Why is Laos Government Suspending Power Supply to Crypto Miners?

    Published on:

    • Électricité du Laos will suspend the power supply amid ongoing drought in the nation.
    • 180 cryptocurrencies’ are operating on the PoW consensus algorithm.

    Crypto mining firms in Laos, an Asian country, could struggle after the government recently shuts its power supply to them. A news provider, Cointelegraph, reports that Électricité du Laos, a state-owned electricity distributor, will suspend the supply amid ongoing drought in the nation.

    Drought or Debt?

    The announcement describes the impact of drought on the hydropower generation plant. The country receives almost 95% energy from the hydropower plant. Crypto mining is an energy-intensive process. Some reports suggest that cryptocurrencies using Proof-of-Work (PoW), a transaction verification algorithm, eat up massive amounts of power.

    Data from the International Energy Agency (IEA), an autonomous intergovernmental organization, shows coal dominated as the country’s energy source in 2020. Coal is among the major contributors to rising carbon emissions. Wind and solar power contribute the least to this mix.

    Source: International Energy Agency (IEA)

    Besides drought, suspension of the power supply could have financial grounds. An EDL employee tells The Laotian Times, “Another reason we must suspend supplying electricity to cryptocurrency mining businesses in Laos is that they are unable to pay their outstanding electricity bills.”

    In 2021, Laos authorized crypto mining and trading in the country after China’s crackdown on the sector. Reuters, a news agency, reported that the Dragon’s announcement for a blanket ban on crypto involves a collaboration between the nation’s major agencies including the central bank, financial, securities, and foreign exchange regulators, to root out “illegal” crypto-related activities.

    Last year, The Laotian Times reported investment firms AIF Group and United Power of Asia collaborated to bring a fleet of 4,000 mining devices for crypto mining in Laos. Additionally, the partnership brought in ฿820 Million (nearly $23 Million) for mining initiatives.

    Crypto Mining Affecting The Poor

    The next Bitcoin halving is due in 2024. Halving causes BTC rewards for mining the crypto asset in half. Due to this, a hash rate may suffer, taking into account the potentially unprofitable mining of many crypto miners. Experts believe the decline could be between 15% to 30%.

    Laos is among the poorest nations in East Asia. Nearly 70% of its population thrives in poverty. A study by Science Direct, a full-text database, argues that crypto-associated entities benefit from economic instabilities, weak regulations, and access to cheap resources. Meanwhile, drop-shipping bad influence on the impoverished during the process.

    CoinMarketCap data shows 180 cryptocurrencies’ are operating on the PoW consensus algorithm at the publication time. Proof-of-Stake (PoW) is a sustainable alternative to Proof-of-Work and is believed to emit fewer greenhouse gasses (GHGs). As per a White House fact sheet, crypto mining contributes to 0.3% of global emissions.


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    Anurag Batham
    Anurag Batham is a journalist and research analyst at CryptoSunday. He has covered blockchain, crypto, metaverse and more since 2021 and holds a keen interest in global economy and climate change with a passion to deliver useful information to the readers.