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The Norwegian government is considering a proposal to abolish the policy of tax preferential treatment for data centers that mine cryptocurrency with cheaper electricity. The executive in Oslo says conditions have changed and the country needs the energy used by miners today.
Norwegian authorities are on the way to scrapping a tax cut that has benefited cryptomining businesses for years. They propose to get rid of the reduced electricity tax rate for data centers in the Nordic country, many of which feature digital currencies.
Power to data centers will thus be subject to the general electricity tax rate, the same as applies to other service industries, says an announcement published this week. Finance Minister Trygve Slagsvold Vedum explained the reasoning behind the move:
We are in a completely different situation in the power market now compared to when the reduced rate for data centers was introduced in 2016.
In many areas, the electricity supply is now under pressure, which causes prices to rise, explained Vedum. At the same time, the crypto mining sector has expanded in Norway. “We need this power for society. The government will therefore discontinue the scheme, says the cabinet member in Oslo.
Research has shown that it is virtually impossible to distinguish between electrical energy used for minting digital coins and that consumed by data centers for other purposes, the government also noted.
If crypto mining is to be subject to the regular electricity tax rate, the tax cut for data centers must be phased out entirely, officials believe. They estimate that in this case the budget income will increase by NOK 150 million (over USD 14 million) now and a further NOK 110 million (over USD 10 million) next year.
The latest development comes after a failed attempt to ban energy-intensive mining of proof-of-work cryptocurrencies in May this year. A push in that direction from the left party Red in parliament was rejected by the majority of Norwegian legislators. At the time, they also rejected a proposed increase in electricity fees for crypto miners.
Do you think Norway will lose its attractiveness as a crypto mining destination if the tax cut for miners is scrapped? Share your thoughts on the topic in the comments section below.
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