Laos, a Southeast Asian nation, has officially approved the mining and trading of cryptocurrencies, in a policy shift meant to take advantage of the cryptocurrency mining crackdown in China — and make profits for the debt-laden nation.
Analysts are banking on the “prudent” move to soar the economy of the communist-ruled country of 7 million, which produces vast surpluses of hydroelectric power.
However, some experts warn that criminal gangs will threaten the move. And seek profits from the new trade thus affecting its kickoff.
The cryptocurrency push comes after the country’s central banks warned individuals and businesses against the use (and possible adoption) of cryptocurrency.
Crypto move to save the country’s economy
Laos prime minister gave six companies including banks and construction companies the green light to begin mining and trading Bitcoin, Ethereum, and Litecoin.
To regulate the highly volatile cryptocurrency industry, government ministries will now work together with the Bank of Laos and Electricité du Laos (the national power utility). The government will consult and research more about this in the next month’s meeting.
The crypto move is meant to cushion the debt-ridden country from the Covid-19 crisis, which has put a huge dent in the hydropower demand — a cornerstone for Lao’s economy. The country is grappling with debts borrowed to finance dam constructions.
Although Lao’s produces vast excesses of hydropower, the county has little internal demand for this rich resource. That explains the country’s latest approval of mining and trading cryptocurrencies, which requires massive amounts of power.
Hydropower crypto mining is a “carbon neutral” industry
Laos is perhaps the only country to use hydropower to mine cryptocurrencies. As such, it plans to front a pitch to term the industry as “carbon neutral”. This comes at a time when cryptocurrency carbon footprints are facing major international criticism.
The mountainous topography and great distances from seaports have, over the years, stalled the growth of Laos’s economy. Prompting the government to use hydropower energy to power casinos, and a range of other industries.
For example, Laos is set to unveil a hydro-powered railway line in December that will run from Kunming to China, and then to Vientiane.
So, mining and trading crypto will become a source of revenue for the government. And probably even help offset its heavy $14 billion debt pile.
Laos has recently come under scrutiny from the Financial Action Task Force, UN office, and the US over drugs and crime. But it has vowed to step up efforts to fight the vices.
Experts also warn about the young Laotian financial system’s early embrace of crypto. They claim the country has poor regulatory systems for it to rush into digital currencies.