Editor’s note: The Norwegian government took an important and high-impact decision that will transform whole bitcoin mining scenary in that country – they cancelled a tax subsidy on energy consumption offered to bitcoin miners until this moment – and we are talking about a really big subsidy.
Some Scandinavian nations charge tax on electrical energy consumption, including Norway. Based on a report from nearby news outlet Aftenposten, in its state spending budget, the government said that cryptocurrency miners inside the country may have to pay regular electricity tax in the New Year.
At the moment, larger mining firms acquire the identical electrical energy tax discount as other power-intensive industries in the country. These using a capacity of more than 0.5 megawatts are charged only 0.48 øre ($0.00056) per kilowatt hour as opposed to the typical price of 16.58 øre ($0.019). An øre is 100th of a Norwegian krone. That implies that eligible miners have already been paying just 2.8 percent from the typical tax rate to power their rigs. Editor’s note: Yeah, you didn’t read it wrong. Bitcoin miners paid only 2.8% of common price for electrical energy consumption, what offered them great profit margins. But, we can imagine several good reasons to cancel such subsidy can be useful for Norwegian population, but not for miners…
“Norway can not continue to provide enormous tax incentives for essentially the most dirty form of cryptographic output like bitcoin. It requires a whole lot of energy and generates significant greenhouse gas emissions globally,” Norwegian parliamentary representative Lars Haltbrekken said within the report.
Now with an finish for the subsidy, bitcoin miners may have to shell out higher taxes, that is probably to lower their net earnings at a time when low crypto rates are already placing stress around the market.
Just this Monday, U.S.-based bitcoin mining firm Giga Watt declared bankruptcy, revealing in court documents that it still owes its most significant 20 unsecured creditors almost $7 million. That number contains claims to hundreds of a huge number of dollars by two energy providers for the firm.
The suggestion to remove Norway’s subsidy was reportedly proposed by the Norwegian Tax Administration, an agency below the authority with the country’s Ministry of Finance. That proposal has now been approved inside the state budget and will be productive from January 2019.
Roger Schjerva, chief economist of tech market interest body, ICT Norway, told Aftenposten:
“This is shocking. Budgets have changed framework conditions without having discussion, consultation or dialogue together with the industry,”
Removing the subsidy will push crypto miners to Sweden and Denmark, he argued, adding that the nation mustn’t “just say no to earnings and operate in a lot of municipalities in Norway.”