Crypto industry in Norway has been dealt a huge blow as the government moved to halt the electricity subsidies for the bitcoin mining companies. According to local media, the new state budget states that, starting from January 1st, crypto miners will have to pay the normal electricity tax.
Bitcoin mining will not be profitable
Currently, BTC mining enterprises with a capacity of more than 0.5 megawatts enjoy the electricity discount, alongside other power-intensive industries. This means that up until now, BTC miners were charged 0.48 øre per kilowatt. This amount will skyrocket to 16.58 øre from the turn of the year.
Speaking to Forbes, German-based mining copmany Northern Bitcoin said that the average cost of BTC mining in Norway is $7,700 per coin, almost twice as much as bitcoin is currently worth. The firm has revealed that China remains the cheapest country to mine bitcoin, with an average cost of $3,100. However, mining one BTC coin can cost as much as $10,000 in Australia.
Norwegian parliament member and environmentalist Lars Haltbrekken even claimed that, “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.“
Norwegian crypto industry is fuming
Needless to say, Norwegian crypto aficionados were not happy about the news. Roger Schjerva, chief economist of tech industry body ICT Norway said that, “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.“
Kryptovault spokesperson Gjermund Hagasæter added that, “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.“
Nonetheless, there are some in the blockchain industry who agree with the move. Jon Ramvi, CEO of blockchain advisory group Blockchangers, was quoted as saying that, “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.
The recent freefall of bitcoin prices, coupled with the anti-crypto policy seems sure to make Norway an unwelcoming territory for crypto miners. The prolonged bear market has seen even the biggest mining farms struggle. Earlier this week, the US crypto mining giant Giga Watt declared bankruptcy. Coindesk revealed it still owes over $7 million for its biggest creditors.
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I have been following the crypto markets since mid 2017, just in time to witness the incredible surge of the digital asset industry. Fascinated by the potential of blockchain technology I’ve started to dig deeper and that’s how I ended up meeting the Toshi Times team. I hold a Political Science degree, therefore the crypto regulation development is particularly interesting for me. I’m also heavily involved with music, running my own label, a YouTube channel and working with distribution. People call blockchain the ‘Fourth Industrial Revolution’ and I believe it will change our daily lives in the coming years and we will have the front row seats to witness it.