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.