Laos, facing a power surplus and heavy debt from massive hydropower dam construction, is attempting to convert its excess electricity into economic gains by developing energy-intensive cryptocurrency mining. This move has drawn international attention and sparked domestic controversy.

* Power Surplus & Debt Problem: Laos aimed to become the "Battery of Southeast Asia" by building numerous hydropower dams. However, power supply now far exceeds demand, and the dam projects have brought a heavy debt burden and ecological damage.

* Cryptocurrency Mining as a Solution: The government has begun issuing licenses to cryptocurrency trading platforms and mining operations, aiming to profit from cheap hydropower and attract foreign miners.

* Environmental & Social Costs: Dam construction has led to disrupted river ecosystems, forced relocations of communities, and unfulfilled promises of improved livelihoods, exacerbating local hardships.

* Economic Challenges: Laos confronts high inflation, currency depreciation, and pressure from high US tariffs. While the International Monetary Fund acknowledges the economic logic of monetizing excess power, it warns that debt and inflation could drag down growth long-term.

Despite the controversies, Laos views cryptocurrency mining as a potential path towards its digital economy goals and escaping the UN's list of "Least Developed Countries."

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Authored by: SCMP

Compiled by: Ivan, WuShuo Blockchain

Burdened by debt and a power surplus, the "Battery of Southeast Asia" is looking to energy-intensive cryptocurrency mining for profits.

Laos aspired to become the "Battery of Southeast Asia." Years of large-scale hydropower dam construction have left the country with a surplus of electricity but also a rapidly climbing debt burden.

Now, to convert this excess power into economic gain, the government is introducing power-hungry cryptocurrency mining operations—a move drawing international scrutiny and domestic debate.

In the multi-billion dollar digital asset mining industry, participants earn Bitcoin and other tokens as rewards for solving complex blockchain algorithms, a process notorious for its high energy consumption.

However, Laos, having built dozens of hydropower projects on the Mekong River and its tributaries, now produces more electricity than the market can absorb.

Government trade data shows that electricity accounted for 26% of Laos's total exports last year. This landlocked nation, long among the poorest in Southeast Asia, is selling its cheap hydropower to energy-hungry Asian neighbors striving to meet climate goals.

Yet, this hydropower construction boom came at a high cost. Environmentalists warn that the dams have damaged river ecosystem health, harmed downstream agriculture and fisheries reliant on sediment-rich waters, and displaced tens of thousands—possibly even hundreds of thousands—of people.

Critics argue this policy sacrifices local livelihoods and ecosystems for economic returns that are questionable.

Meanwhile, Laos's debt has piled up. According to the International Monetary Fund (IMF), a significant portion of the dam financing came from Chinese loans and foreign companies, but the return on this investment is slow due to Laos's lack of transmission infrastructure to export the surplus power.

Laotian officials are now exploring new ways to monetize this idle electricity. Following a high-level meeting, the state-run Vientiane Times reported that policymakers are studying "long-term economic opportunities," including "digital asset mining… enabling the country to turn surplus electricity into economic value."

While regulators remain cautious about the risks of volatile digital assets, Laos has begun issuing licenses to local cryptocurrency trading platforms and mining operations.

This move comes as ordinary citizens grapple with high inflation, and the Lao kip has lost about half its value against the US dollar over the past five years.

Compounding the situation, the US recently imposed a 40% tariff on imports from Laos—the second-highest rate among Washington's trade partners.

Many environmental advocates see the turn to cryptocurrency mining as a symptom of a flawed energy policy—one that has saddled Laos with debt and power it cannot use.

"Allowing electricity for crypto mining is clearly not driven by domestic conditions," said Witoon Permpongsacharoen, head of the Mekong Energy and Ecology Network. "It stems from Laos's heavy debt and its inability to pay it."

Paradoxically, Laos suffers from a power surplus during the rainy season but must purchase electricity from neighbors during the dry season when hydropower output declines.

"Most of Laos's hydropower energy supply is seasonal; during the dry season, Laos buys back power from Thailand," said Pianporn Deetes of International Rivers.

Deetes added that for communities relocated to make way for reservoirs and dams, most promised livelihood improvements have not materialized; many face greater hardship, not prosperity.

She said Laos risks "taking the country's rich natural resources away from the people, leaving them worse off, not better."

Nonetheless, the government's venture into cryptocurrency mining has attracted regional attention as global trade winds shift and countries seek new growth sources.

Laos aims to become a mature digital economy by 2030 and is expected to graduate from the UN's list of "Least Developed Countries" next year.

Despite China—Laos's powerful northern neighbor—banning cryptocurrency mining and trading in 2021 over financial stability concerns, Laos has become an attractive destination for Chinese miners due to its low electricity prices, sometimes even involving illegal activities.

The Lao government's latest measures aim to bring these activities under official oversight and tax the industry through licensing.

The IMF sees the economic logic in monetizing surplus power, but challenges remain.

The IMF warned last November that Laos has "significant public debt levels, posing challenges to its medium-term prospects"; under current policies, "inflation and debt servicing could intensify, implying significant drag on growth for longer."

Laos, facing a power surplus and heavy debt from massive hydropower dam construction, is attempting to convert its excess electricity into economic gains by developing energy-intensive cryptocurrency mining. This move has drawn international attention and sparked domestic controversy.

* Power Surplus & Debt Problem: Laos aimed to become the "Battery of Southeast Asia" by building numerous hydropower dams. However, power supply now far exceeds demand, and the dam projects have brought a heavy debt burden and ecological damage.

* Cryptocurrency Mining as a Solution: The government has begun issuing licenses to cryptocurrency trading platforms and mining operations, aiming to profit from cheap hydropower and attract foreign miners.

* Environmental & Social Costs: Dam construction has led to disrupted river ecosystems, forced relocations of communities, and unfulfilled promises of improved livelihoods, exacerbating local hardships.

* Economic Challenges: Laos confronts high inflation, currency depreciation, and pressure from high US tariffs. While the International Monetary Fund acknowledges the economic logic of monetizing excess power, it warns that debt and inflation could drag down growth long-term.

Despite the controversies, Laos views cryptocurrency mining as a potential path towards its digital economy goals and escaping the UN's list of "Least Developed Countries."

---

Authored by: SCMP

Compiled by: Ivan, WuShuo Blockchain

Burdened by debt and a power surplus, the "Battery of Southeast Asia" is looking to energy-intensive cryptocurrency mining for profits.

Laos aspired to become the "Battery of Southeast Asia." Years of large-scale hydropower dam construction have left the country with a surplus of electricity but also a rapidly climbing debt burden.

Now, to convert this excess power into economic gain, the government is introducing power-hungry cryptocurrency mining operations—a move drawing international scrutiny and domestic debate.

In the multi-billion dollar digital asset mining industry, participants earn Bitcoin and other tokens as rewards for solving complex blockchain algorithms, a process notorious for its high energy consumption.

However, Laos, having built dozens of hydropower projects on the Mekong River and its tributaries, now produces more electricity than the market can absorb.

Government trade data shows that electricity accounted for 26% of Laos's total exports last year. This landlocked nation, long among the poorest in Southeast Asia, is selling its cheap hydropower to energy-hungry Asian neighbors striving to meet climate goals.

Yet, this hydropower construction boom came at a high cost. Environmentalists warn that the dams have damaged river ecosystem health, harmed downstream agriculture and fisheries reliant on sediment-rich waters, and displaced tens of thousands—possibly even hundreds of thousands—of people.

Critics argue this policy sacrifices local livelihoods and ecosystems for economic returns that are questionable.

Meanwhile, Laos's debt has piled up. According to the International Monetary Fund (IMF), a significant portion of the dam financing came from Chinese loans and foreign companies, but the return on this investment is slow due to Laos's lack of transmission infrastructure to export the surplus power.

Laotian officials are now exploring new ways to monetize this idle electricity. Following a high-level meeting, the state-run Vientiane Times reported that policymakers are studying "long-term economic opportunities," including "digital asset mining… enabling the country to turn surplus electricity into economic value."

While regulators remain cautious about the risks of volatile digital assets, Laos has begun issuing licenses to local cryptocurrency trading platforms and mining operations.

This move comes as ordinary citizens grapple with high inflation, and the Lao kip has lost about half its value against the US dollar over the past five years.

Compounding the situation, the US recently imposed a 40% tariff on imports from Laos—the second-highest rate among Washington's trade partners.

Many environmental advocates see the turn to cryptocurrency mining as a symptom of a flawed energy policy—one that has saddled Laos with debt and power it cannot use.

"Allowing electricity for crypto mining is clearly not driven by domestic conditions," said Witoon Permpongsacharoen, head of the Mekong Energy and Ecology Network. "It stems from Laos's heavy debt and its inability to pay it."

Paradoxically, Laos suffers from a power surplus during the rainy season but must purchase electricity from neighbors during the dry season when hydropower output declines.

"Most of Laos's hydropower energy supply is seasonal; during the dry season, Laos buys back power from Thailand," said Pianporn Deetes of International Rivers.

Deetes added that for communities relocated to make way for reservoirs and dams, most promised livelihood improvements have not materialized; many face greater hardship, not prosperity.

She said Laos risks "taking the country's rich natural resources away from the people, leaving them worse off, not better."

Nonetheless, the government's venture into cryptocurrency mining has attracted regional attention as global trade winds shift and countries seek new growth sources.

Laos aims to become a mature digital economy by 2030 and is expected to graduate from the UN's list of "Least Developed Countries" next year.

Despite China—Laos's powerful northern neighbor—banning cryptocurrency mining and trading in 2021 over financial stability concerns, Laos has become an attractive destination for Chinese miners due to its low electricity prices, sometimes even involving illegal activities.

The Lao government's latest measures aim to bring these activities under official oversight and tax the industry through licensing.

The IMF sees the economic logic in monetizing surplus power, but challenges remain.

The IMF warned last November that Laos has "significant public debt levels, posing challenges to its medium-term prospects"; under current policies, "inflation and debt servicing could intensify, implying significant drag on growth for longer."