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.
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.