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Monday, October 3, 2022
HomeNewsNorwegian Ban on cryptomining fails to gain support.

Norwegian Ban on cryptomining fails to gain support.

The Labor Party and the Socialist People’s Party do not support Rødt’s proposal to ban the extraction of energy-intensive cryptocurrencies. – It seems that the government will give the bill to Norwegian electricity customers, says Marhaug (R).

In March, Rødt proposed banning the most energy-intensive extraction of cryptocurrency, which is used for bitcoin , among other things . Now the proposal has been considered, but only SV and MDG support bans.

Rødt points out that the recovery of cryptocurrency is extremely energy-intensive and believes it is more important to prioritize power for industry and climate cuts.

– But it seems that the majority in the Storting will leave the priority to the market, and give the bill to Norwegian electricity customers, she says.

Breach of promise

The party also does not get a majority to investigate the full electricity fee for the data center, which they believe is a breach of promise from the AP and Sp. Before the election, these parties stated that they wanted to introduce a full electricity fee for data centers that extract cryptocurrency.

While ordinary households, many companies and the public sector pay an electricity tax of 15.41 øre per kilowatt hour, the industry has a reduced electricity tax of around 0.55 øre per kilowatt hour.

This also applies to data centers that require large amounts of power to extract cryptocurrency.

In February, the government said that they would avoid a special Norwegian cryptocurrency ban, but that they were considering several measures in connection with electricity use.

– Concerned about discrimination

The majority, on the other hand, state that it is “in principle questionable to discriminate against data centers on the basis of a politically defined societal benefit”.

This is illustrated by the fact that 7 billion You Tube plays of Justin Bieber’s version of “Despacito”, for example, account for a power consumption of 900 gigawatt hours of electricity – equivalent to the annual power consumption for the whole of Barbados.

“Although it is possible to identify hardware and algorithms that differentiate between what some would think is socially beneficial and not, it may not be in society’s interests to regulate this through, for example, electricity tax,” says the majority.

In total, it is estimated that the global extraction of bitcoin now uses 147 terawatt hours (TWh) a year, calculations from Cambridge University show.

In comparison, the entire Norwegian electricity consumption was just under 140 TWh last year, according to Statnett.

Prohibition can hinder innovation

The recommendation from the Finance Committee reminds that cryptocurrencies such as bitcoin , ether and ripple are “very risky and speculative products” and that investing in them “involves a high risk of loss.

The majority of the committee, minus SV and Rødt, point out that cryptocurrency can still provide more secure transactions in societies with poorly functioning monetary systems, institutions and payment systems.

“The emergence of cryptocurrency is understandable in countries, markets and contexts where confidence in the authorities and institutions is weak or has challenges related to its payment systems,” the recommendation states.

“It is no coincidence that cryptocurrency experienced a particular upswing in the wake of the financial crisis in 2008, when confidence in national and international banks and financial institutions was at a bottom level,” it continues.

The majority, minus SV, MDG and Rødt, point out that because cryptocurrency can have a function in other markets, efforts should be made for better regulation through Finanstilsynet and international agreements, and not a ban in Norway.

“The goal must be to reduce the need and demand for cryptocurrency by contributing to the well-functioning monetary system,” it says.

The majority also points out that blockchain technology, which is the basis for bitcoin , can contribute to innovation and competition in several areas of society, including banking and finance. A ban could also hinder further innovation in blockchain technology, according to the majority.

Chris Crespo
Chris Crespohttp://nordicfintechmagazine.com
Chris is the Co-founder of Nordic Fintech Magazine and Fast Forward Banking. He uncomplicates finance through jargon-free financial media content in plain and simple language. Chris is also a guest lecturer at Stanford University and Singularity University where he speaks regularly on the Future of Financial Services, the Future of Money Disruption and Entrepreneurship.