The Laos government’s latest budget projection includes a 2,000 billion KIP ($190 million) boost from Bitcoin mining, despite warnings from the national bank about the dangers of crypto.
Less than two months ago, Laos gave the go-ahead for six companies to begin mining and trading cryptocurrencies.
Finance minister Bounchom Ubonpaseuth told the government to expect Bitcoin mining to contribute around 7% to the Southeast Asian nation’s expected domestic revenue for Laos in 2022, pegged to hit the local equivalent of $2.8 billion.
The novel revenue stream will fatten living expense allowances for politicians and security personnel, as well as bolster pandemic response funds, according to The Star.
It will also reportedly help it tackle Laos’ $14 billion national debt.
Bitcoin-hungry Laos makes more energy than it can use
Due to its hilly topography, high precipitation level, and jurisdiction over part of the Mekong River basin, Laos is one of the most hydropower-rich countries in the region.
As noted by Bitcoin Magazine, the land-locked country can generate up to 26.5 gigawatts of hydroelectric power.
In late August, the Bank of Laos (BOL) warned locals about the dangers of digital assets, particularly their volatility and purported propensity for illegal activity.
The notice deemed buying and selling crypto prohibited by law. BOL said cryptocurrencies are not real currency, and shouldn’t be used to settle debts.
A few weeks later, Laos’ Ministry of Technology and Communications (MTC), along with the BOL and several other official departments, were tasked with drafting rules for a cryptocurrency pilot program, which appears to be in full swing.
The six firms (five construction companies and one bank) allowed to mine Bitcoin and other cryptocurrencies will pay a capped price for their energy.
US Treasury vs. Laos casino
In 2018, the US Treasury placed sanctions on a gambling empire largely run out of a Laos casino.
The US said the Golden Triangle casino is the epicenter of a transnational criminal enterprise that traffics adults, children, illegal drugs, and wildlife.
So, some fear cryptocurrency could have the adverse effect of encouraging the illicit drugs trade in the region.
“You should always be concerned when countries with poor regulatory records start to get involved in things like cryptocurrency,” said National War College professor Zachary Abuza to the Financial Times.
“To say that the Laotian financial system is immature would be a brutal understatement, and we have to be concerned if they are rushing into this,” he added (our emphasis).
According to Laotian Times, the mining and trading of Bitcoin and other cryptocurrencies remain banned for Laos’ general population.
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