Norway wakes up from the crypto dream

It seems a flicker of economic sanity is finally breaking through the fog of crypto-mania. Norway’s government is considering a ban on cryptocurrency mining, not out of some fear of technology but for a reason so blindingly obvious it’s astonishing it needs to be stated: it’s a colossal waste of energy.

Let’s be clear about what crypto mining is. It is not a productive enterprise in any meaningful economic sense. It involves using vast arrays of computers to perform socially useless computations solving pointless cryptographic puzzles in a race to win a prize denominated in a speculative digital token. The primary output of this activity isn’t a useful good or service; it’s a massive electricity bill.

In a world grappling with energy shortages and climate change and specifically in a Europe facing skyrocketing energy costs, dedicating a nation’s precious power supply to this digital busywork is the height of folly. Every megawatt-hour consumed by a Bitcoin mining farm is a megawatt-hour that cannot be used to heat a home, power a factory or charge an electric vehicle. It is a direct and unambiguous opportunity cost. The Norwegian government’s desire to “free up power” for other purposes isn’t just prudent policy; it’s the only rational choice.

The fact that locals have also complained about the noise pollution from these facilities only adds insult to injury. The crypto mining industry descends on regions with cheap power, consumes that public good, imposes negative externalities like noise and grid strain on the local community, and produces nothing of tangible value in return.

This isn’t a complex debate about the future of finance. It’s a simple, first-principles economics problem. Norway isn’t proposing to ban innovation; it’s proposing to ban waste. One can only hope other governments, still mesmerized by the crypto illusion, are paying attention.