The Lao government seeks to generate more revenue for its country with the approval of Bitcoin mining. Miners who have not yet migrated from China could find cheaper energy sources in Laos.
Southeast Asian nation Laos recently authorized the trading and mining of Bitcoin and other cryptocurrencies. The government of that country could deepen this experiment if it achieves satisfactory results in the coming months. In addition, it could attract miners from China and other parts of the world looking for cheaper energy options.
Laos is a little-known country, but its geographical location is strategically important. It shares its borders with China, Thailand and Vietnam, whose cryptocurrency markets and exchanges are thriving.
Its government authorized the operation of six local cryptocurrency mining and trading companies. Local media outlet Laotian Times reported that the Prime Minister made that announcement on September 11th.
This regulatory initiative received support from the ministries of Technology and Communications, Finance, Planning and Investment, Energy and Mines, and Public Safety. The Central Bank of Laos and the Lao Electricity Company are also involved in the project.
That joint work would lead to a draft law, which the executive branch would later approve. In his announcement, the Prime Minister noted that the regulation on cryptocurrency mining would be like that on iron mining.
The Prime Minister’s Office notified that they would buy electric power from a company that would provide cryptocurrency mining with anti-tariff benefits.
The Regulatory and Financial Climate of Laos Awakens Thanks to Bitcoin
Specialists consider that two situations led Laos to decide to legalize cryptocurrencies and their mining, The Financial Times newspaper reported. The country has abundant resources to generate hydroelectric power, little demand in this sector, and a poor financial regulatory history.
Thanks to its mountainous geography, Laos has countless rivers where there are dams and electricity generating plants. These facilities are ideal for supplying green energy to Bitcoin mining, one of the focuses of attraction of this industry.
Tourism has declined in the region alongside the country’s capital income due to the COVID-19 pandemic. As electricity consumption has also fallen, the authorities hope to take advantage of the circumstances to generate profitability. Using low-cost green energy would allow the mining of Bitcoin and other cryptocurrencies to flourish in Laos.
Laos could become a destination for the miners still in China, thanks to its proximity to that country. The bans on cryptocurrency mining between May and July caused a massive migration to other regions in the world.
Meanwhile, Zachary Abuza, a professor of the National War College, stated that the regulation of Laos’ financial system is too immature. For that reason, he believes that the fact that they have rushed to approve cryptocurrencies should cause concern.
It is not a unanimous declaration of the adoption of Bitcoin and other cryptocurrencies, as in the case of El Salvador. However, the industry and the local ecosystem of Laos could grow and become involved in the cryptocurrency markets.
By Alexander Salazar
