Norway eliminates tax breaks for Bitcoin mining

Mattie Hesen

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Despite Norway’s well-known green crypto mining capabilities the country has chosen to eliminate a tax structure that was allowing cryptocurrency miners to be taxed on energy consumption at the same rate of other industries which are using a lot of energy.

In an interview with local news outlet Aftenposten.no, Lars Haltbrekken, a parliamentary representative, said:

“Norway can not continue to provide huge tax incentives for the most dirty form of cryptographic output as bitcoin. It requires a lot of energy and generates large greenhouse gas emissions globally.”

Right now miners pay approximately 0.48 Øre per kilowatt hour which translates into 0.0005 USD, a price that’s in line with other high energy consumers of 0.5 megawatts or more.

The change Norway plans to implement is significant. After January 1st, miners will pay the normal electricity tax rate of 16.58 Øre (approximately 0.02 USD) per kWh.

Norwegian CCN publisher Jonas Borchgrevink reacted to the upcoming tax change:

“Norway is one of the greenest nations on earth when it comes to the production of electricity. 99% of the electricity is produced by hydropower, and we continue to expand with wind power-, offshore wind power-, solar energy- and bio-energy facilities. From January 2018 to October 31st 2018, we exported 15 071 492 MWh, imported 6 321 079 MWh with a total “net profit” of 8 750 413 MWh. We are in excess of green energy.”

Source: Stattnett

The government and parliament’s reason behind removing the electricity tax break for Bitcoin mining is the fact it generates large greenhouse gas emissions globally. However, Borchgrevink mentions that considering Norway’s “green” power their decision “does not make any sense”. He further explains that shutting the offshore oil production that’s currently pumping over 1.6 million barrels per day would be a wiser decision when it comes to reducing the global carbon footprint.

Also interviewed by local publication Aftenposten.no, Roger Schjerva, a ranking economist said:

“We just say no to income and work in many municipalities in Norway. We can only hope that politicians understand that energy-intensive computing is one of the things we will be living with in the future.”

Gjermund Hagasæter, a spokesperson for crypto mining company KryptoVault said:

“If this is correct, it will be a complete disaster for the cryptocurrency industry in Norway. This gives a terrible signal to foreigners that are thinking of investing in Norway.”

Most of Norway’s power grid is hydroelectric and for this reason many believe the government’s decision to remove the tax break for Bitcoin mining is just an attempt to use the rapidly expanding crypto industry to balance the budget.

Interestingly, China which is one of the countries with the most miner still has a power grid made mostly from coal power plants. According to Bitnodes, there are currently only 46 full Bitcoin code nodes running in Norway. This means that the tax change which will be implemented at the start of 2019 might not have a significant impact on Bitcoin mining as a whole but it will certainly influence the decision of miners considering Norway as a place to conduct business in the future.