Sweden averse to Bitcoin mining amid rapid rise in energy demand
Sweden is looking to redirect the energy being used by crypto miners to operations that would create more jobs in the country.
Europe’s mining heaven Sweden looks to re-direct Bitcoin miners’ power to job-creating projects as the country’s energy demand rapidly increases.
Sweden’s Energy Minister Khashayar Farmanbar told Bloomberg News:
“We need energy for more useful things than Bitcoin, to be honest. We are moving from a period of administration to an extreme expansion where our entire manufacturing industry is seeking to electrify.”
The country’s power demand has been increasing due to a rise in mining activities. Data centers in the county use only a tiny percentage of Sweden’s power today, with the share of crypto mining being even smaller. However, the county’s estimations show that power demand from mining operations may grow 8x by 2040.
Mining in the region
Sweden’s wind and hydro-powered affordable electricity and cold climate set the perfect environment for crypto miners. The county doesn’t disclose the mining industry’s data publicly. Therefore, it is hard to estimate the size of mining operations. However, it is known that the country hosts mining giants, including the Canadian Hive Blockchain Technologies and Hong Kong’s Genesis Mining.
According to Cambridge Bitcoin Electricity Consumption Index, Sweden accounts for 0.84% of the average monthly global hashrate based on the numbers from January 2022. The country is also ranked 27th amongst countries with the highest annual electricity consumption for Bitcoin mining, with a total consumption of 124,609 terawatt-hours.
A few weeks ago, the Swedish government asked for Swedish Energy Agency to reveal how much power is used for digital infrastructure, especially asking for a specific focus on crypto mining. Once the numbers are retrieved, Farmanbar said that the government would take some measures to halt crypto mining in the region to re-direct the electricity into industries that can create tangible benefits to the country, such as creating more jobs.
While not mentioning any detail on the measures the government is considering taking, Farmanbar hinted at a change in the country’s current tax policy.
Currently, the same affordable tax rate applies to all data centers to attract global giants like Microsoft and Meta to the country. However, it attracted mining companies more than the others when coupled with the climate and cheap electricity.
Swedenenergy senior advisor Erik Thornstrom commented on the possibility of an update to differentiate the tax rates and said:
“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.”
In addition, Sweden is also considering the environmental effects of crypto mining when planning to halt mining operations. The country plans to invest the energy it will cut from mining operations into carbon-friendly projects such as producing fossil-free steel. According to the estimations, the government expects to reduce national carbon emissions by 10%.
Other countries with changing attitudes towards mining
Kazakhstan, the third country with the highest mining activity in the world, is also experiencing the same problem as Sweden. Kazakhstan’s energy crisis started in November 2021, and the country has been cutting power from Bitcoin miners to save the rest of the nation ever since.
So far, Kazakhstan has implied significant tax increases and a bureaucratic burden on all mining operations to discourage them from operating. Before the energy crisis hit and the nation took these measures, Kazakhstan was the second country with the highest mining activity.
On the other hand, Paraguay recently announced a new bill that will work in favor of crypto miners. The Senate of Paraguay’s new bill is currently waiting for the President’s approval. If it passes, the county will offer excess energy to crypto miners at affordable prices and exempt them from value-added taxes.