Tax Rates For Electricity Soars In Norway, Leading Miners To Potentially Flee To Sweden
Around the world, the cost of mining seems to be predominantly expensive as a result of how much electricity is needed. In Norway, new tax rates have been established that makes electricity even more expensive, but miners don’t want to take this laying down. Instead, these bitcoin miners are looking for solutions offshore, which ultimately leads them to Sweden.
Erik Svensson, the director of Boden Business Agency in Sweden, says that Bitcoin miners have been entering from Norway, hoping to use the area to move their data centers. Many of these miners have already reached out to Svensson, opting to visit to find if this is the right solution for their tax issues in Norway.
The government in Sweden charges 0.5 øre per kWh in electricity tax, while Norway charges over 33 times that amount for the same amount next year. The new law will be specific to the mining data centers, which are the “dirtiest form of cryptographic output,” in the opinion of Lars Haltbrekken, a representative for the Norwegian parliament.
This decision will most likely tear down the miners that are already suffering from losses after the crypto market has been declining. Tariffs for power are one of the driving forces behind what a mining firm can make as they process proof-of-work computations to validate blocks. Some blocks for Bitcoin, for example, can cost as much as $3,500 each.
The new tax provisions ensure that miners will lose a lot of profit. Ultimately, miners in Norway only have one of two fakes – shutting down or moving their facility to a less costly area.
When speaking to a local news outlet, Svensson noted,
“The huge difference between the cost of mining in Norway and that in Sweden makes ours an attractive market for miners. It is clear that this is very interesting. We are becoming very attractive as it seems now.”
International Sales Manager for Bitmain, Julie Hvideberg, said that this shocking provision was the last thing she expected to come from Norway’s authorities. Though Bitmain is easily the largest crypto mining company in the world, they have decided to pull operations from Norway, and their decision could influence the others that follow their path in the industry.
Speaking to ET, Hvideberg said,
“We have already spoken with our Norwegian partners who have recommended us to stop the mining operations altogether. We are a global company and can move to Sweden or Denmark, but our Norwegian partner loses a big contract.”
While Bitmain has done their best to remain in touch with the Norwegian lawmakers, they were not informed of any subsidy cuts in the works.
“It will be difficult to expand the Norwegian office. We can be anywhere in the world, and government policy pushes the industry out of Norway.”