The Norwegian government has scrapped a power subsidy currently granted to bitcoin miners.
According to a report from local news outlet Aftenposten, in its state budget, the government said that cryptocurrency miners in the country will have to pay normal electricity tax from the New Year.
At the moment, larger mining firms receive the same electricity tax discount as other power-intensive industries in the country. Those with a capacity of more than 0.5 megawatts are charged only 0.48 øre ($0.00056) per kilowatt hour instead of the standard rate of 16.58 øre ($0.019). An øre is 100th of a Norwegian krone.
That means that eligible miners have been paying just 2.8 percent of the standard rate to power their rigs.
“Norway can not 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,” Norwegian parliamentary representative Lars Haltbrekken said in the report.
Now with an end to the subsidy, bitcoin miners will have to shell out higher taxes, which is likely to reduce their net profits at a time when low crypto prices are already putting pressure on the industry.
Just this Monday, U.S.-based bitcoin mining firm Giga Watt declared bankruptcy, revealing in court documents that it still owes its biggest 20 unsecured creditors nearly $7 million. That number includes claims to hundreds of thousands of dollars by two power providers to the firm.
The suggestion to remove Norway’s subsidy was reportedly proposed by the Norwegian Tax Administration, an agency under the authority of the country’s Ministry of Finance. That proposal has now been approved in the state budget and will be effective from January 2019.
Roger Schjerva, chief economist of tech industry interest body, ICT Norway, told Aftenposten:
“This is shocking. Budgets have changed framework conditions without discussion, consultation or dialogue with the industry,”
Removing the subsidy will push crypto miners to Sweden and Denmark, he argued, adding that the country mustn’t “just say no to income and work in many municipalities in Norway.”
Editor’s note: Quotes have been informally translated from Norwegian.
Electricity pylon image via Shutterstock