Near 35 Fold Increase
Crypto mining services enjoy the same tax discounts as any energy intensive industry in the Scandinavian nation. With the already cheap energy in the country, miners only have to pay 0.48 øre (one øre is 100thof a Norway’s Krone) for every kilowatt consumed.
The new government decision means the energy rate will jump to 16.58 øre. This represents more than 34.5 times increase in energy billing.
Lars Haltbrekken, an outspoken Norwegian Parliamentary representative said “Norway cannot continue to provide huge tax incentives for the most dirty form of cryptographic output like bitcoin. It requires a lot of energy and generates large greenhouse gas emissions globally.”
Proposed by Norwegian Tax Administration, the move has been approved and will be enforced from January, 2019.
ICO Norway, the local crypto interest group that actively advocates for crypto and blockchain technology, reacted very negatively to the news, with Roger Schjerva, their Chief Economist, angered, “This is shocking! [Changing] 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 others, such as Jon Ramvi, CEO of Oslo based blockchain advisory group, Blockhangers, who believe the move is justified by the government. “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.”
On the importance of mining farms, he was very particular about the role miners play within the Bitcoin ecosystem, “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”.
The shocking move comes at a time when cryptocurrencies are being run to the ground. Bitcoin is already trading below USD 4,000 and other cryptos are bleeding price too. A report by Forbes revealed that even with current advantage miners have in Norway, their average cost of mining one BTC is USD 7,700. The massive increase in cost and diving value of Bitcoin will leave very little room for profitability, if at all.