Norway Bans New Crypto Mining Data Centres to Meet Climate Targets

Norway has implemented a temporary ban on new data centres specifically designed for crypto mining. This move is aimed at conserving electricity for more productive industries that employ more people and contribute to the country's economic growth. The ban targets Bitcoin and other proof-of-work cryptocurrencies, which consume significant amounts of electricity to validate transactions. In April 2024, the Norwegian government announced plans to restrict data centres to focus resources on more productive forms of work. The digitisation Minister, Karianne Tung, stated that the initiative aims to control and limit undesirable projects such as crypto mining.

The primary reason for the temporary ban on crypto mining data centres is to meet the nation’s climate targets. Energy Minister Terje Aasland explained that crypto mining is incompatible with the government’s climate goals because it uses excess electricity without contributing meaningfully to long-term investments. Norway has a history of regulating crypto mining. In 2022, the government proposed ending tax incentives for the industry, forcing it to pay the standard rate for electricity. Finance Minister Trygve Slagsvold emphasized that the move prioritizes energy use to benefit the entire community, noting that crypto mining consumes tremendous energy but offers little local benefit.

Norway has been an attractive destination for Bitcoin miners due to its grid being powered by 92% hydropower and 7% wind energy, making it a resourceful economy in terms of climate targets. However, the government is concerned about the long-term viability of crypto mining. Residents of Hadsel, a Norwegian province, petitioned the government in October 2024 to shut down a local Bitcoin mine. Despite their efforts, electricity prices in the region skyrocketed due to energy companies accounting for lost revenue from the mine's closure. Venture capitalists highlighted that residents suffered when the government targeted Bitcoin mining. The mayor of Hadsel, Kjell-Borge Freiberg, noted that residents had been complaining about the noise from the mining operations. The Bitcoin mine produced 20% of the energy company’s revenue, and its closure led to increased electricity bills for residents, estimated to be an extra $235 to $280 annually.

Russia has also implemented a mining ban in ten regions, including those with vulnerable energy grids. Many countries, including Norway, are taking a critical stance towards crypto mining, either to meet climate targets or to restrict the spread of anonymous currencies. Energy-rich countries like Norway are prioritizing their grid for industries they deem more productive. Miners in Norway now face the choice of remaining in the country and investing in low-power consumables, relocating to another country, or switching to proof-of-stake methods to comply with government regulations and remain profitable.

In 2024, Norway began scrutinizing the crypto mining industry by announcing new regulations to align the market with climate change targets and sustainability beliefs. The regulations require all data centres engaged in crypto mining to register their activities. The government clarified that these regulations are not intended to punish the crypto industry but to better align it with national targets. This move underscores Norway's commitment to balancing economic growth with environmental sustainability, ensuring that energy resources are used efficiently and productively.