The ailing prices of cryptocurrencies have aroused many issues for miners and mining firms to make their end meets. Now, an announcement adds another set back for the Norwegian miners, as the government scraps the power subsidy that was currently granted to bitcoin miners.
According to a report from local news outlet Aftenposten, the Norwegian government stated in its state budget that the cryptocurrency miners in the country are exempted from the power subsidy and will have to pay normal electricity tax from the New Year. At present, larger mining firms avail special electricity tax discount similar to other power-intensive industries in the country.
Industries 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). So until now, miners have been paying just 2.8 % of the standard rate to power their rigs. The report quotes the Norwegian parliamentary representative Lars Haltbrekken:
“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.”
Now that the subsidy that the Bitcoin miners enjoyed have ended, they will have to shell out higher taxes. Naturally eating into their net profit, given the low crypto prices, the profit margin has receded to almost nothing.
Reportedly this suggestion to remove Norway’s subsidy was proposed by the Norwegian Tax Administration, an agency under the authority of the country’s Ministry of Finance. The approved proposal will be effective from January 2019. Roger Schjerva, the 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,”
This move will force the crypto miners to move to Sweden and Denmark, Schjerva argues that the country mustn’t “just say no to income and work in many municipalities in Norway.”’
The woes over cryptocurrency mining are pilling by the day. Just this Monday, Giga Watt, a U.S.based bitcoin mining firm filed for bankruptcy, while still owing nearly $7 million to its biggest 20 unsecured creditors.