Norwegian government ends tax incentives for crypto mining firms

The government of Norway has decided to end a power subsidy currently enjoyed by bitcoin miners, CoinDesk reported referring to a report from Aftenposten.

In its state budget, the government said that normal electricity tax would be levied on cryptocurrency miners from January 2019. The proposal to end the subsidy was reportedly made by the Norwegian Tax Administration, an agency under the Ministry of Finance.

Currently, mining firms with larger operations receive the same tax discount on electricity consumption as other power-intensive businesses in the country. Those with a capacity of over 0.5 megawatts are required to pay only 0.48 øre ($0.00056) per kilowatt hour, compared to the standard rate of 16.58 øre ($0.019).

“Norway cannot 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 (as translated by CoinDesk).

Speaking with Aftenposten, Roger Schjerva, chief economist of ICT Norway, said that the government changed the framework conditions “without discussion, consultation or dialogue with the industry.” With the new tax regime, crypto miners might look to other countries, such as Sweden and Denmark, he said.

The higher tax rates will put a strain on the profits of mining firms, who are already reeling under the effects of a drastic market downturn.

On Monday, U.S.-based crypto mining firm Giga Watt filed for bankruptcy while still owing millions of dollars to creditors.