Bitcoin miners were enjoying a subsidy from the Norwegian government. This has all come to a halt with the recent announcement that starting 2019, all miners in the country will pay normal electricity taxes.
Whether or not the government’s decision is based on the current state of the crypto markets is up for debate. Currently many large mining companies are using an electricity tax discount. As other power-intensive industries in the country.
The standard rate for the ones with more than 0.5 megawatts capacity is $0.019 per kilowatt hour. The companies enjoying the subsidy are charged the measly $0.00056 for the same timeframe. Essentially, this means that miners enjoying the subsidy have been paying less than 3% of the standard power price.
Lars Haltbrekken, a Norwegian parliamentary representative stated that it’s impossible for the country to continue providing incredibly large tax incentives for the dirtiest form of cryptographic output, namely Bitcoin. He further elaborates that the whole process takes an enormous amount of energy and also generates huge greenhouse gas emissions globally.
The subsidy ending will probably stop a lot of miners
With the subsidy being put to a grinding halt, miners will be required to pay normal taxes. Combined with the current market situation, this is bound to bring miner profit down a by a huge margin. The current crypto prices are already putting heavy pressure on miners and the subsidy ending might just the last push for miners to call it quits.
The crypto market crashing was bound to have a house of cards effect on mining companies. On the 19th of November, the United States-based bitcoin mining company Giga Watt publicly declared bankruptcy. Court documents later revealed that the company still owes 20 of its biggest creditors nearly $7 million. The majority of that sum is owed to two power providers to the firm.
The Ministry of Finance is indirectly responsible for the subsidy removal. The decision for removal was taken by the Norwegian Tax Administration, which is under the authority of the country’s Ministry of Finance. With all changes being approved for the state budget, the changes will come into effect immediately after January 1st, 2019.
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Categories:Crypto News Cryptocurrency Market Europe