Concerned about projected increase in electricity demand, the government in Sweden may turn its back on crypto mining, the country’s energy minister has indicated. Swedish bitcoin minting industry, a leader in Europe, is likely to soon lose the preferential treatment it has been taking advantage of for some time, a media report revealed.
Crypto Miners May Find It Harder to Access Sweden’s Cheap Green Energy
Amid forecasts for growing energy needs in other sectors, Sweden may change its attitude towards cryptocurrency mining. In a recent interview, Minister of Energy Khashayar Farmanbar remarked that the Swedish economy is moving “from a period of administration to an extreme expansion where our entire manufacturing industry is seeking to electrify.” Quoted by Bloomberg, the he official stated:
We need energy for more useful things than bitcoin, to be honest.
With its hydro reservoirs and wind parks providing clean and low-cost electricity, Sweden has attracted many bitcoin miners and its coin minting industry has become one of, if not the largest in Europe. However, worried about its increased power consumption, the government in Stockholm has tasked the Swedish Energy Agency to estimate the energy usage in the digital space, especially crypto mining.
The location of mining farms is largely determined by the availability of cheap electricity while the profits for their operators depend to a large extent on the prices of crypto assets. The results from the ordered review are likely to worsen the first of these conditions and the crypto market downturn has already affected the other one.
Farmanbar refrained from revealing what measures the government might impose to restrict mining but two options have been discussed. One is to change the order in which power users are connected to the network, prioritizing those that presumably bring more benefits to the society, such as creating a large number of jobs.
The other possible move is to limit the scope of the preferential tax treatment that all data centers currently enjoy. The argument is that the intended purpose of this incentive was to attract multinational corporations such as Microsoft and Facebook, not crypto mining businesses, as noted by a senior adviser at industry group Swedenergy, Erik Thornstrom, who elaborated:
I think the existing tax reliefs should be focused on the activities they were meant to attract in the first place. Mining of cryptocurrencies is more questionable.
Officials Advised to Learn More About Innovative Technologies Like Crypto Mining
“I think a lot of public officials including the energy minister who have strong opinions about cryptocurrency and blockchain in general need further education and awareness,” commented Sukesh Kumar Tedla who chairs the Swedish Blockchain Association. He admitted that crypto mining uses a lot of energy but pointed out that so do many other innovative technologies.
The latest episode in the debate over the future of bitcoin mining in Sweden comes after last year the directors of Sweden’s financial services and environmental protection agencies suggested a ban on the energy-intensive proof-of-work (PoW) mining in the European Union, on the backdrop of a serious increase of energy consumption in the sector.
Their call to eliminate the alleged threat to climate transition goals has been backed by officials in other EU nations, including Germany, Spain and Norway. However, a proposal to prohibit PoW mining, was dropped from the draft of the comprehensive Markets in Crypto Assets (MiCA) regulatory package agreed by EU institutions. The controversial text amounted to a Bitcoin ban, according to the continent’s crypto community.
Among those that hope to benefit from curbing crypto mining are, for example, companies from Sweden’s steel industry. For instance, SSAB plans to organize a fossil-free production and insists that grid operators should prioritize industrial projects like its own rather than connect users on a first-come, first-served basis, which is what they currently do. “We could reduce Sweden’s carbon dioxide emissions by 10%,” Tomas Hirsch, head of energy at SSAB, insisted.
“Is bitcoin mining what we should be using power for, when we can use it for making fossil-free steel, for example? It is not entirely trivial in a free market,” Minister Farmanbar commented, noting that in the face of expected bottlenecks, Sweden should look into whether it’s using its energy in the best possible way. His statement comes as politicians like him are finding themselves under increasing pressure to combat global warming.
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Image Credits: Shutterstock, Pixabay, Wiki Commons, Alexandros Michailidis
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