According to a report published by Norway’s largest distributed newspaper Aftenposten to November 21, 2018, the Scandinavian country’s government has decided to do away with electricity subsidy provided to bitcoin mining entities.
Bitcoin Mining Haven No More
Subsidized electricity rates in the country made it an attractive destination for cryptocurrency miners the world over to set up their mining operations. This is evident from the fact that until now, mining facilities in the country paid a measly rate of $0.05 per kilowatt. However, after the amendment to the state’s budget agreement, this rate is set to skyrocket to approximately $2 per kilowatt. Notably, the new rate will be in effect from January 1, 2019.
Supporting the decision by the Norwegian government is the Socialist Left Party (SV) representative, Lars Haltbrekken. He stated:
“Norway cannot continue to provide huge tax incentives for the dirtiest form of cryptocurrency output [Bitcoin] requires a lot of energy and generates large greenhouse gas emissions globally.”
The development will deal further blow to the nascent digital currencies industry. It won’t be surprising to see this move trigger a mass exodus of crypto mining companies from Norway. Not to mention the industry has recently been marred with a considerable loss in market cap, as the price of bitcoin plunged by almost 25 percent in one week.
It’s worth highlighting that according to a German bitcoin mining firm Northern Bitcoin, currently, it takes about $7700 to mine a bitcoin in Norway. However, with electricity subsidies vanishing from the mining industry, one can expect this cost to shoot up considerably from 2019.
Globally, Norway sits somewhere in the middle concerning the cost of mining bitcoin. Countries like Canada, and China, enjoy a low cost of mining bitcoin, $4,000 and $3,100, respectively. Conversely, the cost of mining bitcoin can go as high as $10,000 in a country like Australia.
Retaliating to the decision made by the government, personalities from Norway’s technology sector have heavily criticized the move.
Roger Schjerva, chief economist, ICT Norway, states:
“Budgets have changed 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 gambling with this credibility.”
Bitcoin Mining Not Sustainable?
What used to be a lucrative side-business in the previous years is now witnessing a slump in its popularity. Bitcoin mining has taken a beating in the past few months, especially since the end of the crypto bull run in Q1 2018.
BTCManager reported on November 23, 2018, how the U.S. bitcoin mining giant GigaWatt filed for bankruptcy in Washington, making it the latest victim of the falling crypto prices.