“The government should allow crypto data centers to compete on an equal footing with all other power-hungry industries. If you do that, you will get more industry activity, more skills development, more ripple effects and build the base for machine learning data centers in the future,” writes Torbjørn Bull Jenssen in this commentary. The reason for Bull Jenssen's comment is that Digitalization Minister Karianne Tung (AP) and Energy Minister Terje Aasland (AP) have advocated “closing the door” for crypto mining in Norway. Bull Jenssen points out, among other things, that Karianne Tung at Politisk Kvarter in April described cryptocurrency as anonymous, untraceable and often used by criminals. Parliamentary representative Lars Haltbrekken (SV) voted in - this is something one has to stop.

Below is Bull Jenssen's comment.

Cryptocurrency has been a hot topic for almost 15 years. 400 thousand Norwegians own cryptocurrency and as many as 1 million say they expect to buy cryptocurrency over the next 10 years. Against this backdrop, one would think that a minister for digitisation had inserted himself into the subject and acquired knowledge, but unfortunately that is not the case.

The allegations are wrong

Bull Jenssen believes that all these claims are incorrect and further writes:

If you trade cryptocurrency, you are required to identify yourself, in the same way as at the bank. The transactions are extremely traceable and the very few who use cryptocurrency are criminals. Tung's bullet point list is outdated and bears the mark of a total lack of expertise in the field.

The same applies to statements that have come from Tung's colleague and Minister of Energy Terje Aasland, who claims that krypton recycling is burdened with large greenhouse gas emissions and therefore we do not want in Norway.

This, too, is incorrect. It is only the source of electricity that determines whether or not there will be greenhouse gas emissions. If we withdraw more of the crypto activity to Norway, where we have clean, renewable power, it will benefit the climate. Cryptodatasenter is a competitive sector and more activity in Norway will make it less profitable for those who currently use coal in Kazakhstan.

Preventing profitable business development

That politicians sleep by the hour and speak negatively about cryptocurrency on failing knowledge grounds is nothing new. Nor is there anything that changes the possibilities for the further emergence of cryptocurrency in society. What is stopped, however, is the opportunities for Norwegian municipalities to attract new business activity.

I also record that Haltbrekken goes so far as to criticize the government and Tung for leaving it up to the municipal politicians to allow data centers with crypto-related activity or not. What he fears is that local politicians may want new business activity and that crypto data centers are the only ones interested in establishing themselves and that this is something the state should stop.

Tung and Aasland do not go as far when it comes to government override, but want the same outcome: no crypto data centers in Norway.

Instead of allowing the market and local democracy to ensure the efficient use of resources, the government is trying to scare away those actors who are actually ready to establish themselves in municipalities with power surpluses and defunct industries. Instead, it is hoped that a subsidized battery factory or a Google data center will emerge. Building industrial policy frameworks on lack of knowledge, hope and subsidies has rarely led to anything good.

Norway should focus on crypto data centers

Norway has a cold climate, clean energy, defunct industry and surplus electricity in northern Norway. This makes us one of the most suitable destinations for energy-intensive crypto data centers.

Allowing bitcoin miners to establish themselves will help reduce greenhouse gas emissions globally, improve resource utilization locally and facilitate the building of infrastructure that can be used for machine learning in the future.

The special thing about crypto data centers compared to traditional data centers is that they are extremely energy intensive. The same goes for data centers used for machine learning. This requires special infrastructure and means that centers being built for bitcoin mining today can easily be used for machine learning tomorrow.

Moreover, it is so that all the energy goes to heat. The Minister of Energy would achieve more for the environment if he focused on the development of energy recovery systems rather than banning the only type of data center that actually establishes itself in Norway on a large scale.

There are already a number of examples of crypto-data centers where residual heat has been reclaimed for wood drying, heating greenhouses and drying dry fish. In the future, water-cooled plants will become increasingly common, which will ensure even better utilization of residual heat and will be well suited to connect to district heating systems. By investing in and facilitating even more heat recovery, you will build important expertise, which can also be exported, and ensure positive ripple effects locally.

The government is about to shoot itself in the foot and should instead let crypto data centers compete on an equal footing with any other power-hungry industry. Doing so will lead to more industry activity, more skills development, more ripple effects and build the base for machine learning data centers in the future.

Kaupr's blog column is open for posts, analyses and debate in Norwegian, Danish or Swedish, and in some cases also in English. Send your article or idea to morten@kaupr.io.

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