The crypto mining industry of Norway is going to witness more hardship, as the Norwegian Tax Administration has announced that cryptocurrency mining units will no longer able to enjoy the discounted electricity tax rate. The proposed change will take effect from January 2019, according to the report published in the International Business Times.
Norway currently offers discounts on the tax rate on electricity to power-intensive industries, those which consumes power of more than 0.5 megawatts are charged 0.48 Norwegian kroner ($0.056) per kilowatt hour, instead of the regular rate of 16.58 Norwegian kroner. The crypto mining industry also qualifies for the same discount structure.
Cryptocurrencies being linked to the dirtiest form of currencies and the huge environmental costs associated with crypto mining, the proposal to end the discount structure was going around for a long time.
Norwegian parliamentary representative Lars Haltbrekken stated:
“Norway cannot continue to provide huge tax incentives for the dirtiest form of cryptographic output like bitcoin. It requires a lot of energy and generates large greenhouse gas emissions globally,”
The development will have an adverse effect on the crypto ecosystem around the region and end to subsidy means increasing cost and subdue profitability. The crypto mining industry is already struggling hard on the back of depreciating cryptocurrency prices. This could also force the closure of several mining units in the country.
The prolonged bear market has made the crypto mining business uneconomical and is even facing problems to breakeven costs. Bitcoin network’s hash rate, one of the key way to measure the computing power of the network has dropped 24 per cent from all-time high levels at the end of August through November.
The break-even cost to mine a single bitcoin using Bitmain’s Antminer S9 rig is estimated to be around $7000, which well above the current BTC prices. At this pace, it is likely that more crypto miners will exit the business which will have a cascading effect on chipmakers like Bitmain.
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