Under an approved proposal from the Norwegian Tax Administration, Norway's tax collection agency, cryptocurrency miners will no longer qualify for a discounted electricity tax rate. The proposed change, included in the state budget, will take effect January 2019, according to a November 23 report from the International Business Times.
Within the current tax framework, mining companies, like other energy-intensive industries in Norway, with electricity outputs of more than 0.5 megawatts qualify for a subsidized tax rate of 0.48 øre ($0.00056 as of press) per kilowatt-hour, as opposed to the standard 16.58 øre. At less than 3 percent of the regular rate, the tax that miners currently pay is massively discounted.
Although the proposed change is likely informed by various considerations, Lars Haltbrekken, a representative of the Norwegian legislature, noted the environmental costs associated with crypto mining:
"Norway cannot continue to provide huge tax incentives for the dirtiest form of cryptographic output like bitcoin. It requires a lot of energy and generates large greenhouse gas emissions globally."
However, the discontinuation of the electricity subsidy comes as a "shock" to some, such as Roger Schjerva, chief economist for the technology interest group ICT. He asserts that the decision was made without discussion or consultation with the Norwegian crypto mining industry. Also, he believes that the higher tax rate will negatively impact the crypto industry within Denmark and Sweden as well.
Gjermund Hagesæter, a spokesman for the crypto mining firm KryptoVault, added that the tax shift spells "disaster" for Norway, according to local news outlet E24. "This gives a terribly bad signal to foreigners about investing in [the country's crypto industry]," he continued.
News of Norway's proposed tax change arrives amid a larger discussion of the environmental impact of crypto mining. A recent report published in November's Nature Sustainability suggests that crypto mining may use more energy than conventional copper and platinum mining – possibly even more than gold mining. The study noted that from January 2016 to June 2018, 17 megajoules were required, on average, to mine $1 of bitcoin, as opposed to four for copper and seven for platinum.
Additionally, an October study published by the University of Hawai'i at Mānoa contends that bitcoin, if it were to be implemented at a rate similar to other technological advancements, "could produce enough emissions to raise global temperatures by 2°C as soon as 2033." Researchers found that for the year 2017, bitcoin usage led to emissions of 69 million metric tons of carbon dioxide.
The Norwegian crypto mining industry may be opposed to the 2019 budget change, but the decision ultimately reflects the caution of various researchers and policymakers considering the effects of mining.
Translations by Google.