SWEDEN BRACES FOR MIGRANT CARAVAN OF NORWEGIAN BITCOIN MINERS

Data center managers in Sweden are expecting a deluge of inquiries from cryptocurrency mining operations in Norway. The Norwegian authorities this week revoked energy tax subsidies for the sector, throwing the future of many companies into doubt.

‘THE DIRTIEST FORM OF CRYPTOGRAPHIC OUTPUT’

Up until this week, mining firms in Norway qualified for the same electricity tax discount as other heavy users. Businesses with a capacity of over half a megawatt, pay only 0.48 Norwegian Krone (5.6 cents) per kilowatt-hour. With that subsidy now rescinded, miners will pay the standard rate of 16.58 Krone, or nearly $2 per kilowatt-hour.

The change comes into effect from January 2019, and such a dramatic price rise will devastate the industry in Norway. Many firms invested in the country for its cool climate and cheap hydro-electric power. They are now disappointed that this move was not put to the industry for prior consultation.

Parliamentary representative, Lars Haltbrekken, explained the motivation for the move:

Norway cannot continue to provide huge tax incentives for the dirtiest form of cryptographic output like bitcoin. It requires a lot of energy and generates large greenhouse gas emissions globally.

NORWAY’S LOSS A GAIN FOR SWEDEN?

Of course, this has left data center managers in Sweden rubbing their hands with glee, as Norway’s Scandinavian neighbor becomes the obvious alternative. Sweden charges a similar 0.5 Swedish Krona per kWh for users over 0.5 MW, and also offers reduced electricity rates for smaller users up to 0.1 MW.

When asked if he would be contacting the companies who are losing out due to the Norwegian changes, Boden Business Agency director, Erik Svensson said:

I think the companies in Norway are contacting us, they know where we are.

One major player who has already put its planned Norwegian projects on ice is Bitmain. However, it has confirmed that Sweden is an attractive alternative. Bitmain’s head in Norway, Julie Hvideberg, said:

We have already talked with our Norwegian partners… saying that we must stop the project. We are a global company and can move to Sweden or Denmark, but our Norwegian partner loses a big contract.

Still, before everyone starts envisaging Sweden as some kind of promised land of milk and honey, take note. Things can also go awry for crypto-entrepreneurs there, as reported by Bitcoinist earlier this month.


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Author: EMILIO JANUS
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Norway Pulls Switch on Bitcoin Mining Tax Subsidies

Norway’s government is putting more pressure on cryptocurrency mining by following through with the threat that it was considering removing electricity tax subsidies on Bitcoin mining.

Mining has been under stress recently as miners from around the world look for the next opportunity to tap into economical resources and ideal mining conditions. Norway not only has shown the world an innovative approach to mining but also offers the ideal climate.

Northern Bitcoin, a German listed company, recently began an underground mining project in a former metal mine slashing the price and energy costs of mining. The mine is located next to a deep fjord, which provides all the cooling the mining operation needs, as opposed to typical mining operations which require expensive air conditioning.

Conventional Bitcoin mining has taken a hit though, as from 2019 miners will be subject to the same tariff as other users who currently pay the standard non-subsidized energy tax. It is a revelation which has not gone down well with Norway’s crypto-mining community who feel that the government should be supportive rather than bringing in punitive changes to the industry. Roger Schjerva, chief economist of tech industry body ICT Norway reflected the feeling of the industry at the latest news:

“This is shocking… Budgets have changed framework conditions without discussion, consultation or dialogue with the industry. Norway scores high on rankings of political stability and predictable framework conditions but now the government is gambling with this credibility.”

The recent crash in the value of Bitcoin has hit the mining industry in Norway. German Bitcoin, using the fjord-based cooling system at the Lefdal mine in Sandane, is cited by the government as the way to move forward, using clean and economically viable alternatives. It has little sympathy for the plight of companies hit by Bitcoin’s instability and the removal of Norway’s electricity tax incentives.

“Norway cannot continue to provide huge tax incentives for the most dirty form of cryptographic output as Bitcoin,” argues Norwegian parliamentary representative Lars Haltbrekken. “It requires a lot of energy and generates large greenhouse gas emissions globally.”

Jon Ramvi, chief executive of Oslo-based blockchain advisory group Blockchangers, agrees, suggesting that it will be the Norwegian community who will be the beneficiaries of the subsidies being removed:

“This is a win for the Norwegian people and our natural resources… Less mining in Norway will reduce the prices of electricity for companies and people residing in Norway meaning that we reap the benefits of these resources locally instead of giving it away to Bitcoin miners.”

Currently, Norwegian Bitcoin data centers are discounted in the same ways as other industries with high energy costs paying NOK 0.48 (USD 0.056) per kilowatt. This will now rise to NOK 16.58 (USD 1.94) per kilowatt from January 2019.


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Author: Harold Vandelay
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