Cryptocurrency miners seek cheap energy in Norway and Sweden

HIVE Digital Technologies

10/04/2018 09:58

* Bitmain looking to Sweden, Norway to expand -sources
    * Bitfury, HIVE have already moved in
    * Utilities see business opportunity in mining 
    * Graphic http://tmsnrt.rs/2G2dLIa

    By Christoph Steitz and Stephen Jewkes
    FRANKFURT/MILAN, April 10 (Reuters) - Cryptocurrency miners
are moving in to Norway and Sweden to take advantage of cheap
hydro-electric energy and low temperatures to power and cool
their servers.
    Iceland has been Europe's most popular location for miners
of digital currencies such as bitcoin and ethereum.
    But at 6.5 euro cents and 7.1 cents per kilowatt hours,
respectively, commercial power prices in Sweden and Norway are
cheaper than Iceland's 8 cents and far below the European
average of 11 cents.
    The interest is good news for Sweden's Vattenfall  VATN.UL 
and Norway's Statkraft  STATKF.UL , the dominant utilities in
their countries.  Supplying power to cryptocurrency miners is a
tiny part of current business but the two state-owned firms have
said they see it as an opportunity.
    The process is energy intensive. Miners plug in thousands of
servers at a time to get the computing power to produce
cryptocurrencies, which is done by solving mathematical
equations.
    Miners of bitcoin will use about 130 terawatt hours of
energy this year, matching Argentina's consumption or the
projected usage of all the world's electric vehicles by the
mid-2020s, according to Morgan Stanley.
    "We're on a global hunt to secure as much power as we can,"
said Olivier Roussy Newton, director and co-founder of Canadian
group HIVE Blockchain Technologies  HIVE.V , which started
mining ethereum in Sweden in January.
    The company said it was expanding energy capacity for its
crypto mining in Sweden to 17.4 megawatts, with funds available
to ramp up a further 26.8 MW by September. Last month, it agreed
to buy data centre company Kolos Norway AS for $9.9 million with
a view to expanding its mining operations.
    In March, U.S. miner Bitfury opened a new $35 million mining
data centre in Norway. The miner will be buying 350 gigawatt
hours of pure clean energy from local renewable energy provider
Helgeland Kraft  HKRAT.UL .
    Many bitcoin miners are looking at the area including the
Chinese because of abundant cheap hydro power, said Bill Tai, a
member of Bitfury's board of directors.
    China's Bitmain, the world's largest bitcoin miner which
recently set up a unit in Switzerland, has also been
investigating Sweden and Norway's potential, two industry
sources with knowledge of the matter said.
    China accounts for around 70 percent of the crytopcurrency
mining industry but Beijing has discouraged it in part, due to
concerns about pollution from coal-fired power. This has forced
them to look elsewhere.
    "A lot of miners are keen to get into Norway and that
includes Bitmain and other Chinese names," said Mark Collins,
chief executive of CBH Consulting AG, a Zurich-based clean
energy consultant running for the blockchain industry.
    A second source with knowledge of the matter also mentioned
Bitmain's interest. "A number of nationalities are turning to
the Nordics," that source said.
    Bitmain spokesman Nishant Sharma said the company would
announce expansions in Europe and other regions as they occur.
He said he was not aware of any "special plans" for Sweden or
Norway.
    
    GREEN POWER
    Mining a single bitcoin requires $1,400-$1,800 worth of
electricity, up to a quarter of the total costs and about the
annual power bill of a four-person household in Germany.
    This means that cryptocurrency miners are under pressure
from policymakers to prove their green credentials and Norway
and Sweden's clean energy holds even greater appeal.
    "This area is the Saudi Arabia of green energy," said Tai.
    In Norway, hydropower accounts for over 99 percent of
electricity production while in Sweden the number is about 40
percent with the same again from nuclear.
    Some utilities in Europe such as Italy's Enel  ENEI.MI  and
Germany's E.ON  EONGn.DE  are worried that the speculation
behind cryptocurrencies could lead to a market crash. Enel said
in February it was not interested in powering cryptocurrency
miners.  urn:newsml:reuters.com:*:nL8N1PR3U8
    But Norway and Sweden have welcomed the business.
    "It is an opportunity for energy providers in the area. It's
a consistent power draw for them without spikes and troughs and
energy providers like that," said Collins.
    Norway recently changed tax rules to exempt data centres
from paying property taxes in a bid to attract foreign
companies.  urn:newsml:reuters.com:*:nL8N1P645C
    Node Pole, a Swedish investment advisor owned by Vattenfall
and smaller peer Skelleftea Kraft, helped Chinese tech company
Canaan Creative, a miner and one of the world's largest makers
of bitcoin mining chips, to set up shop in Sweden last year.
    "For the last 6-8 months there has been an increasing
interest in opportunities in Sweden," Node Pole Chief Executive
Patrik Oehlund said.
    Vattenfall provides Canaan with the roughly 10 MW of power
capacity it needs and the utility sees more bitcoin deals on the
horizon.
    "There are a number of companies in different phases of
evaluating establishment on the Nordic Market," said Matts
Wesslen, Vattenfall's manager of energy intensive industries.
    Nevertheless, Alex de Vries, blockchain specialist at PwC,
said the opportunities in cryptocurrency mining may be
short-lived.
    "If bitcoin energy consumption continues like it does today
it will become unsustainable," he said.
    "That might be an opportunity for utilities in the
short-term but over the long-term miners will have to find ways
to become more efficient to cut electricity use."

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Bitcoin's energy consumption    http://tmsnrt.rs/2G2dLIa
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 (Additional reporting by Patricia Uhlig in Frankfurt and
Lefteris Karagiannopoulos in Oslo; editing by Anna Willard)
 ((christoph.steitz@thomsonreuters.com; +49 69 7565 1269;
Reuters Messaging:
christoph.steitz.thomsonreuters.com@reuters.net))