Laos' Bet on Cryptocurrency: Is Hydropower the Key to Easing Debt Without Harming the Environment?

Laos is considering using its surplus hydropower for cryptocurrency mining as a way to make use of excess energy and confront rising national debt. This proposal, which has been brought up in government discussions and covered by state-run media, seeks to turn unused electricity into digital assets, capitalizing on the country's significant hydropower resources. However, the plan has drawn pushback due to concerns about environmental and social consequences, as dam construction has been associated with community displacement, ecological damage, and unfulfilled compensation promises to local residents title1 [ 1 ].

The economic argument from the government centers on expanding income sources in light of Laos's substantial debt and restricted export options. The country has borrowed heavily, especially from China, to finance its hydropower projects, resulting in energy oversupply but leaving Laos with public service debts surpassing $1.3 billion each year title3 [ 3 ]. By directing the surplus electricity to power-hungry crypto mining operations, officials hope to earn foreign currency and lessen dependence on traditional exports. In 2023, power company Electricite du Laos (EDL) suspended electricity to miners temporarily due to drought and outstanding payments, highlighting the unpredictability of this approach title1 [ 1 ].

Environmental groups and experts have questioned whether the initiative is sustainable. Large hydropower developments have already put pressure on the Mekong River ecosystem, decreasing fish populations and reducing crop output downstream. Some argue that prioritizing crypto mining only intensifies these problems, putting debt repayment ahead of social welfare. Vitoon Permpongsakaroen of the Mekong Energy and Ecology Network pointed out that financial motives, not domestic energy requirements, are driving the move title1 [ 1 ]. Additionally, the Kip has lost half its value against the U.S. dollar in five years, and ongoing inflation complicates the country’s financial situation title1 [ 1 ].

Laos is not the only country turning to cryptocurrency mining to exploit renewable energy. Both Bhutan and Ethiopia have used hydropower for mining purposes, with Bhutan’s assets totaling $1.31 billion in

holdings. However, hydropower generation in Laos varies by season and is affected by the climate, leading to electricity imports during the dry season. These vulnerabilities raise doubts about the strategy’s sustainability, especially given that mining activities have already been disrupted by drought and grid limitations title3 [ 3 ].

The government has begun to oversee the industry by issuing licenses to local crypto companies and imposing temporary pauses on new mining ventures. In 2021, Laos launched a pilot project allowing six companies to mine Bitcoin, taking advantage of China’s crackdown on domestic mining. Still, regulations are not yet fully developed, as authorities try to attract investment while also weighing risks like financial instability and environmental damage title3 [ 3 ].

Although the move fits into Laos’s broader digital economy goals—including blockchain, AI, and digital finance—the road ahead is full of obstacles. High national debt, energy supply instability due to climate change, and international criticism of crypto’s environmental effects could all hinder progress. The International Monetary Fund has warned about debt sustainability, while 40% U.S. tariffs on Laotian exports further restrict economic choices title1 [ 1 ].

As Laos attempts to manage these challenges, the outcome of its cryptocurrency initiative will depend on how well it can balance energy surpluses with economic and environmental needs. The country’s journey could provide lessons for other nations looking to use renewable resources for digital asset creation, but success will require careful debt management, limiting environmental harm, and ensuring fair treatment for communities affected by dam construction.