Laos plans to take advantage of the thriving digital assets market as it projects to make $260m AUD in revenue from Bitcoin mining in 2022.
According to a report by Cambodian newspaper, The Phnom Penh Post, the country looks to use the Bitcoin mining revenue to bolster domestic revenue which currently accounts for 15% of its GDP. The country’s Minister of Finance Bounchom Ubonpaseuth speaking at the second ordinary session of the National Assembly’s (NA) 9th legislature, confirmed the projected revenue would increase the projected 2022 revenue by around 20%.
The debt-ridden nation could use the new revenue resource to stabilise its economy. Already, the government has issued regulations that will streamline crypto company operations in the country.
The regulation specifies the types of crypto businesses that can operate in the country and the measures for their use to ensure safety, reliability and efficiency. The notice indicates that crypto businesses must be wholly Laos-owned and are financially stable with sufficient operational capital. Crypto exchanges must deposit $5 million with the Bank of Laos as security.
Mining companies should use at least 10MW of power within a six-year extendable contract from the country’s electricity provider. The crypto miners will also gain from these regulations. They will enjoy low-cost power as the government plans to exempt imports and power transmission fees for mining operations.
The new Laos crypto regulations is a move away from the ban on digital currencies that had been in effect in the country since 2018.
Data from the World Bank shows the country to be one of the poorest in the Asian region. However, it has an abundance of hydroelectric power that it can use to become the major power supplier within Southern Asia. That is what allows it to support crypto mining and related activities.
The roadmap to a CBDC
Other than acting as a booster to the domestic revenue, Laos can use digital currencies in far more ways. The country’s economy is currently dollarized with foreign currencies like the US dollar and Chinese Yuan used in private transactions for imported goods.
The government is looking towards a Central Bank Digital Currency (CBDC) as the best alternative to the weakened local currency. It has already enlisted the services of Sorimitsu, a Japanese blockchain company to explore the possibility of a national digital currency.
Laos embracing cryptocurrencies comes at a time when the crypto mining landscape is still shifting. Following the Chinese crypto crackdown, Bitcoin miners have been looking for other friendly locations to operate. So far, countries like the US, Kazakhstan, Australia, Norway and Sweden have become some of the preferred mining destinations. However, there is a likelihood of another shift following Sweden and Norway’s plans to ban Bitcoin mining in Europe.
With such support for digital currencies and massive renewable electricity supply, Laos is in the best place to gain from any new shift due to the ban of mining activities in other countries.