Norway

CBDCs could provide smooth cross-border payments, says Bank of Israel official

The adviser to the deputy governor and CBDC project manager spoke at Fintech Week Tel Aviv on how a recent CBDC experiment proved efficient in cross-border transactions.

At Fintech Week Tel Aviv 2023, Yoav Soffer — the adviser to the deputy governor at the Bank of Israel — touched on the topic of central bank digital currencies (CBDCs) as an efficient cross-border payment option.

The talk came after the Bank for International Settlements concluded its research on international retail and remittance payments via CBDCs between the central banks of Israel, Norway and Sweden. The BIS project is called “Project Icebreaker.”

Soffer, who is also the project manager for the CBDC program for the Central Bank of Israel, said that while domestic payments in Israel have become “very easy, convenient and cheap,” the same is not true for payments outside the country.

“Cross-border payments are often perceived to face challenges of high costs, low speed, limited access and insufficient transparency, according to the Financial Stability Board.”

Soffer touched on the result of an example transaction that took less than two minutes. Moreover, he stressed that this model would significantly reduce the costs of sending funds internationally and is “much more competitive in terms of the foreign exchange transaction.”

*Yoav Soffer speaking at Fintech Week Tel Aviv 2023. Source: Cointelegraph*

He continued to say that the technological requirements for countries to join the model are very limited, and once a prototype is built, onboarding should essentially be a domino effect.

“Once you build it for three countries, you could build it for 180 countries. Therefore, it’s also very scalable.”

However, he did say that in employing such a program, ways to provide liquidity for CBDC providers would need to be considered, as well as the integration of policies. Soffer said privacy is another major consideration that the BIS team was aware of during the project.

Despite over a hundred countries looking into the possibilities of CBDCs, the sentiment around these centralized digital currencies is mixed. They have useful capabilities, such as efficient cross-border transactions, though some say they could threaten consumers’ future.

Former CFTC Chair Christopher Giancarlo recently stressed that CBDCs should protect privacy, not be a surveillance tool, as many fear. United States Representative Tom Emmer also commented that they could be “easily weaponized” to spy on U.S. citizens.

Norwegian police recover $5.9M stolen from Axie Infinity Ronin hack

The seized funds will be used to reimburse affected users and help prevent North Korea from funding its nuclear weapons program.

According to a press release published on Feb. 16 by Norway’s National Authority for Investigation and Prosecution of Economic and Environmental Crime (Okokrim), authorities have seized 60 million Norwegian kroner ($5.85 million) in stolen cryptocurrencies linked to the Axie Infinity Ronin Bridge hack in March 2022. According to Senior Public Prosecutor Marianne Bender:

“Okokrim is good at following the trail of money. This case shows that we also have a great capacity to follow the money on the blockchain, even if the criminals use advanced methods.”

According to Bender, Okokrim worked with Federal Bureau of Investigation agents and the U.S. Department of Justice to track the trail of stolen digital assets. “We as a society stand stronger in the fight against digital, profit-motivated crime,” she said, “This is money that can support North Korea and their nuclear weapons program. It has therefore been important to track the cryptocurrency and try to stop the money when they try to withdraw it in physical value.” In April 2022, The U.S. Department of Justice identified North-Korea backed Lazarus Group as the mastermind of the attack.

Authorities say that Sky Mavis, creator of the Axie Infinity game and the Ronin Bridge, will be notified of the seizure so that affected users “get the money back to the greatest extent possible.” The hack was valued at over $600 million at the time of the incident. Axie Infinity reopened its Ronin bridge in June 2022 after its founders, along with external investment from Binance, reimbursed users a total of 117,600 Ether (ETH) and 25.5 million USD Coin (USDC). The remaining 56,000 stolen ETH belonged to the Axie DAO Treasury and remains undercollateralized as Sky Mavis “works with law enforcement to recover the funds.”

Going cashless: Norway’s digital currency project raises privacy questions

At this point, the test network for the Norwegian CBDC uses not the public Ethereum ecosystem, but a private version of the enterprise blockchain Hyperledger Besu.

The small Nordic country of Norway may not be particularly notable on the global crypto map. With its 22 blockchain solution providers, the nation doesn’t stand out even at the regional level.

However, as the race to test and implement central bank digital currencies (CBDCs) accelerates every day, the Scandinavian nation is taking an active stance on its own national digital currency. In fact, it was among the first countries to begin the work on a CBDC back in 2016.

Dropping cash

In recent years, amid a rise in cashless payment methods and concern over cash-enabled illicit transactions, some Norwegian banks have moved to remove cash options altogether.

In 2016, Trond Bentestuen, then an executive at major Norwegian bank DNB, proposed to stop using cash as a means of payment in the country:

“Today, there is approximately 50 billion kroner in circulation and [the country’s central bank] Norges Bank can only account for 40 percent of its use. That means that 60 percent of money usage is outside of any control.”

A year before that, another large Norwegian bank, Nordea, also refused to accept cash, leaving only one branch in Oslo Central Station to continue handling cash.

This sentiment came in parallel with Bitcoin (BTC) enthusiasm, as DNB enabled its customers to buy BTC via its mobile app, local courts demanded that convicted drug dealers pay their fines in crypto, and local newspapers widely discussed investments in digital assets.

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Last year Torbjørn Hægeland, executive director for financial stability at Norway’s central bank, Norges Bank, outlined to the project’s goal of replacing cash use in the country:

“With this background, the decline in cash use and other structural changes in the payment system are key drivers for the project.”

The experimental phase of the Norwegian CBDC will last until June 2023 and end with recommendations from the central bank on whether the implementation of a prototype is necessary.

Ethereum is the key

In September 2022, Norges Bank released the open-source code for the Ethereum-backed digital currency sandbox. Available on GitHub, the sandbox is designed to offer an interface for interacting with the test network, enabling functions like minting, burning and transferring ERC-20 tokens.

However, the second part of the source code, announced to go public by mid-September, has yet to be revealed. As specified in a blog post, the initial use of open-source code was not a “signal that the technology will be based on open-source code,” but a “good starting point for learning as much as possible in collaboration with developers and alliance partners.”

*Norges Bank in Oslo. Source: Reuters/Gwladys Fouche*

Earlier, the bank revealed its principal partner in building the infrastructure for the project — Nahmii, a Norway-based developer of a layer-2 scaling solution for Ethereum of the same name. The company has been working on this scaling technology for Ethereum for several years and has its own network and tokens. At this point, the test network for the Norwegian CBDC uses not the public Ethereum ecosystem, but a private version of the enterprise blockchain Hyperledger Besu.

In late 2022, Norway became part of Project Icebreaker, a joint exploration with the central banks of Israel, Norway and Sweden on how CBDCs can be used for cross-border payments. Within its framework, the three central banks will connect their domestic proof-of-concept CBDC systems. The final report for the project is scheduled for the first quarter of 2023.

Local specifics, universal problems

In terms of hopes and fears, what defines the Norwegian CBDC project among others is the national regulatory context. Like its geographical neighbors, Norway is known for its cautious approach to the digital assets market, with high taxes and the relatively small scale of its domestic crypto ecosystem — a recent study by EU Blockchain Observatory estimated its total equity funding at a modest $26.9 million.

Norwegian serial entrepreneur Sander Andersen, who has recently moved his fintech company to Switzerland, doubts that the upcoming project will co-exist peacefully with the crypto industry. There are already more than enough problems for tech entrepreneurs in the country, he said in a chat with Cointelegraph:

“Despite the country’s strong infrastructure for entrepreneurs in other industries, such as low energy costs and free education, these benefits do not extend to the digital realm. The tax burden faced by digital companies makes it nearly impossible to compete with businesses based in more business-friendly jurisdictions.”

As central bank digital currencies have the potential to compete with private cryptocurrencies, and the goal of any government is to control financial transactions as tightly as possible, Andersen doesn’t see Norway among the exceptions:

“The Norwegian central bank’s CBDC project can also pose a threat to the legal status of private stablecoins in the country. The introduction of a CBDC may prompt increased regulation and oversight of private stablecoins, making it harder for these companies to operate.”

Speaking to Cointelegraph, Michael Lewellen, head of solutions architecture at OpenZeppelin, a company contributing its contracts library to the Norges Bank project, doesn’t sound so pessimistic. From a technical perspective, he emphasized, there is nothing stopping private stablecoins from trading and operating alongside CBDCs on both public and private Ethereum networks, especially if they use common, compatible token standards such as ERC-20.

However, from a policy perspective, there’s nothing that can stop central banks from performing financial gatekeeping and enforcing the Know Your Customer (KYC) standards, and this is where the CBDC looks like a natural development. Banks will not sit idly by as the blockchain ecosystem grows, as there is a lot of shadow-banking activity happening on-chain, Lewellen specified, adding:

“CBDCs offer central banks the ability to better perform gatekeeping and enforce KYC rules on CBDC holders, whereas enforcing the same standards against entities using non-governmental stablecoins is far more challenging.”

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Could Norway’s CBDC offer anything reassuring in terms of users’ privacy? It’s hardly possible from both technological and strategic points of view, Lewellen said. Today, a mature solution doesn’t exist that would allow privacy in a compliant manner regarding the use of CBDCs.

Any national digital currency would almost certainly require every address to be linked to an identity, using KYC and other means we see in banks today. In fact, if done on the private ledger, like the one that Norges Bank is testing right now, the CBDC will offer not only less privacy for a single customer, but at the same time less public transparency with regard to blockchains.

Australian firm raises $28M to expand Bitcoin mining capabilities

The Sydney-based Arkon Energy secured $28 million in a recent funding round to expand its renewable energy Bitcoin mining operations despite the volatile market.

The turbulent climate of the crypto industry is not putting a full stop to builders in the space. Arkon Energy, an Australian renewable data center infrastructure company, recently raised millions to expand its Bitcoin (BTC) mining operations and acquired another European-based data center.

The funding round was completed with $28 million raised by the data center infrastructure company, which uses 100% renewable electricity to mine BTC. Arkon extracts renewable power trapped in electricity markets to sustainably lowers its costs.

Arkon CEO Josh Payne said this type of market creates the perfect storm for growth due to many factors:

“The current market climate, with low prices for Bitcoin and mining equipment, offers a compelling opportunity to take advantage of our unique profitability and access to growth capital.”

In addition, Arkon acquired one of Norway’s leading renewable energy-based data centers, Hydrokraft AS, as a part of a larger plan to create a “vertically integrated green Bitcoin mining platform.”

However, on Oct. 6, the Norwegian government proposed eliminating the reduced electricity tax available for BTC miners in the country. The country’s finance minister said the power market is in a completely different situation now compared with when it first initiated the tax break in 2016.

Similarly, in the Canadian province of Quebec, the energy manager for the region asked the local government to cut power from crypto miners due to high energy demands.

The current market downturn and industry turmoil have created a rough environment for many companies in the space.

One recent example is BTC miner Iris Energy, which is now facing a default claim worth $103 million from creditors in the United States. A filing with the U.S. Securities and Exchange Commission on Nov. 7 alleges that the company failed in restructuring to meet payment deadlines.

The Hashrate Index recently released its Q3 mining report, which revealed low hash prices alongside soaring energy costs made the quarter particularly rough for the mining industry. After BTC dropped below $20,000 in September, hash rates climbed to a new all-time high on Oct. 3.

Amid the doom and gloom, some companies are pushing forward. Chinese BTC miner Canaan recently announced plans to scale its operations globally and include new research and development projects.

The state of crypto in Northern Europe: Hostile Scandinavia and vibrant Baltics

The Nordics remain a cold place for crypto, but Estonia still leads as the public blockchain adopter.

Despite the turbulence that broke out in the crypto market this summer, there is an important long-term marker that should be considered in any complex assessment — the combination of adoption and regulation. The latest report by EUBlockchain Observatory, named “EU Blockchain Ecosystem Developments,” tries to measure this combination within the European Union, combining the data on each and every member country from Portugal to Slovakia.

As the original report counts more than 200 pages, Cointelegraph prepared a summary with the intent to capture the most vital information about the state of crypto and blockchain in Europe. Cointelegraph started from a group of countries that are usually labeled as Western European and continues with a review of Northern European states.

Sweden

Numbers: $39.9 million (40 million euros) raised in initial coin offerings (ICOs), 15 blockchain startups launched.

Regulation and legislation: According to the report, the country still lacks any definite crypto and blockchain legislation: “One must often use the existing legal framework and force blockchain to fit within that framework.” The principal supervisory authorities in the country are the Swedish Financial Supervisory Authority and the Swedish Data Protection Agency.

Taxes: While the report lacks any information about the tax regime regarding crypto in the country, the local tax advisers specify that capital gains from selling crypto are subject to a 30% tax.

Notable initiatives: The Swedish land-ownership authority Lantmäteriet began testing blockchain technology in 2016, which resulted in a pilot project to develop future real estate transactions by using smart contracts. In June 2018, developers completed the first successful transaction on the platform. Together with Nasdaq, one of Sweden’s major banks, SEB, initiated the Nordic Fund Ledger — a consortium to improve mutual fund trading by applying blockchain. An initiative should have been launched in 2020, but by the publishing time, there is no evidence it did.

Local players: 3Box, a decentralized user data storage system, AIAR, an Ethereum-based education platform, and Bitrefill, a digital gift card and mobile airtime provider that accepts crypto as a payment method.

Denmark

Numbers: $32.4 million (32.5 million euros) of total funds raised by blockchain projects, 24 blockchain startups.

Regulation and legislation: Denmark has no laws specifically addressing cryptocurrencies. In 2021, Danske Bank, the largest bank in Denmark, stated that it won’t offer any cryptocurrency services to customers itself, but also that it wouldn’t interfere with transactions coming from crypto platforms.

Taxes: According to Coincub, crypto gains incur an income tax of around 37%: “If you’re a high earner, your crypto gains — as part of your overall income — could go up to 52% tax.”

Notable initiatives: In 2018, Copenhagen-based shipping giant Maersk and IBM announced the launch of TradeLens, a blockchain-enabled shipping solution designed to promote more efficient and secure global trade.

Local players: As the report specifies, perhaps the most important names among the Danish crypto startups would be the ones that were established in the country but registered in other jurisdictions, such as Chainalysis, Blockshipping and MakerDAO.

Finland

Numbers: 18 blockchain startups

Regulation and legislation: The chief supervisory authority for everything crypto-related in the country is the Finnish Financial Supervisory Authority. In 2019, the Act on Virtual Currency Providers came into effect. It demands registration from any entity that aims at Finnish customers while providing or marketeering its crypto-related services. The Virtual Currency Act does not draw any distinctions between different types of digital currencies.

Taxes: Profits from the exchange or sale of crypto are subject to capital gains tax, which makes up 30% of the income not exceeding $29,922 (30,000 euros) and 34% on the excess above this limit.

Notable initiatives: Back in 2018, the Finnish government announced the collaboration with Essentia to build blockchain-based solutions for smart logistics.

Local players: SOMA (SOcial MArketplace), a decentralized peer-to-peer (P2P) platform on Ethereum for trading and exchange of physical goods, LocalBitcoins, a P2P platform for digital currencies, and Haja Networks, a developer of distributed and decentralized database solutions based on blockchain solutions.

Norway

Numbers: $26.9 million (27 millions euros) of total equity funding, 22 blockchain solution providers.

Regulation and legislation: The advisory and supervisory authorities regarding blockchain and crypto are the Norwegian Data Protection Authority, the Financial Supervisory Authority (FSA), Norges Bank and the Norwegian Tax Authority. The FSA has previously noted that a legal framework and rules for investor protection are needed if cryptocurrencies become a suitable investment for consumers. However, according to the report, “It is unlikely that Norway will enact additional legislation on cryptocurrencies until the EU adopts its flagship cryptocurrency legislation, the Regulation on Markets for Crypto-Assets (MiCA).”

Taxes: As in other Scandinavian countries, crypto assets in Norway are subject to the general capital gains tax. The annual tax rate for private individuals constitutes 22%; the same percentage goes for legal entities due to a flat corporate income tax rate. However, an individual would pay more if his yearly income exceeds certain levels.

Notable initiatives: In 2021, The FSA established a regulatory sandbox to encourage fintech innovation. The Central Bank of Norway is actively exploring a central bank digital currency (CBDC), which is now proceeding through a two-year phase of technical testing.

Local players: Choose, a cryptocurrency platform backed by CO2 emission permits, ViPi Cash, an online platform facilitating global money transfers using blockchain technology, and Diwala, a decentralized platform for skill verification of individuals through the decentralized ledger technology.

Latvia

Numbers: 15 blockchain startups

Regulation and legislation: Crypto remains largely underregulated in the country. In 2020, the chief local financial regulator, the Financial and Capital Market Commission, urged investors to “be particularly vigilant, as cryptocurrencies operate in an infrastructure that is currently characterized by lower regulation than in the financial and capital markets.”

Taxes: The Latvian PIT Act defines crypto as a capital asset subject to the general capital gains tax, which is 20%.

Notable initiatives: In 2019, the Economic Ministry of Latvia introduced two blockchain-based pilot projects. The first one should strengthen the supervisory capacity of the State Revenue Service and reduce the shadow economy through the implementation of a blockchain-based cash register. The second would ease the process of acquiring limited liability company status by using blockchain systems in the Enterprise Registry.

In 2021, the national air carrier airBaltic added Dogecoin (DOGE) and Ether (ETH) as payment options. It started to accept Bitcoin (BTC) as early as 2014.

Local players: Blockvis, a blockchain development and consulting group, Velvet, a blockchain-powered solution for online identification, and Soft-FX, a software developer, which collaborated with a list of major cryptocurrency platforms such as Binance, Bifinex and others.

Lithuania

Numbers: 31 blockchain startups, $1.09 billion (1.1 billion euros) raised by local startups

Regulation and legislation: The report calls Lithuania “one of the most pro-blockchain countries in Europe.” It became one of the first countries to issue regulations on ICOs back in 2018. From 2019, every digital assets provider needs to be registered with the country’s Centre for Registers.

Taxes: Corporate tax for the crypto companies stands at 15% and the same flat rate goes for the individual’s income.

Notable initiatives: In 2018, the Bank of Lithuania launched a digital currency sandbox called LB Chain, which is envisioned to become a prototype for central bank-issued blockchain-backed coins.

Local players: DappRadar, a market intelligence vendor for decentralized applications (DApps), Bankera, a blockchain-backed digital bank, and BirDegree, a blockchain-based and gamified online education platform.

Estonia

Numbers: $284 million (285 million euros) raised, 200+ blockchain solutions providers

Regulation and legislation: Estonia was the first European country to provide clear regulations and guidelines for digital currencies. The local law recognizes digital currencies as “value represented in digital form that is digitally transferable, preservable, or tradable, and that natural persons or legal persons accept as a payment instrument.” However, digital currencies are not considered legal tender and do not otherwise possess the legal status of money.

Taxes: Digital currencies are qualified as property and their exchange is subject to a capital gains tax of 20%.

Notable initiatives: The blockchain-enabled e-Residency program allows anyone to start and manage an EU-based company completely online and, according to the report, “has proven a significant facilitator of blockchain business activity in the country.” However, it should be noted that when the country tightened the definition of virtual asset service providers (VASPs), more than 1,000 licenses were revoked from crypto firms.

The country utilizes a highly scalable and privacy-focused keyless signature infrastructure blockchain, which is being used in healthcare, property, business and succession registries, along with the state gazette and the country’s digital court system.

Local players: Idealogic, a full-cycle software development firm with strong expertise in product design and custom software development in Fintech, Cryptodevelopers.net, a developer of cryptocurrency wallets, and Solve.care, a healthcare blockchain technology company.

Key takeaways

Discussing the report takeaways with Cointelegraph, Kristina Lillieneke, CEO at BlackBird Law and a member of EU Blockchain Observatory, explained the rather low numbers demonstrated by Scandinavian countries regarding the crypto industry. While she agreed with the important factor of high taxes, Lillieneke pointed out such regional problems as regulatory uncertainty and fear-mongering among banks and media.

“Most banks have been blocking their customers from trading in crypto and founders of crypto companies have had their bank accounts forcibly closed. As most people are still dependent on the fiat banking system in the Nordics this is a strong deterrent to making innovations,” she said.

The expert drew the example of Sweden, where the local financial authority, Finansinspektionen, leads a non-stop crusade against Bitcoin. Erik Thedéen, the head of Finansinspektionen, has written numerous articles sharply criticizing Bitcoin and claiming it is only used by criminals to launder money and finance terrorism and is a large threat to the environment.

Recent: What the Russia-Ukraine war has revealed about crypto

Lillieneke expressed pessimism regarding any possibility of a U-turn in the Nordics, even with the upcoming pan-European MiCA framework. In her opinion, MiCA itself doesn’t contain any cure for the familiar problems:

“The regulations in Europe seem only to aim at limiting the market and innovation around everything that is decentralized and has the potential of empowering people while it favors centralized solutions run by the states, the EU or big-tech.”

More controversy comes with the recent transformation of Estonia, which has been one of the earliest blockchain adopters in the world and conducted a crypto-friendly policy until 2021, when the new guidelines for VASP licensing demolished all the previous gains for the industry. However, speaking to Cointelegraph, Marianna Charalambous, research project manager at the University of Nicosia and member of the EU Blockchain Observatory, noted that the country still remains one of the leaders in public blockchain implementation.

“Estonia remains an advocate of public sector blockchain initiatives on a national and European level, as a wide number of blockchain applications are being implemented in the public sector. Looking at the use of blockchain on an institutional level we can identify a different approach compared to the private sector which has been affected by the new legislation,” she stated.

It’s legislation season in the EU: Law Decoded, Oct. 3–10

In one week, the EU institutions voted in favor of a crypto-friendly resolution and promoted MiCA to the next stage.

Last week, the European Union appeared to be rather busy with making decisions that could define the future of the crypto industry. First of all, 566 out of 705 members of the European Parliament voted in favor of a resolution originally drafted by member of the European Parliament (MEP) Lídia Pereira.

The resolution recommends authorities in the 27 member states consider a “simplified tax treatment” for crypto users involved in occasional or small transactions and have national tax administrations use blockchain technology “to facilitate efficient tax collection.” It also calls on the European Commission to assess whether converting crypto to fiat would constitute a taxable event, depending on where the transaction occurred.

Meanwhile, representatives from a committee with the European Council sent the finalized text of the Markets in Crypto-Assets (MiCA) framework to parliament for a vote. Should the parliamentary committee approve the text, the policies could go into effect starting in 2024. The committee’s next meeting is scheduled for Oct. 10. The MiCA, first introduced in September 2020, aims to create a consistent regulatory framework for cryptocurrencies among European Union member states.

Crypto payments didn’t get to be an exception from a new set of sanctions introduced by the European Union against Russia amid its military aggression in Ukraine. The new sanctions include a complete ban on cross-border crypto payments between Russians and the EU. This statement includes the prohibition of “all crypto-asset wallets, accounts, or custody services, irrespective of the amount of the wallet.” This comes shortly after Russian officials’ approval of the usage of crypto for cross-border payments.

Norway’s government proposes eliminating the tax perk for Bitcoin miners

The finance minister of Norway, Trygve Slagsvold Vedum, has suggested the government abolish a scheme that allows crypto data centers to pay a reduced rate on electricity. According to the government, the reduced rate should be phased out as the demand for electricity was rising in certain areas. “In many places, the power supply is now under pressure, which causes prices to rise. At the same time, we are seeing an increase in cryptocurrency mining in Norway. We need this power for the community,” said the minister.

Japan will invest in the Metaverse and NFTs

Fumio Kishida, the prime minister of Japan since 2021, said the government’s investment in the country’s digital transformation already included issuing nonfungible tokens (NFTs) to local authorities. He also hinted at digitizing national identity cards. In addition, the prime minister said the cabinet would “promote efforts to expand the use of Web 3.0 services that utilize the metaverse and NFTs.” According to the official, the government will be making efforts to promote Web3 services, including those dealing with NFTs and the Metaverse.

Kim Kardashian pays SEC $1.26 million

American socialite Kim Kardashian will pay $1.26 million in penalties for her involvement in the promotion of a cryptocurrency scheme called EthereumMax. The United States Securities and Exchange Commission announced the charges against Kardashian for “touting on social media a crypto asset security offered and sold by EthereumMax” without disclosing the payment received for her promotional involvement. She has agreed to settle the charges and pay $1.26 million in penalties, disgorgement and interest and is set to cooperate with further investigations by the SEC into the EthereumMax project.

Norway’s government proposes eliminating reduced electricity tax for Bitcoin miners

“We are in a completely different situation in the power market now than when the reduced rate for data centers was introduced in 2016,” said Norway’s finance minister.

Trygve Slagsvold Vedum, the finance minister of Norway, has suggested the government abolish a scheme that allows crypto data centers to pay a reduced rate on electricity.

In an Oct. 6 announcement, the government of Norway proposed that data centers operating in the country be subject to the same electricity tax rates as other industries, representing a potential change in policy for Bitcoin (BTC) miners. According to the government, the reduced rate should be phased out as the demand for electricity was rising in certain areas.

“We are in a completely different situation in the power market now than when the reduced rate for data centers was introduced in 2016,” said the finance minister. “In many places, the power supply is now under pressure, which causes prices to rise. At the same time, we are seeing an increase in cryptocurrency mining in Norway. We need this power for the community.”

In May, Norway’s Parliament rejected a proposal to ban crypto mining first introduced by the country’s Red Party. Jaran Mellerud, an analyst at Arcane Research, told Cointelegraph at the time that Norway’s political parties would “likely make one more attempt at increasing the power tax specifically for miners” with an outright ban unlikely to happen.

Many BTC mining firms currently operate in Norway, using 100% renewable energy sources and contributing 0.74% of the global Bitcoin hash rate, according to data from the Cambridge Bitcoin Electricity Consumption Index. However, many residents of the Sortland municipality in the north of the country have complained about noise pollution from miners — echoing concerns from lawmakers in the United States.

The proposed elimination of the miner electricity tax rate came following Vedum’s presentation of Norway’s national budget for 2023. According to the finance minister, subjecting miners subj to standard electricity tax rates could bring in more than $14 million in revenue.

Norway’s government proposes eliminating reduced electricity tax for Bitcoin miners

“We are in a completely different situation in the power market now than when the reduced rate for data centers was introduced in 2016,” said Norway’s finance minister.

Trygve Slagsvold Vedum, the finance minister of Norway, has suggested the government abolish a scheme that allows crypto data centers to pay a reduced rate on electricity.

The proposed elimination of the miner electricity tax rate came following Vedum’s presentation of Norway’s national budget for 2023. According to the finance minister, subjecting miners to standard electricity tax rates could bring in more than $14 million in revenue.

Norwegian town wants ‘noisy’ Bitcoin miners out, experts respond

A municipality in Norway is using all means necessary to avoid “energy-sucking” Bitcoin miners establishing further operations, citing noise complaints and energy concerns.

There’s a new Bitcoin (BTC) energy FUD in town: noise. In Sortland, a Norwegian municipality, locals are waging war on Bitcoin miners to thwart further BTC mining developments. Their latest protest against proof-of-work (PoW) mining is that it’s loud.

It’s not enough that Bitcoin miners in Sortland use 100% renewable energy sources, create jobs and even use waste heat from the PoW process to dry out timber and seaweed for local businesses; they must do so quietly.

Sortland (red) in the extremes of Norway. Source: Google

Kjetil Hove Pettersen, CEO at local KryptoVault, explained that it could be another case of media spin aiming at Bitcoin. He explained the situation to Cointelegraph:

“It is usually the negative voices that get the most media attention; this does not reflect on all local opinions.”

Pettersen detailed that grid owners are, in fact, happy to host Bitcoin miners–as Bitcoin miners help to balance grids (as recently shown in Texas)–and that “There is a political or social cost for being outspoken about that in today’s climate.” The false narratives that media create are not new, according to Pettersen:

“[…] The narrative that we are suppressing other industry establishments by using (the skeptics use the word “wasting”) so much energy, while in fact, the opposite is true. Sometimes we are accused of driving up the energy price, which also is not true.”

Arcane Research analyst Jaran Mellerud and regular Cointelegraph contributor explained: “Northern Norway has a massive electricity surplus due to little local demand and limited transmission capacity.” In the north of Norway, where Sortland is located, energy costs are very low, and stranded hydropower is, in fact, abundant.

Pettersen listed the benefits of Bitcoin mining as adding more revenue to local municipalities’ power grids while supporting grid balance; lowering the overall grid fees for consumers; creating jobs; earning income for the Norwegian treasury as Bitcoin miners pay taxes and finally, contributing to Norway’s national trade balance. That’s without mentioning the direct consequence of Bitcoin mining, securing the world’s largest cryptocurrency.

CSO at the Human Rights Foundation, Alex Gladstein visited Kryptovault and spoke of “positive externalities.” Source: Twitter

Pettersen conceded that the Bitcoin industry has “A lot of work to do in telling our story, and dispelling myths and misconceptions.” Bitcoin provides a lifeline to many around the world–particularly in the global south–but the narrative that Bitcoin mining uses more energy than neighboring Finland continues to compel mainstream media publications.

Similar to Pettersen, for Mellerud, it’s a question of storytelling and narratives. He sums it up succinctly, “Municipalities in northern Norway should appreciate Bitcoin mining as a way to refine the electricity locally.” He continued:

Bitcoin mining facilities create local jobs and increase the income for the municipalities as they often own the local power-generating companies.”

Unfortunately, narratives that demonize Bitcoin mining and energy consumption continue to make headlines. Noise could be next.

Norwegian town wants ‘noisy’ Bitcoin miner out, CEO responds

A municipality in Norway is using all means necessary to avoid “energy-sucking” Bitcoin miners establishing further operations, citing noise complaints and energy concerns.

There’s a new Bitcoin (BTC) energy FUD in town: noise. In Sortland, a Norwegian municipality, locals are waging war on Bitcoin miners to thwart further BTC mining developments. Their latest complaint against proof-of-work (PoW) mining is that it’s loud.

Kjetil Hove Pettersen, CEO at local KryptoVault, explained that it could be another case of media spin aiming at Bitcoin. He explained the situation to Cointelegraph:

“It is usually the negative voices that get the most media attention; this does not reflect on all local opinions.”

Pettersen detailed that grid owners are, in fact, happy to host Bitcoin miners—as Bitcoin miners help to balance grids (as recently shown in Texas)—and that “There is a political or social cost for being outspoken about that in today’s climate.” The false narratives that media create are not new, according to Pettersen:

“[…] The narrative that we are suppressing other industry establishments by using (the skeptics use the word “wasting”) so much energy, while in fact, the opposite is true. Sometimes we are accused of driving up the energy price, which also is not true.”

Pettersen conceded that the Bitcoin industry has “A lot of work to do in telling our story, and dispelling myths and misconceptions.” Bitcoin provides a lifeline to many around the world—particularly in the global south—but the narrative that Bitcoin mining uses more energy than neighboring Finland continues to compel mainstream media publications.

Bitcoin mining facilities create local jobs and increase the income for the municipalities as they often own the local power-generating companies.”

Unfortunately, narratives that demonize Bitcoin mining and energy consumption continue to make headlines. Noise could be next.