Norway finance minister urges government to stop scheme that offers energy benefits to crypto miners

The Norwegian Finance Minister, Trygve Slagsvold Vedum, requested the government to stop its cryptocurrency scheme that gives local bitcoin miners a discount on electricity costs. It is important to note that Norway started certain energy benefits for data centers, including cryptocurrency miners, in 2016 by allowing them to pay less for electricity than regular users.

However, according to Finance Minister Vedum, the macroeconomic environment has changed significantly during the last six years, necessitating systematic adjustments:

“We are in a completely different situation in the power market now than when the reduced rate for data centers was introduced in 2016. In many places, the supply of power is now under pressure, which causes prices to rise. At the same time, we see a development with increased extraction of cryptocurrency in Norway. We need this power of community. The government will therefore discontinue the scheme.”

The Minister also argued that terminating the initiative will bring in an extra NOK 150 million (about $14 million) for the Norwegian economy.

Currently, Russia’s weak energy deliveries are exerting significant pressure on Europe’s power market. An additional element that made things worse was the COVID-19 epidemic. Between 2020 and the beginning of 2022, many businesses reduced their electricity needs. However, in recent months, the revived demand was too much for power generators to handle, which increased costs.

Norway focuses on renewable energy

Recently, the Scandinavian nation has gained appeal as a location for bitcoin miners. Given its relatively small population, Norway contributes 0.7% of the world’s hash rate, which is still a sizeable portion.

It’s important to note that Norway has a wholly green focus. Wind power accounts for only a small portion of its electricity production, whereas 88% of it is generated by hydropower thanks to the region’s humid climate and steep terrain.

Recently, the Norway-based mining firm Kryptovault AS introduced a method that dries wood from the waste heat generated by Bitcoin mining operation. The company manufactures bitcoin almost exclusively using renewable energy, similar to many of its rivals in Norway.