Finland is emerging fast as an attractive place for crypto mining due to its relatively cool climate, which helps with cooling mining rigs, and its abundant renewable energy sources.
Additionally, Finland has a stable political and economic environment, which can be beneficial for long-term investments like crypto mining operations. However, factors such as electricity costs, regulatory environment, and infrastructure availability should also be considered and taken into consideration.
Miners in Finland see the country as an attractive location due to the unique situation of near-zero energy costs during periods of overproduction has attracted the bitcoin mining industry to the Nordic region, Lennu Keinänen co-founder of Once Mining, a crypto mining firm based in Finland told Cryptonews.com.
Finland remains Europe’s most unexplored Bitcoin mining frontier in Scandinavia although over the years its Nordic neighbours Norway, and Sweden have been seen as more desirable locations. Many crypto miners headed to the region to seek refuge from rising electricity prices in 2022.
Finland Offers Near-Zero Energy Costs
In 2023, electricity prices in Finland fell below zero due to surging hydropower, nuclear energy, solar, and wind. That year the Nordic nation witnessed its first monthly power surplus in almost 20 years. Analysts forecast that 25 TWh of renewable energy will be built in Finland by 2030, which will push down prices further, according to a report by European energy markets newswire Montel News.
Low energy prices are crucial for crypto miners because mining cryptocurrencies requires a significant amount of electricity. The lower the cost of electricity, the higher the profit margins for miners, as it reduces the operational expenses associated with running mining hardware. Since energy costs can heavily impact the profitability of mining operations, miners often seek locations with access to cheap electricity to maximize their returns.
“The unique situation of near-zero energy costs during periods of overproduction has attracted the bitcoin mining industry to Finland. Bitcoin mining requires substantial amounts of electricity, and the ability to operate at lower costs significantly enhances profitability,” said Keinänen.
Government Subsidies and Wind Energy
The Finnish government has been providing substantial subsidies for wind energy, aiming to boost renewable energy production and reduce carbon emissions, explains Keinänen.
While well-intentioned, these subsidies have led to a rapid expansion of wind energy capacity. This in turn has had an impact on energy production resulting in a significant increase in fluctuating energy production.
“Wind energy, by nature, is variable and depends on wind conditions. As a result, when wind conditions are favourable, there’s an overproduction of energy, leading to instances where the price of electricity can drop below zero, reaching as low as -0.3€/kWh. Conversely, during periods of low wind, underproduction can occur, causing electricity prices to spike, at times reaching up to 2€/kWh,” said Keinänen.
Finnish Tax Administration
The Finnish Tax Administration has made it clear that crypto is subject to tax. Miners have to pay tax on capital gains from disposing of cryptocurrency by selling, trading, or spending it, as well as Income Tax on any income earned from activities such as crypto mining.
“The mining industry is still in the infancy here but about to become quite significant in the next few years,” explains Keinänen.
He goes on to explain that there is huge interest in opening mining sites and there’s a continuous buzz of site scouting activities going on in Finland.
“Bitcoin mining cost efficiency is primarily determined by the price of electricity, as mining consumes significant amounts of power. Lower electricity costs increase profitability, as the expense of running mining hardware is reduced. Therefore, locations with cheap electricity are more cost-efficient for Bitcoin mining. Mining is not tax-free but can be organized quite tax efficiently,” adds Keinänen.
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