The elimination of electricity subsidies for Bitcoin miners in Norway will put additional stress on the emerging industry, whose returns have been heavily impacted by recent erosion in the value of Bitcoin and crypto currencies. There are also reports that several minor Bitcoin miners across the world are shutting down their machines.
According to study conducted by the German Bitcoin miner Northern Bitcoin, which operates in Norway, the average cost of Bitcoin mining in Norway is $7,700 per coin. It claims that it can mine Bitcoin (and other cryptocurrencies) at a reduced rate by utilizing cheap renewable energy and cooling systems based on fjords.
Norwegian newspaper Aftenposten has reported that the country’s parliamentary representative Lars Haltbrekken has said “Norway cannot 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.”
Bitcoin miners and information centres in Norway right now enjoy the same rebates as other huge energy – dependent industries with a capacity of not less than 0.5 megawatts. From January it’ll be 16.58 øre per kilowatt. Northern Bitcoin, which utilizes the Lefdal mine in Sandane, Norway to operate its Bitcoin mines, discovered that China, in conjunction with Saudi Arabia, has the least average Bitcoin mining charges of $3,100.
The average expenditure of Bitcoin mining in Canada is about USD 4,000. At the other end of the scale, Bitcoin mining in Australia can cost nearly $10,000 per Bitcoin.
The Norwegian tech industry has responded furiously to the changes in state power subsidies and has called on the government to back the industry.
Commenting on the withdrawal of subsidies, Roger Schjerva, chief economist of tech industry body ICT Norway, said “This is shocking. 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.”
However, others within the crypto and blockchain world have invited the cancelation of subsidies.
Jon Ramvi, chief executive of Oslo-based blockchain advisory group Blockchangers, said “This is a win for the Norwegian people and our natural resources. 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.”
He further said “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. It means that if you want to hack the network, you will need to have more computational power than the other machines in the network. However, the Bitcoin network has been extremely secure for over a year now so there should be no need for more miners.”