Norway Stops Subsidies for Crypto Mining

| Publish date: 11/23/2018
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Cryptocurrency miners in Norway were enjoying a tax subsidy on power. Until now. According to local news outlets, the Norwegian government announced in its state budget that cryptocurrency miners would have to start paying normal electricity taxes from the beginning of 2019.

Current Status of Power Subsidies for Crypto Miners

Currently, cryptocurrency mining operations receive the same kind of tax subsidy on power consumption as other power-intensive industries in the country do.

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According to Norwegian government policies, enterprises that consume more than 0.5 megawatts of electricity for their operations are charged only 0.48 Ore (which is about $0.00056) a kilowatt. The standard price of electricity is 16.58 Ore (which amounts to about $0.019). An Ore is 100th of a Krone, the Norwegian currency.

What this means is that cryptocurrency miners that were eligible for this subsidy were paying only 2.8% of what would be charged had they paid normal taxes on electricity.

Reasons for Cessation of Subsidies

Lars Haltbrekken, the Norwegian parliamentary representative from the Socialist Left Party (SV) strongly advocated removing the tax subsidies for cryptocurrency mining rigs.

Haltbrekken stated that the country could not carry on providing such huge tax incentives to Bitcoin, the “most dirty” form of cryptographic output. He continued, saying that cryptocurrency mining required too much energy and also produced large amount of greenhouse gas emissions across the world.

Reactions from the Industry

ICT Norway, the domestic industry interest group, has condemned the Norwegian government’s actions. ICT’s chief economist, Roger Schjerva issued a strong statement against what the government has done.

He stated that this decision by the Norwegian government to change conditions without discussion, consultation or even dialogue was shocking. He also said that Norway had long enjoyed the reputation of being politically stable and had predictable policy frameworks.

Interestingly enough, some within the Blockchain industry agree with the move. The Chief Executive of Norway’s Blockchain advisory group Blockchangers, Jon Ramvi reportedly said that less crypto mining in the country would reduce energy prices for other companies and residents. What this meant, he said, was that they would be able to reap the benefits of cheaper electricity rather than giving it away to cryptocurrency miners.

Ramvi further clarified that more crypto miners did not mean that Bitcoin became faster or any easier to scale. The only function that these miners were performing was to secure the BTC network, but, he said, the network had been secure for over a year. Thus, the need for so much mining was gone.

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