According to a report from Norway’s most prominent publication Aftenposten on November 21st, the country has decided to end electricity subsidies that Bitcoin (BTC) mining facilities were enjoying up until this moment.
Mining farms, as well as other industries with intensive energy consumption, were paying dirt-cheap rates of 0.48 øre ($0.05) per kilowatt. However, in a development that is sure to affect the field in a significant way, the number will go up to 16.58 øre per kilowatt starting from January 2019.
The reason for the change in the cost per kilowatt was an amendment to the state budget pact. The decision was, naturally, supported by prominent members of the Norwegian parliament. Some of the opinions were fairly strong, including that of Socialist Left Party (SV) representative Lars Haltbrekken.
“The Dirtiest Form of Cryptocurrency Output”
The Aftenposten report quotes Haltbrekken as saying that the country cannot afford to “continue to provide huge tax incentives for the dirtiest form of cryptocurrency output […] [Bitcoin] requires a lot of energy and generates large greenhouse gas emissions globally.”
Northern Bitcoin, which is a German-listed company in the crypto mining business in Norway, was the subject of a Forbes report this month, focusing on the effects of the “advantageous” electricity subsidies. Thanks to it, the farms in Norway are (were, starting on January) able to mine BTC at $7,700 as the average cost per coin.
However, the measure, as one would expect, did not come without criticism from some sectors, including the domestic industry interest group ICT Norway. Its Chief Economist Roger Schjerva was adamant on its refusal to accept the new regulation, stating that the parliament decision to take away the subsidies was “shocking” and indicating that changing the “framework conditions without discussion, consultation or dialogue with the industry” was irresponsible.
“Norway scores high on rankings of political stability and predictable framework conditions, but now the government is playing a gambling role with its credibility,” he said in obvious anger and disappointment.
Reducing Crypto Mining in Norway: Possible Effects
The opinions in favor of the government and parliament measure were also numerous, some of them working and revolving around the blockchain field. For example, the CEO of blockchain advisory company Blockchangers, Jon Ramvi, is quoted by Aftenposten expressing that once mining is reduced in the Nordic nation, “it 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 executive also explained that a higher number of miners in the BTC network does not necessarily mean that it will have more scalability or that it will be faster. “The only function of more miners is securing the network further.”
The rising cost of electricity has mainly affected individual, smaller-scale miners, and they have been running negative revenue rates. However, the prominent companies are still making a profit off the activity, according to Diar.
By Andres Chavez