Norwegian Government Plans to Remove Power Subsidies for Bitcoin Crypto Miners
The cryptocurrency market has suffered so much volatility and price drops this year. Unfortunately, it doesn’t look like it’ll be letting up anytime soon if new reports out of Norway about new measures targeted at bitcoin miners are to be believed.
Bitcoin’s price crash has seen the market struggling to survive in recent times. With a price crash as low as $3966 –down from $20k in January, investors are beginning to worry a lot about the freefall and its attendant effects.
This freefall though, has been attributed to the split of the Bitcoin Cash blockchain into two, a development that resulted from the software upgrade of the blockchain, which had caused a ‘hash war.’
This has resulted in mining operations losing a lot of money, and then trading off their mining equipments for a fraction of the price. As if this wasn’t bad enough, the government of Norway, has also heaped on its own “coal”, further affecting the market’s recovery negatively.
The latest reports out of Norway involves claims that the government has revoked subsidies for crypto miners. The Norwegian government, reports said, will no longer be willing to continue to subsidize power purchased by Bitcoin miners and mining companies.
Afterposten, a local news outlet claims earlier on Saturday that mining firms, that had been made to pay an equivalent of 0.05 US dollars per kilowatt, will as from January, be made forced to pay more after an upward review of the current charges.
The cost of electricity by these Bitcoin firms will most likely, increase to an equivalent of $1.94 per kilowatt, a significant 3880 percent increase.
Even with the previously subsidized power charge, mining BTC in Norway was more expensive, compared to what miners were charged in other mining friendly countries. Mining firms, according to reports, pay as much as $7,700 to mine a single Bitcoin, essentially making Norway the most expensive country for bitcoin miners in the globe.
A spokesman for Norway’s Socialist left Party, Lars Halbrekken was reported to have said that the country can no longer be afford the largesse payment of incentives for Bitcoin Miners.
“Norway cannot 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,”
The implication for miners is that the prices of Bitcoin which have seen new lows of around $3,900, will not be worth mining anymore, seeing as they would be mined at a huge loss.
It is unclear the exact carbon footprint of the Bitcoin network that is being used. But estimate shows that the network consumes as much energy to run compared to what is obtainable in other less economically vibrant countries like Norway.
Meanwhile, Halbrekken’s attribution of the country’s incapacity to deliver to greenhouse gasses has been countered Jonas Borchgrevink, CNN publisher and Norwegian native.
Borchgrevink was reported to have said that the manner and rate of electricity generation in Norway can sustain mining.
“99% of the electricity is produced by hydropower, and we continue to expand with wind power…We are in excess of green energy,” Borchgrevink said. “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,”
But while the development has started receiving a lot of backlash from operators and actor in the market, some have also seen it as a commendable step.
One comment from an anonymous Bitcoin miner who felt disenchanted with the decision labels the decision of the Norwegian government as both unilateral and ‘shocking.’
“[To change] framework conditions without discussion, consultation or dialogue with the industry,” the comment reads. “…now the government is playing a gambling role with its credibility,”
it further reiterated.
However, the government’s decision has received commendation from some blockchain industry members in Norway.
In an interview with Aftenposten, Jon Ramvi, Blockchangers CEO says the decision will help reduce the increasing level of profiteering in Norway crypto market.
“We reap the benefits of these resources locally instead of giving it away to Bitcoin miners. Less mining in Norway will reduce the prices of electricity for companies and people residing in Norway,”
The ‘hash war’ Bitcoin Satoshi’s Vision chain (Bitcoin SV) and Bitcoin ABC chain, which are respectively owned by Craig Wright and Jihan Wu, could continue to affect the prices of Bitcoin and the state of crypto’s prices in general.