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Norway has scrapped a subsidy granted to cryptocurrency miners in the country, which could result in spiraling energy costs for operators the sector.

As reported by local news outlet Aftenposten, crypto mining companies will be required to pay standard electricity tax from 2019, after the government decided to remove the effective subsidy from its latest budget.

The development will pose serious problems for miners in Norway, who currently pay an effective 2.8% of the market rate for their energy. With the removal of the discount, which currently applies to several energy intensive industries in the country, miners will now have to stump up the full costs like most other businesses.

The news comes at a time of increasing difficulties for crypto miners, particularly Bitcoin Core (BTC), worldwide, with the collapse in BTC prices in particular pushing many to the brink and beyond. This week, U.S. mining firm Giga Watt became the latest high profile casualty, after filing for bankruptcy with debts of somewhere between $10-$50 million.

Scrapping the subsidy will mean firms that are currently paying just 0.48 øre ($0.00056) per kilowatt hour will have to pay at the standard rate, equivalent to 16.58 øre ($0.019) per kilowatt hour.

With power one of the main expenses for mining firms, the removal of the subsidy is likely to be another heavy body blow as the industry continues its wider decline.

Lars Haltbrekken, a representative of the Norwegian parliament said Norway could not continue to subsidize ‘dirty output’ like cryptocurrency. He declared, “Norway cannot continue to provide huge tax incentives for the most dirty form of cryptographic output like [BTC]. It requires a lot of energy and generates large greenhouse gas emissions globally.”

The announcement came without notice, with some analysts suggesting the change was made “without discussion, consultation or dialogue with the industry,” reflecting the increasing hostility from governments to cryptocurrency-focused businesses. Neighbouring jurisdictions may now look to follow Norway’s lead, in a bid to discourage the environmentally taxing process of mining for cryptocurrencies like BTC.

With the budget having passed through parliament, the chances will come into effect for remaining mining businesses from January.

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