Norway Scraps Electricity Subsidy For Cryptocurrency Miners
The Scandinavian nation Norway has pulled the plug from providing electricity subsidies to cryptocurrency mining facilities in the country. Local news outlet Aftenposten reported that in its state budget the government announced that crypto miners will have to pay the normal electricity charges starting next year.
This will significantly hit the profitability of the Norwegian miners while raising their power liability drastically. Until now, high-power consuming industries like crypto mining farms paid for their electricity bills at a subsidized rate of 0.48 øre ($0.05) per kilowatt. From January 2019, this will increase to 16.58 øre per kilowatt. Currently, the miners are only paying 2.8% of the standard electricity rates to the government.
Lars Haltbrekken, the parliamentary representative for Norway’s Socialist Left Party (SV) is in strong support of introducing the new revised rates. He said: “Norway cannot continue to provide huge tax incentives for the most dirty form of cryptographic output like bitcoin. It requires a lot of energy and generates large greenhouse gas emissions globally.”
This decision of the government has received a heavy criticism from the domestic crypto industry players. Roger Schjerva, chief of ICT Norway, a domestic industry interest group replied with a sharp criticism.
Schierva said: “This is shocking! [To change] 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 playing a gambling role with its credibility.”
However, there are a few players from the blockchain industry who also support the government’s decision to end the power subsidy. Jon Ramvi, CEO of Oslo-based blockchain advisory group Blockchangers, says 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.”
Ramvi also added that adding more miner to the Bitcoin network won’t make it any faster or scalable. Rather it will just make the network more secure. However, he stated that the Bitcoin network has been “extremely secure” for “over a year,” and hence there not additional need to incentivize the miners.
This news comes just at a time when the entire mining industry is facing tough times to the drastic fall in the crypto market. The cost of mining one Bitcoin has gone way higher than its actual prize and with Bitcoin showing no recovery over the last several months, many miners have started to shut down their operations.