Bitcoin miners are looking to Norway

Bitcoin miners are looking to Norway

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2023-02-01 01:11:42

Norway – a country with abundant green energy

The Kingdom of Norway – the country of the Scandinavian peninsula, where Bitcoin is considered an asset class subject to taxes and related regulations. Bitcoin mining centers around the world are constantly moving due to the tightening of crypto regulation and Bitcoin mining problem. Thanks to developed technology, Norway – a leading hydroelectricity producing country, possessing abundant renewable energy resources, is gradually becoming Europe’s Bitcoin mining center.

According to the Norwegian Directorate of Energy and Water Resources, the electricity mix in Norway is powered by nearly 100% renewable energy from hydro and wind. That means that Bitcoin mining in this Nordic country is completely green energy. Thereby, attracting a series of multinational companies as well as local businesses such as Bitfury, Kryptovault, Bitzero, Bitdeer, etc. to join the Bitcoin mining market.

Sources convert into electrical energy.

According to the director of Kryptovault, Bitcoin mining not only solves the problem of energy surplus in Norway, but also brings stable cash flow to the renewable energy industry. At the same time, he asserted that Norway is the ideal country for Bitcoin mining, as the country produces more energy than it consumes.

“For that reason, energy prices are very low and we can use them more efficiently instead of being wasted.”

Kjetil Hove Pettersen – CEO of Kryptovault.

According to Cambridge Bitcoin Mining Electricity Consumption Index (CBECI) data, mining is consuming around 250 megawatts of electricity with 100% renewable energy, contributing 0.77% of the Bitcoin hashrate. Global.

After the mining operation, 99% of the electrical energy from the miners will be converted into heat. Bitcoin mining businesses in Norway use this secondary energy to dry wood and seaweed.

Furthermore, grid customers will benefit somewhat, given the presence of energy-hungry processes from businesses like Kryptovault. The more energy is used, the lower the cost of electricity grid fees will be. Year by year, as the total energy consumption of the local area will increase, the electricity grid fee will also gradually decrease.

“An estimated 2 million Euros have been saved due to the presence of Kryptovault in our network”

Svein Bjerke – Director of local lumber company Trekraft AS

In addition, Norway considers Bitcoin as an asset, so businesses or miners will be subject to capital gains tax in this country. The annual tax rate for individuals is about 22%, a lower rate than neighboring countries such as Sweden, Finland, Denmark, etc. Legal entities will apply the same percentage, due to the fixed corporate income tax. Thereby, the fact that miners “moved home” to the north pole of Europe has brought a significant profit to Norway.

Seamless “buffalo” of Kryptovault, Norway. Source: Kryptovault homepage.

Currently, the mining companies are mainly located in central and northern Norway due to cheaper energy prices in the south, where most of the population in the country is concentrated. According to Jaran Mellerud of Arcane Research, grid operators believe that northern Norway’s energy prices will stay low until 2027. Additionally, Norway is not a member state of the European Union. The EU’s Digital Asset Markets (MiCA) regulation is about to impose heavy restrictions on Bitcoin mining activities that won’t affect Norway too much.

All of the above information shows that Bitcoin miners have a lot of time to enjoy cheap energy and good mining conditions in Norway.

Barriers in the future

In October 2022, Norwegian Minister of Finance Trygve Slagsvold Vedum proposed to the government to eliminate the electricity consumption tax reduction for Bitcoin mining data centers. Mr. Vedum said that data centers operating in Norwegian territory should be subject to the same electricity tax as other industries. In light of the growing crypto mining activity in Norway, the minister suggested that tax breaks should be phased out gradually, given the increasing demand for electricity in certain regions.

“We are in a completely different situation in the electricity market right now, compared to the one when the price drop for data centers was introduced in 2016.”

Mr. Trygve Slagsvold Vedum, Norwegian Minister of Finance

The issue of electricity tax rates will come up after Mr. Vedum presents Norway’s national budget for 2023. According to the finance minister, the introduction of a standard electricity tax rate for mining companies could bring more than $14 million in revenue. In addition, Norway’s electricity price in the last months of 2022 increased sharply, pushing the average price of 0.18 USD/kWh – 4 times the average of the previous 3 years.

“Every day, we check the price of electricity every hour. If the price is above or below breakeven, then we make the decision to turn it on or off.”

Kjetil Hove Pettersen, CEO of Kryptovault

Mr. Pettersen expects electricity prices in northern Norway to fall again in the first quarter of 2023, when temperatures are maintained at more stable levels.

Miners are suspended at Kryptovault. Source: CoinDesk.

Noise is also an issue when mining Bitcoin, when recently in Sortland – Norway, locals are asking for miners to be moved elsewhere. Bitcoin mining uses 100% green energy, creates jobs, and uses waste heat from the Proof-of-Work process to dry wood and seaweed for local businesses. But for the people, the above benefits are still not enough when compared to the mining noise brought by the Proof-of-Work mechanism.

Although there is no specific solution to the problems of electricity price, noise…Norway will still be an attractive country for Bitcoin mining.

#Bitcoin #miners #Norway

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