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- The government of Norway is acknowledging an offer to eliminate the law of preferential tax treatment for data centers.
- The law permitted many crypto businesses to pay less for power tax.
The government of Norway is all set to eliminate a tax reduction that has been giving advantages to the crypto mining business for years. They are offering to remove the minimized energy tax rate for data centers in the Nordic country, the majority of which are minting virtual currencies.
Power for data centers will therefore be subject to the normal energy tax rate, the same that is applicable for other service industries, and the government publicized in an announcement issued that very week. Finance Minister Trygve Slagsvold Vedum described the reason behind the step.
“We are in an entirely different condition in the energy market now related to when the minimized rate for data centers was launched in 2016.
In the majority of regions, the power supply is now under pressure, which causes prices to inflate, Vedum explained. Meanwhile, the crypto extraction sector has broadened in the country.
“We require this energy for the community. The government will thus not continue with this scheme,” the member of the cabinet in Oslo was cited as saying.
The Tax Reduction
Investigations have demonstrated that it is not possible practically to differentiate between electrical energy consumed for the minting of virtual coins and that used by data centers for different purposes, the government also highlighted.
If crypto mining is to be based on the regular electricity tax rate, the tax reduction for data centers must be eliminated completely, officials trust. They calculate that in this matter, budget receipts will grow by 150 million Norwegian kroner (more than $14 million) now and the other 110 million kroner (over $10 million) in 2023.
The recent growth comes after an unsuccessful trial to prohibit the energy-intensive mining of proof-of-work cryptocurrencies in May 2022. A threshold in that direction by the far-left Red Party in parliament was not accepted by many policymakers of Norway. Meanwhile, they also changed down an offered electricity tax hike for crypto miners.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
