Norway has struck a blow to its domestic crypto mining industry by acting to end electricity subsidies for BTC mining facilities.
Norway has acting to end electricity subsidies for Bitcoin (BTC) mining facilities, Norway’s largest printed newspaper Aftenposten reported Nov. 21.
Until now, mining farms — in keeping with other power-intensive industries — paid a low rate of 0.48 øre ($0.05) per kilowatt. This will now rise to 16.58 øre per kilowatt as of January 2019, following an amended to the state budget agreement. One vocal parliamentary representative for the Socialist Left Party (SV) Lars Haltbrekken is quoted as strongly advocating the action, arguing:
"Norway can not continue to provide huge tax incentives for the most dirty form of cryptocurrency output […] [Bitcoin] requires a lot of energy and generates large greenhouse gas emissions globally."
As Forbes reported earlier this month, with the currently advantageous electricity subsidies, Norwegian farms are able to mine Bitcoin at an average cost of $7,700 per coin, according to data from Northern Bitcoin, a German-listed firm that mines cryptocurrencies in Norway.
Aftenposten reports that the domestic industry interest group ICT Norway has responded with strong criticism of the government action; chief ICT economist Roger Schjerva has reportedly issued a sharp-toned statement, protesting:
“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.”
There are nonetheless some within the local blockchain industry, however, who broadly agree with the government’s move. Aftenposten cites Jon Ramvi, CEO of Oslo-based blockchain advisory group Blockchangers, 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.”
Ramvi added that "more miners in the Bitcoin network does not make it faster or scale better. The only function of more miners is securing the network further,” arguing that the BTC network has been “extremely secure” for “over a year,” removing the need to incentivize more miners.
A recent report from weekly crypto outlet Diar indicated that only “big guns” in the industry are still making profit from Bitcoin mining; smaller miners paying retail electricity prices shifted towards negative revenue for the first time this September as the costs of electricity rises.