Sweden is getting rid of tax incentives for data centers in July 2023. This decision could affect Bitcoin (BTC) miners who have turned to Nordic countries to increase their profitability.
Sweden removes tax incentives for bitcoin miners
Sweden has been a hub for bitcoin miners over the past year and is one of the last remaining strongholds in Europe. Energy prices have skyrocketed across the continent mainly due to the ongoing war in Ukraine. For this reason, most bitcoin miners have been dumped.
Norway and Sweden, the northernmost regions of the continent, have remained the last areas still profitable and working for bitcoin miners. The reason was the ideal setup for data centers, such as lower temperatures and access to cheap renewable hydropower.
Sweden is now eliminating tax incentives that could prevent new investments in the region. Based on the November 2022 fiscal budget report, Sweden will increase the electricity tax from 0.006 SEK ($0.0006 USD) to 0.36 SEK ($0.035) per kilowatt-hour (kWh) by July 2023. Currently, Sweden is home to miners who use about 150 megawatts (megawatts) of power.
Jaran Melrod, a senior analyst at Luxor Technologies, a cryptocurrency mining company, said that raising this tax would increase electricity costs to $0.093/kWh. Moreover, he added that putting electricity costs at these levels means that using the MicroBT Whatsminer M30s, a moderately efficient bitcoin mining chip, will only break even in current market conditions.
Targeting bitcoin miners
After the move, Francis Coppola said that cryptocurrency proponents could interpret the move as an attack. Since Sweden imposed a 98% tax cut for data centers in 2017, the pace of job creation has been slower than expected four years ago.
Depending on the budget, the energy crisis has caused household electricity prices to skyrocket. Therefore, any attempt to cut taxes will take energy from other manufacturing industries, which are prolific in job creation.
Microsoft and Hive, both of which own data centers In the region, they protested the sudden actions given that the government has ordered a report on the energy impact of data centers, which is currently incomplete.
Moreover, the implementation of the tax will happen in the middle of the year, which makes it difficult to plan for. They also complain about the lack of official contact with active bitcoin miners in the area. Instead, only a page on the IRS website highlighted the change.
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