Norwegian officials are currently reviewing a proposal to end preferential tax treatment of data centers that mine cryptocurrency using cheaper electricity. According to Norway’s executive powers, the country has changed its energy needs.
As Norway tries to save power and collect more taxes, mining firms are likely to lose their tax incentive.
Norwegian authorities have announced that they will scrap a tax cut which has been a benefit to crypto mining companies for many years. They propose to eliminate the lower electricity tax rate for data centres in the Nordic country. Many of these countries are creating digital currencies.
In a statement published this week, the government stated that power for data centers would be subject to the general electric tax rate. This is the same rate that applies to other service industries. The move was explained by Trygve Skavold Vedum, Finance Minister.
The power market is in a totally different place now than it was in 2016, when the lower rate for data center rentals was implemented.
Vedum explained that power supply in many areas is under threat, which leads to rising prices. The crypto mining sector has also grown in Norway. “We need this power for the community. According to an Oslo cabinet member, the government would therefore end the scheme.
The government noted that investigations have revealed that it is virtually impossible to tell the difference between the electrical energy used in minting digital coins and the one consumed by data centers for other purposes.
Officials believe that crypto mining must be subject to regular electricity tax rates. The tax cut for data center operators must be eliminated completely if crypto mining is to become taxable. Officials estimate that this will result in budget receipts increasing by 150 million Norwegian Kroner (more than $14 million) and 110 million kroner (more about $10 million) next years.
This latest development follows a failed attempt to ban energy-intensive mining proof-of-work cryptocurrency cryptocurrencies in May this year. The majority of Norwegian lawmakers rejected a push in this direction by the far-left Red Party. They also rejected a proposal to increase the electricity tax for crypto miners.