Laos Cuts Power Supply To Crypto Mining Firms, Cites Production Concerns

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Electricite du Laos (EDL), the state-run power distribution company, has announced a major cut to crypto mining firms in the country, swerving from its pro-crypto stance since 2021.

According to local news reports, the country cites several reasons for the sudden decision ranging from electricity production to climate concerns linked to how it produced electricity due to drought.

The country suffered drought in the first half of the year coupled with rising temperatures triggering a higher consumption demand amid hydropower stations struggling to meet demand. 

The authorities noted that hydropower plants responsible for 95% of the country’s total electricity have been impeded by the recent drought causing a significant shift in priorities as it weathers the storm.

The EDL seeks to increase its production and bolster output for export to the Electricity Generating Authority of Thailand (EGAT) ahead of the upcoming dry season. 

The head of EGAT has also underscored the need for Loas to bolster its production as a result of the drought which will significantly affect its exports.

Another reason for the decision to part ways with crypto firms is the inability of firms to pay their debts amid huge investments by the country. 

In a recent interview, a staff of the EDL noted that a key reason was miners being unable to “pay their outstanding balances.” 

Despite the reasons cited, most crypto enthusiasts met the decision with displeasure in the wake of the recent bearish market outlook and miners struggling to stay afloat. 

A partnership turned soar; Laos cut ties with miners 

In September 2021, Laos took a huge leap to formally regulate crypto mining and trading including plans to offer incentives to firms that are licensed and operate in the country. 

The move was perceived as an attempt to make the country the next digital asset mining destination amid China’s mining clampdown at the time. China shut down mining operations in several cities citing colossal energy consumption and climate concerns.

Per the agenda, authorities in Laos approved licenses for six to trade and mine cryptocurrencies, specifically Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC). 

Boviengkham Vongdara, Laos Communications and Technology Minister disclosed that the crypto firms to receive the incentives must be wholly owned by Laos and pay a $5 million security with the Bank of Laos. 

Crypto mining firms also received a minimum usage of 10 megawatts, renewable under a six-year contract including exemption from import and transmission fees by the EDL.

The atmosphere around mining activities remains uncertain with several jurisdictions clamoring for a huge cut on electricity to miners after multiple reports have criticized the sector’s high energy consumption. 

As legislators look to impose taxes on miners, pro-web3 commentators have pointed to the high energy usage of traditional finance companies and gaming firms.

This year, the Biden-led administration proposed a 30% crypto mining tax citing climate and energy concerns on other users. 

On the flipside, the Sultanate of Oman has launched the second mining facility worth $370 million investing over $650 million in the sector after opening its Economic Free Zone with promises to prioritize the development of blockchain-based firms. 

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