Trygve Slagsvold Vedum – the Finance Minister of Norway – urged the government to scrap its crypto program that allows domestic bitcoin miners to pay a reduced rate on electricity.
In his view, the current market conditions and the ongoing energy crisis in Europe are key reasons for this amendment.
In 2016, the Norwegian government introduced certain energy benefits for data centers, including cryptocurrency miners, by enabling them to pay less for energy than general consumers.
According to Finance Minister Vedum, though, the macroeconomic picture has drastically changed in the past six years, and that requires certain changes:
“We are in a completely different situation in the power market now than when the reduced rate for data centers was introduced in 2016. In many places, the supply of power is now under pressure, which causes prices to rise.
At the same time, we see a development with increased extraction of cryptocurrency in Norway. We need this power of community. The government will therefore discontinue the scheme.”
The Minister further claimed that removing the program would generate additional revenue of NOK 150 million (approximately $14 million) for Norway’s economy.
Currently, Europe’s power market is under major pressure due to Russia’s limited energy deliveries. The COVID-19 pandemic is another factor that worsened the situation. Numerous companies reduced their electricity needs between 2020 and the beginning of 2022 (when the health disaster was at its peak). However, power generators could not cope with the renewed demand in the past several months, which led to higher prices.
The Scandinavian country has recently turned into an attractive destination for bitcoin miners. The country accounts for around 0.7% of the global hash rate, which considering its relatively small population, is still a significant figure.
What’s worth noting is that Norway has an entirely green focus. A small fraction of its electricity is produced by wind, while 88% comes from hydropower as the wet climate and mountainous terrain stimulate this.
Not long ago, the local mining company – Kryptovault AS – vowed to relocate its operations north of the Arctic circle due to the vast water sources in that area. Like many of its Norwegian rivals, the firm produces bitcoin almost entirely with renewable energy (98% of it comes from hydropower).
