If the current consumption forecasts become reality, Sweden may soon have to make a decision: electricity for steel mills – or for Bitcoin computer farms.
For Energy Minister Khashayar Farmanbar, the answer is clear.
"To be honest, we need energy for more useful things than bitcoin," Farmanbar said in an interview with Bloomberg.
After a long period of stagnant electricity consumption, the country is now on a path of “extreme expansion” because “our entire manufacturing industry is trying to become electrified”.
Sweden is currently a hotspot for bitcoin mining, but the minister's comments suggest things could get tougher for the industry.
The government in Stockholm is so concerned about the country's electricity consumption that it recently asked the Swedish Energy Agency to measure the consumption of digital infrastructure, with a particular focus on crypto mining.
Is there a mining ban in the EU?
The complex mathematical puzzles that are essential for the operation of the digital currency are solved in Bitcoin computer farms.
This is energy-intensive and therefore requires large amounts of cheap electricity, which Swedish operators obtain cheaply from hydro and wind power.
The government's new approach has the crypto industry worried that their lives could get harder.
Farmanbar did not want to say what measures he intends to take to curb mining.
One of the options discussed would be to connect new customers to the electricity grid more quickly if they provide a tangible benefit to society - for example by creating many jobs.
Tax benefits for data centers, which were not intended as an incentive for Bitcoin farms anyway, could also be curtailed.
Swedish crypto calculator farm operators include Hive Blockchain Technologies Ltd.
of Canada and Hong Kong-listed Genesis Mining Ltd.
They did not respond to requests for comment.
Sukesh Kumar Tedla, the chairman of the Swedish Blockchain Association, defends himself against the allegations: "Yes, mining cryptocurrencies consumes a lot of energy, but this also applies to many other innovative technologies that help our society function." However, these arguments sting increasingly on deaf ears in times of increasing environmental awareness and scarce energy.
Sweden's financial regulator has labeled cryptocurrencies a climate change threat and has called for an EU-wide mining ban, backed by lawmakers in countries from Germany to Spain and Norway.
The energy crisis and the electrification of even such industries as mining and steel production mean that the battle for electricity is getting tougher.
According to the European Central Bank, bitcoin mining around the world consumes enough electricity to power countries like Spain and the Netherlands.
The size of the industry in Sweden is difficult to estimate as there is no public data on how many such companies there are and how much electricity they use.
Exponential growth expected
Industry association Swedenergy estimates data center power requirements to be just a few percent of total consumption, and only a small portion of that goes to crypto farms.
According to the Swedish grid operator, however, the electricity requirements of such facilities could increase eightfold by 2040.
Because Sweden's share in bitcoin mining is increasing.
In January it was just over 0.8 percent of the global processing rate, according to the latest data from the University of Cambridge's Center for Alternative Finance.
Two years earlier it was virtually non-existent.
Meanwhile, the steelmaker SSAB plans to produce steel without using fossil fuels.
The country's grid operators should prioritize such industrial projects instead of simply handing over electricity on a first-come, first-served basis as is the case today.