significant investments by the country. A staff member of EDL noted in a recent interview that miners were unable to settle their outstanding balances.

Despite the reasons stated by authorities, the decision has been met with dissatisfaction among crypto enthusiasts, particularly considering the recent bearish market outlook and the challenges faced by miners to sustain their operations.

This decision comes after Laos took measures in September 2021 to regulate crypto mining and trading. The country aimed to position itself as a digital asset mining destination following China’s crackdown on mining operations due to energy consumption and climate concerns. Laos approved licenses for six firms to trade and mine cryptocurrencies, such as Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC). The government required these firms to be wholly owned by Laos and pay a $5 million security with the Bank of Laos. Additionally, crypto mining firms received a minimum usage of 10 megawatts under a six-year contract and were exempt from import and transmission fees imposed by EDL.

The future of mining activities remains uncertain, as many jurisdictions are pushing for reduced electricity consumption by miners due to concerns about energy usage. Some critics argue that traditional finance companies and gaming firms also consume large amounts of energy. Recently, the Biden administration proposed a 30% crypto mining tax, citing environmental and energy concerns.

In contrast, the Sultanate of Oman has invested over $650 million in the mining sector, opening its Economic Free Zone and launching a $370 million second mining facility. The country aims to prioritize the development of blockchain-based firms in its efforts to support the sector.


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