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. According to a media report, the Swedish Bitcoin Minting Industry, which is a leading European industry for bitcoin mining, will soon lose its preferential treatment.
Crypto Miners May Find It Harder to Access Sweden’s Cheap Green Energy
Sweden might reconsider its attitude to cryptocurrency mining in light of rising energy demand forecasts. 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:
To be quite honest, energy is needed for many more things than just bitcoin.
Sweden’s hydro reservoirs, wind parks, and clean electricity have attracted many Bitcoin miners. The country has also seen its coin-mining industry grow to be one of the most important in Europe. Concerned about rising power consumption, Stockholm’s government has requested that the Swedish Energy Agency estimate energy consumption in digital spaces, including crypto mining.
Location of mining farms depends heavily on electricity availability, while profits for operators are dependent in large part upon the price of crypto assets. These conditions will likely be worsened by the results of the reviewed review, and crypto market turmoil has already affected one.
Farmanbar did not reveal what government measures might be taken to limit mining, but there were two possibilities. The other is to shift the order of power users connected to the network. Prioritizing the ones that are most beneficial for society (e.g., creating large numbers jobs) would be the first option.
Another possible option is to restrict the tax preferential treatment all data centers enjoy at the moment. According to Erik Thornstrom (a senior advisor at the industry group Swedenergy), this incentive was intended to draw multinational companies such as Microsoft or Facebook and not crypto mining firms.
The tax incentives that exist should focus on what they are meant to attract. More questionable is the mining of cryptocurrency.
Officials advised to explore innovative technologies such as 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. While he acknowledged that crypto mining requires a lot energy, he also pointed out the many 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.
Officials from other EU countries, such as Norway, Spain, and Germany supported their call for the elimination of the threat to climate change goals. The EU institutions dropped a proposal to forbid PoW-mining from the final Markets in Crypto Assets(MiCA), regulatory package. 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. SSAB, for instance, plans to create a carbon-free production. It also insists grid operators prioritize industrial projects similar to its own and not connect users according the first-come first-served model that they are currently using. “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. He made this statement as lawmakers like him face increasing pressure to reduce global warming.
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