Laos's Bitcoin Initiative: Settling Debts or Fueling Economic Turmoil?

Laos is considering

mining as a potential solution to its escalating national debt and unused hydropower resources, as reported by the South China Morning Post Laos Eyes Bitcoin Mining To Tackle Mounting Debt [ 1 ]. Known as the "battery of Southeast Asia" because of its extensive hydroelectric investments, Laos has faced difficulties in converting its power surplus into revenue and covering foreign debt obligations associated with dam development. With annual payments on external public debt expected to average $1.3 billion from 2025 to 2028—amounting to about 9% of GDP each year—the government is searching for alternative income sources Laos Eyes Bitcoin Mining To Tackle Mounting Debt [ 1 ].

This approach builds upon a 2021 pilot that allowed six firms to engage in Bitcoin mining under regulated power purchase agreements, a move many analysts saw as an attempt to attract miners forced out by China’s restrictions Laos Eyes Bitcoin Mining To Tackle Mounting Debt [ 1 ]. Still, there have been obstacles. In 2023, Électricité du Laos (EDL), the national utility, halted electricity supply to miners due to drought-related shortages, highlighting hydropower’s instability. By May 2024, crypto mining centers accounted for more than a third of the country’s power consumption, worsening blackouts and leading to a freeze on new mining permits Laos Eyes Bitcoin Mining To Tackle Mounting Debt [ 1 ].

Environmental advocates argue that this pivot reveals shortcomings in energy management. Witoon Permpongsacharoen from the Mekong Energy and Ecology Network remarked, “The decision to use electricity for crypto mining in Laos is not based on domestic needs. It is a consequence of overwhelming debt and inability to repay” Laos Eyes Bitcoin Mining To Tackle Mounting Debt [ 1 ]. Hydropower production remains unpredictable due to climate fluctuations, with excess during rainy seasons and the need to import during dry periods. While flexible loads like Bitcoin mining might help monetize surplus energy, the threat of water shortages restricts scalability.

This policy is in line with international developments. Countries such as Bhutan and Ethiopia have also utilized hydropower for Bitcoin mining to take advantage of excess electricity. Bhutan described Bitcoin as a kind of “strategic battery” for optimizing seasonal energy, while Ethiopia’s utility generated $55 million from selling surplus hydropower to miners in a ten-month span Laos Eyes Bitcoin Mining To Tackle Mounting Debt [ 1 ]. However, Laos faces unique hurdles, including unpredictable river flows and financial stress, which make direct imitation difficult.

The financial situation is becoming more severe. A Chinese hydropower operator has recently begun $555 million arbitration proceedings against EDL over unpaid bills, highlighting the sector’s economic vulnerabilities Laos Eyes Bitcoin Mining To Tackle Mounting Debt [ 1 ]. While mining Bitcoin could bring in foreign currency, its success depends on consistent energy access and supportive regulations. Experts remain guarded, noting that recent policy changes—such as EDL’s power cutoffs to miners during dry spells—illustrate the conflict between adopting new technology and facing infrastructure limitations.

Currently, Bitcoin’s price stands at $117,228 Laos Eyes Bitcoin Mining To Tackle Mounting Debt [ 1 ], a value that could make mining more profitable if electricity expenses are kept low. Nevertheless, it is unclear whether the government can successfully balance its crypto mining ambitions with the need for energy stability and sound debt management.