Norway, a country that has become a popular Bitcoin mining destination after the China crypto crackdown, is considering banning Bitcoin mining. The country’s minister of local government and regional development, Bjørn Arild Gram confirmed to EuroNews they are looking to back a European Bitcoin mining ban.
The minister told the media house that the country is considering potential policy measures to mitigate the effects of crypto mining on the environment. He went on to add, “Although crypto mining and its underlying technology might represent some possible benefits, in the long run, it is difficult to justify the extensive use of renewable energy today.”
He confirmed that the government is considering supporting a proposal by Swedish regulators that wants the European Union to ban the energy-intensive proof-of-work blockchains. Instead, they should “migrate applications” to less energy-intensive proof of stake and hybrid consensus models.
The proof of work mining involves multiple computers working to solve mathematical puzzles. The computer that solves the puzzle first gets rewarded, and the other computers have to verify the solution. The mining difficulty increases with an increase in nodes and blocks to verify, which means more computing power is needed, hence energy required increases.
Erik Thedéen, director of the Swedish Financial Supervisory Authority, is one of the Swedish officials pushing for the European ban on Bitcoin mining. He said, “Sweden needs the renewable energy targeted by crypto-asset producers for the climate transition of our essential services, and increased use by miners threatens our ability to meet the Paris Agreement.”
Norway, Sweden and Iceland have become popular Bitcoin mining destinations due to their abundance of renewable energy sources and low electricity rates. Data from Eurostat shows that Norway has the cheapest electricity for non-household consumers in Europe, as it draws more than 90% of its electricity from hydroelectric power generation.
Minister Gram is of the view that Norway should use its renewable energy for creating value and transitioning to a climate-neutral society. His sentiments form part of a long drawn energy discussion in the country over its use of renewable energy to power Bitcoin mining following Oslo’s tax break for data centres in 2016. Some leaders, including new environment minister Espen Barth Eide, have previously expressed concerns over Norway becoming the world’s Bitcoin mine over its power-intensive industries.
The changing European crypto landscape
Following the China ban on crypto mining, the Bitcoin mining landscape became more decentralised with countries like Norway and Sweden becoming some of the new top mining destinations. However, if countries follow through with the proposal, then they will have to ban all power-intensive crypto mining operations.
The European Union confirmed that it would support a policy banning energy-intensive mining activities across Europe. The commission wants to promote more sustainable forms of blockchain technologies as it looks to meet its emission reduction targets for the digital sector.
The commission is looking into the impact of mining activities from an international perspective. Given most of the Bitcoin mining occurs outside the EU, it believes these countries should be developing their own emission reduction strategies.
For now, Norway remains an ideal location for Bitcoin miners. However, it can all change when the proposal to ban proof of work mining goes through.