Norway Removes Tax Breaks for Bitcoin Mining as Crypto Firm Labels it a ‘Disaster’
Norway, a country known for its green crypto mining outfits, has decided to roll back a tax structure which previously allowed cryptocurrency miners to be taxed on power consumption at the same rate as other industries which use a lot of energy, according to a local news outlet.
A parliamentary representative named Lars Haltbrekken told Aftenposten.no:
Norway can not continue to provide huge tax incentives for the most dirty form of cryptographic output as bitcoin. It requires a lot of energy and generates large greenhouse gas emissions globally.
The change is astronomical in nature. Currently miners pay about 0.48 Øre – or just 0.0005 USD – per kilowatt hour. This is in line with other high energy consumers of 0.5 megawatts or more. However, after January 1st, they will pay the normal electricity tax rate of 16.58 Øre, or roughly two cents – in tax alone – per kWh. The reaction from pro-business Norwegians was not favorable.
Message from native Norwegian & CCN Publisher Jonas Borchgrevink:
Norway is one of the greenest nations on earth when it comes to the production of electricity. 99% of the electricity is produced by hydropower, and we continue to expand with wind power-, offshore wind power-, solar energy- and bio-energy facilities. From January 2018 to October 31st 2018, we exported 15 071 492 MWh, imported 6 321 079 MWh with a total “net profit” of 8 750 413 MWh. We are in excess of green energy.
That the parliament and the government claims the reason for removing the electricity tax break for Bitcoin mining is that it generates large greenhouse gas emissions globally does not make any sense. Why would a “green nation” punish miners companies from Norway, encouraging them to re-establish elsewhere and get a higher carbon footprint? It is plain stupid. If we are to be a “green nation,” why don’t we shut down the offshore oil production that pumps up more than 1.6 million barrels per day? Parliament is hypocritical. Look at this quote from norskpetroleum.no:
Total production rose in 2017 for the fourth consecutive year, and gas sales were at a record high. Never before has so much gas been sold from the Norwegian shelf as was the case in 2017. In the next few years, total production is expected to remain high.
Another Parliament member from SP, Sigbjørn Gjelsvik, said that they don’t want to support an industry that employs few employees. That’s an insightful statement. So we will stop supporting other industries when they automate most of their production tasks? If that’s the case, let’s say goodbye to industry as a whole.
A ranking economist, Roger Schjerva, told the same local publication that:
We just say no to income and work in many municipalities in Norway. We can only hope that politicians understand that energy-intensive computing is one of the things we will be living with in the future.
And a Kryptovault spokesperson, Gjermund Hagasæter, said:
If this is correct, it will be a complete disaster for the cryptocurrency industry in Norway. This gives a terrible signal to foreigners that are thinking of investing in Norway.
Norway’s power grid is almost entirely hydroelectric, which somewhat belies the statements of the representative – some might interpret the move as a money grab or effort to balance the budget on the back of an emerging industry. It is with some degree of irony that one of the countries with the most miners, China, still relies on coal power plants for much of its grid.
According to Bitnodes, there are just 48 full Bitcoin core nodes operating in Norway at time of writing. While “Bitcoin” is often used interchangeably by people less familiar with it, it can be extrapolated from that figure that the number of mining operations in the country is probably does not number in the thousands, across cryptocurrencies. Meaning that while the move, which takes effect at the beginning of 2019, will not necessarily be a huge setback to the Bitcoin mining network as a whole, it definitely will have an impact on the decision of miners in the future regarding Norway as a viable place to start and/or do business.
Forbes’ coverage of the matter cites a company called Northern Bitcoin as claiming that a Bitcoin costs about $7,700 at present to mine in Norway. Whether or not this is accurate, the cost of electricity in mining will increase. Mining profitability varies on a number of factors, particularly the size of the mine. The ideal mine has a lot of machines mining 24/7, which means that power is consumed and used even when there is no actual profit being had. The recent downturn in the global price of cryptocurrencies is sure to have a secondary effect on the profitability of Norwegian miners, making it an all-around unfriendly zone for Bitcoin miners.
Featured image from Shutterstock.