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We have been closely reporting on the story regarding Norway’s proposal to cut tax relief on companies mining cryptocurrency; the news of the proposal broke in early November, and the legislature was approved in December. Cryptocurrency enthusiasts in Norway and elsewhere have expressed public outrage over the issue, believing this is a step back for Norway when it comes to crypto innovation.
Cryptocurrency miners in Norway had benefited from a tax reduction that allowed data centers to pay reduced tax on their electricity fees. The new proposal will put an end to this and exclude cryptocurrency miners from benefiting, ultimately making mining in Norway several magnitudes more expensive, and encouraging them to leave the country. The plan will take effect in March 2019.
HIVE Blockchain Technologies Ltd has expressed disappointment and frustration over the issue since they have an asset located in Norway named Kolo’s Norway AS. HIVE Blockchain Technologies Ltd or HIVE is a cryptocurrency mining company, originally created in 1987; they used to mine gold but switched focus from gold to cryptocurrency in 2017.
The frustration felt by HIVE, and other cryptocurrency companies that have assets operating out of Norway is that they feel totally out of the loop. The Norwegian government ushered in this proposal without proper discussion and consultation with industry experts, leaving those in the industry angry and confused.
Many in the industry think the decision by the government is naive and not well thought through, after all, how could they understand the implications of the cryptocurrency industry without speaking to experts in the industry? However, at present, it doesn’t look like the Norwegian government is looking to reserve the decision or open up lines of communication to reconsider.
Frank Holmes, Interim Executive Chairman of HIVE said:
“These abrupt regulatory changes have forced us to reassess the value of our asset in Norway which, prior to the proposed change, represented an attractive green-field opportunity to develop data centres to serve the global technology community as well as the potential to erect cryptocurrency mining infrastructure given the access to more than 1,000 megawatts of power on the property. We have already communicated proposed changes to debt holders due to the proposed increase in power costs in the region. HIVE will assess the viability of our presence in Norway as cash management remains a priority that we consider to be in the best interests of HIVE’s equity holders.”
He went on to add that HIVE will be investigating the damages this policy will result in, up until March 2019, when the policy is set to come in.