The largest printed newspaper in Norway, Aftenposten, on the 21st of November, reported that Norway has been making plans to end electricity subsidies for Bitcoin mining farms within the country. Mining farms in the country, until now, pay about 0.48 øre per kilowatt. This translates to about $0.05. This is the same as the amount other power dependent industries pay and is a subsidized rate. However, from the first of January 2019, Bitcoin mining farms will have to pay 16.58 øre per kilowatt. This conclusion followed the adjusted state budget agreement.
No More Electricity Subsidies For Bitcoin Mining Farms
Lars Haltbrekken, a vocal parliamentary representative for Left Party had a strong opinion about the issue. In his words:
“Our government cannot keep offering huge tax incentives for the dirtiest type of cryptocurrency – Bitcoin. Creating Bitcoin requires a lot of energy and produces a lot of gas emissions around the world.”
Bitcoin (BTC) Price Today – BTC / USD
Earlier this month, it was reported by Forbes that the electricity subsidies provided by the Norwegian government offers a lot of advantages for Bitcoin farms. It allows them to mine BTC at $7,700 per coin. This is according to the data from a German-listed cryptocurrency mining firm in Norway Northern Bitcoin.
The reports from Aftenposten indicates that ICT Norway, a domestic interest group in the country responded to the government’s actions with strong criticism. Roger Schjerva, the chief ICT economist, in a sharp tone, protested against the action. In this words:
“This is shocking! How can they change the framework conditions without dialogue, consultation or any discussion with the blockchain industry. Norway is one of the highest ranking countries when it comes to political stability. It has a predictable framework. However, the government is now gambling with its credibility.”
While many in the blockchain industry are protesting against the government’s action, there are some people within the same industry who agree with it. The CEO of Blockchagers, an Oslo-based blockchain advisory group, said that a reduction in the mining activities in Norway will reduce the cost of electricity for residents and companies based in Norway. What this means is that they will enjoy the benefits of this move on a local scale rather than letting Bitcoin miners enjoy every thing.
Also, Ramvi said that a reduction in the number of miners on the Bitcoin network is going to be beneficial in terms of scaling. According to him, fewer miners will ripple into faster speed. The only reason why more miners enter into the system is to secure the network. Ramvi says that the Bitcoin network has been secure for more than one year so there is no need to incentivize more miners.
Recently, Diar, the crypto weekly outlet announced that big time industry participants are the ones who profit the most from Bitcoin mining. The small scale miners who pay retail prices for electricity don’t gain as much as they would have if they enjoyed subsidies. This September, the increase in the cost of electricity made these retailers report negative revenue for the first time in history.
Already, mining Bitcoin is more expensive than buying Bitcoin, by removing the subsidies on electricity for Bitcoin mining farms, the cost for mining is only going to increase.