MP Espen Barth Eide is critical of Norway’s attractive position for crypto miners. (Photo: UN Photo/Jean-March Ferré/CC BY-NC-ND 2.0)
MP Espen Barth Eide is critical of Norway’s attractive position for crypto miners. (Photo: UN Photo/Jean-March Ferré/CC BY-NC-ND 2.0)

Barth Eide: – Can We Prevent Norway From Becoming the World’s Bitcoin Mine?

Norwegian MP Espen Barth Eide is worried that Norway may become so attractive for crypto miners that it will supplant power-intensive Norwegian industry. The Finance Minister responds that stopping discounts to crypto miners is difficult.

In a written question to Finance Minister Siv Jensen, MP Espen Barth Eide (Labour) expresses concern regarding the major interest Norway is experiencing from international crypto miners. He refers to the fact that the underlying technology behind bitcoin as well as other crypto currencies, block chains, carries a potential for providing new solutions in many areas, such as e.g. increasing information security. However, there are also challenges related to this. As the digital currencies are not traceable to individuals, it makes them most attractive for criminal activities.

He now worries that electricity tax discounts make Norway the world’s ‘bitcoin mine’.

Data Center Discount

As of 2016, the tax on electrical power supplied for data centers with an outtake of more than 5 MW was reduced. As of 2017, the condition was changed to apply to outtakes exceeding 0.5 MW. The goal was to make Norway an attractive location for major data centers, also for international actors. The regulations do not distinguish between data storage, processing or crypto mining.

Crypto currency mining is very energy demanding, and the discounts on Norwegian power has made it far more attractive than intended to establish such activities in Norway. The original intent was to attract other kinds of data centers. The term ‘data center’ refers to a company that has storing and processing of data as its main business activity. The Norwegian Tax Administration presented an interpretation statement last June, concluding that the discounted electricity tax applies also to data centers mining crypto currencies.

Espen Barth Eide argues that while it is important for Norway to attract investments and jobs in new technologies, we must also make sure that the energy consumption does not supplant other important power-intensive industry, nor is used to promote illegal activities, nor undermines the State’s authority as primary issuer of means of payment. Barth Eide thus questions whether crypto currency mining is a kind of activity that should benefit from electricity tax discounts.

Difficult to control

Norwegian Finance Minister Siv Jensen says that there has been neither studies nor proposals about excluding power supplied for crypto currency mining or sales from the electricity tax deductions. The Ministry of Finance assumes that it may be hard to carry out and control an arrangement that differentiates the tax level according to what purposes the data capacity has been used for.

Jensen refers to the fact that the data centers benefiting from the reduced tax level are used by many customers and for a variety of purposes. Given the amount of data stored and processed by a data center, it is not possible to exclude the possibility that some of it is related to criminal activity based on crypto currencies. Such criminal activities are as unwanted as any other economic crime; however, it must be fought primarily through regulation and control of financial transactions.

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