Norway turns the heat up on power-intensive crypto mining outfits

Norway revealed plans to temporarily ban establishing new data centers that mine cryptocurrency with the most power-intensive technology. On Friday, the Nordic country’s government said it aims to conserve electricity for other industries.

The Norwegian government revealed plans in April 2024 to regulate crypto mining activities in the country by restricting data centers. Norway’s Digitalization Minister Karianne Tung and Energy Minister Terje Aasland acknowledged that the initiative is driven by the government’s desire to control and limit undesirable projects, such as crypto mining.

Norway intensifies efforts to limit crypto mining

Norway will become the first nation in Europe to implement comprehensive regulations for data centers, focusing on controlling energy-intensive activities like cryptocurrency mining. The regulation requires crypto mining operators to register with local authorities and disclose the service offered.

Tung argued that the government requires a registration obligation for those behind the data center, the center’s manager, and an obligation to state which services are offered. He added that the purpose of regulating the crypto mining industry is so that the government can shut down projects it does not want.

The Norwegian government said the regulation aims to empower the relevant authorities to approve or reject projects based on their social and environmental impact. Aasland maintained the importance of promoting socially beneficial data centers.

In Norway, crypto mining is considered incompatible with the country’s environmental goals. Aasland issued concerns about the industry’s significant greenhouse gas emissions.

The government also disclosed that a temporary ban on data centers that mine crypto could be introduced during the autumn of 2025.

“The Labour Party government has a clear intention to limit the mining of cryptocurrency in Norway as much as possible. Cryptocurrency mining is very power-intensive and generates little in the way of jobs and income for the local community.”

-Karianne Tung, Minister of Digitalization and Public Administration in Norway.

The Norwegian government also proposed in October 2022 to abolish the reduced electricity tax rate for data centers, effectively subjecting mining electricity to standard rates.

Finance Minister Trygve Slagsvold Vedum emphasized the importance of prioritizing electricity for societal needs amid the growing prevalence of crypto mining.

Vedum said the proposed changes were projected to generate additional revenue of 150 million NOK (approximately $13.61 million), with 110 million NOK expected to be realized in 2023.

According to Cambridge University CCAF’s Bitcoin Mining Map data from January 2022, Norwegian Bitcoin miners contribute approximately 0.74% to Bitcoin’s hash rate, which measures the computational power dedicated to mining.

Norway also ranks among the top in electricity generation per capita globally, largely due to its mountainous terrain and wet climate, facilitating the development of numerous hydropower plants. In 2021, hydropower contributed 92% of the country’s electricity generation, with an additional 7% from wind power.

Banning crypto mining causes a surge in electricity prices

In October last year, residents of Hasdek, a Norwegian municipality that pushed to shut down a local Bitcoin mine, faced a spike in their electricity bills due to the lost revenue for the local power company. Climate tech venture capitalist Daniel Batten argued that when politicians turn against Bitcoin, the people suffer.

Mayor of Hadsel, Kjell-Borge Freiberg, revealed on September 13 that the noise from the Bitcoin mining center was disturbing many residents in Hadsel. The mine’s closure – representing around 20% of electricity distribution provider Noranett’s income – meant local electricity bills would surge to compensate for the lost revenue.

Noranett network manager Robin Jakobsen stated that there’s an impact when such a large individual customer switches off operation suddenly. He estimated that, following the adjustment, the average household in Hasdel could face an additional annual cost of between 2,500 and 3,000 Norwegian krone (roughly $235 to $280).

Batten argued that it showed another example of how Bitcoin mining helps lower power prices for everyday people. The data center consumed roughly 80 gigawatt hours (GWh) of electricity annually, equivalent to the yearly usage of around 3,200 households. Freiberg revealed that Hasdel would seek new projects to offset the reduced electricity consumption following the mining center’s closure.

In September 2022, locals in Sortland, another Norwegian municipality, complained about the noise of Bitcoin mining activity in the area. CEO at the local KryptoVault, Kjetil Hove Pettersen, acknowledged that it could be another case of media spin targeting Bitcoin.

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