Laos finds itself grappling with a challenging situation involving electricity supply and crypto mining operations. This was in response to the intense drought experienced in the first half of 2023. This situation has prompted the country’s state-owned electricity distribution company, Électricité du Laos (EDL), to make a decision regarding the supply of electricity to crypto mining projects.
Drought-Induced Electricity Demand Surge and EDL’s Pronouncement
The drought that plagued Laos during the initial months of 2023 have led to a surge in electricity demand. Unfortunately, this rise in demand has coincided with a decrease in power generation capabilities from hydropower plants, which are a vital source of energy in the country.
Électricité du Laos has also made an official announcement. It outlined its decision to temporarily halt electricity supply to crypto mining operations within the nation’s borders. The reasoning behind this action is multifaceted. One prominent factor is the formidable challenge of generating sufficient power amidst the prevailing drought conditions.
Struggles of Hydropower Plants
The extreme heat associated with the drought has exacerbated the electricity demand. As a result, exacerbating the challenges faced by the hydropower plants. Given that these plants contribute a significant 95% of Laos’ total power generation, their compromised functioning due to the drought has posed a substantial hurdle.
Notably, the implications of this situation are far-reaching. It affects not only the local power supply but also the nation’s plans to export substantial electricity volumes to neighboring Thailand in 2024.
As the drought’s severity intensifies, Laos’ ability to meet its electricity export commitments to Thailand is increasingly hampered. The projection for 2024, which previously held promise for significant electricity exports, is now cast into uncertainty due to the prevailing unfavorable conditions.
Financial Considerations and Laotian Government’s Cryptocurrency Endeavor
In addition to the environmental and logistical concerns, EDL has underscored another pivotal aspect influencing its decision. Certain crypto mining projects have been unable to meet their financial obligations and outstanding balances. This financial strain has undoubtedly contributed to EDL’s decision to suspend electricity supply to these operations.
Further, a historical context sheds light on the intersection of crypto mining and Laos. In a strategic move, the Laotian government initiated a public-private pilot project in September 2021, opening the doors to cryptocurrency mining and trading.
The motive was to further leverage the vacuum created by China’s clampdown on mining activities, which compelled major miners to seek alternative operational bases. Under this initiative, six companies were authorized to conduct mining operations in Laos.
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