The Minister Says Sweden Needs Energy for Useful Sectors

The Minister Says Sweden Needs Energy for Useful Sectors

A media report has revealed that the Swedish bitcoin mining industry is likely to lose the special privileges it has been enjoying for an extended period. Sweden is the leader in bitcoin mining in Europe, but the growing power demand is a matter of serious concern. The Energy Minister has hinted that the government of Sweden may turn its back on crypto mining.

Crypto Miners Could Lose Access to Sweden’s Cheap Green Energy

Sweden may change its perspective on crypto mining amid increasing demand for energy needs in other sectors. The Minister of Energy, Khashayar Farmanbar, remarked that the Swedish economy is moving "from a period of administration to an extreme expansion where our entire manufacturing industry is seeking to electrify." Bloomberg quoted from a recent interview. The Minister said:

"We need energy for more useful things than bitcoin, to be honest."

The hydro reservoirs and wind parks of Sweden have been providing clean and low-cost electricity. Sweden has attracted bitcoin miners, and its coin minting industry has become one of the largest in Europe. However, the government in Stockholm has tasked the Swedish Energy Agency to estimate the energy usage in the digital space, especially crypto mining, due to its increased power consumption.

The location of mining farms is largely determined by the availability of cheap electricity, while the profits for their operators depend to a large extent on the prices of crypto assets. The possible withdrawal of cheap power for mining is likely to worsen the first of these conditions, and the crypto market downturn has already affected the other one.

The Minister refrained from revealing what measures the government might impose to restrict mining, but two options have been discussed. One is to change the order in which power users are connected to the network and assign sectors that can benefit society at large, such as creating a large number of jobs.

The other possible move is to limit the tax benefits that all data centers currently enjoy. Erik Thornstrom, the Senior Adviser at industry group Swedenergy, explained that the purpose of the incentive was to attract multinational corporations such as Microsoft and Facebook, and not crypto mining businesses. He further added:

"I think the existing tax relief should be focused on the activities they were meant to attract in the first place. The mining of cryptocurrencies is more questionable."

Officials are Advised to Learn About Crypto Mining

"I think a lot of public officials, including the Energy Minister, who have strong opinions about cryptocurrency and blockchain in general, need further education and awareness," commented Sukesh Kumar Tedla, who chairs the Swedish Blockchain Association. He admitted that crypto mining uses a lot of energy but pointed out that so do many other innovative technologies.

The Directors of Sweden’s Financial Services and Environmental Protection Agencies suggested a ban on energy-intensive proof-of-work (PoW) mining in the European Union last year. The latest debate over the future of bitcoin mining in Sweden comes as a follow-up on the backdrop of a serious spike in energy consumption in the sector.

The call to eliminate the alleged threat to climate transition goals has been backed by officials in other EU nations, including Germany, Spain, and Norway. However, a proposal to prohibit PoW mining was dropped from the draft of the Markets in Crypto Assets (MiCA) regulatory package agreed to by EU members. The crypto community vehemently opposed the controversial text, calling it tantamount to a Bitcoin ban.

The curb on crypto mining would benefit companies in Sweden’s steel industry. SSAB plans to roll out fossil-free production and insists that grid operators should accord weightage to industrial projects like its own rather than connect users on a first-come, first-served basis, which is what they currently do. "We could reduce Sweden’s carbon dioxide emissions by 10%," Tomas Hirsch, Head of Energy at SSAB, insisted.

"Is bitcoin mining what we should be using power for, when we can use it for making fossil-free steel, for example? It is not entirely trivial in a free market," the Minister questioned. Sweden should look into whether it’s using its energy in the best possible way. His statement comes as politicians like him are finding themselves under increasing pressure to combat global warming.