Microsoft receives $1.5m grant to assist creation of new data centre in Virginia



The company, which also has data centre facilities in Sweden and Iceland, only acquired its Norwegian site last year, which was once billed as the biggest potential data centre campus in the world – before the legislators declared crypto mining “dirty”.

HIVE Blockchain Technologies (TSX.V: HIVE) (OTC: HVBTF) has protested about proposed energy subsidy changes being brought by the Norwegian parliament, which will increase the running costs of its mammoth Kolos data centre being built in Ballangen, Norway.

Last month, the Norwegian parliament approved a legislative bill that cryptocurrency miners will no longer be subject to tax relief on power consumption at the same rate as other power-intensive industries. The change, which is included in the state budget for 2019, is expected to take effect in March 2019.

HIVE completed the acquisition of the Kolos asset last June, before the tax change was announced, so it is obviously sore that the returns may not be as big as it first thought. “I am extremely disappointed by the proposed changes to the regulatory framework in Norway,” said Frank Holmes, interim executive chairman at HIVE. “In my view, unilateral decisions by governments without industry consultation and discussion represent a significant risk to stability and long-term investment decisions.

“My experience as a global chief investment officer is that regulatory uncertainty is a significant barrier to attracting long-term foreign capital, and governments that unexpectedly move the goal posts create an unfavourable investment environment.”

He added: “This abrupt regulatory change has forced us to reassess the value of our asset in Norway which, prior to the proposed change, represented an attractive green-field opportunity to develop data centres to serve the global technology community, as well as the potential to erect cryptocurrency mining infrastructure given the access to more than 1,000MW of hydro power on the property.”

He said the firm had already communicated “proposed changes” to debt holders due to the planned increased power costs in the region. “HIVE will assess the viability of our presence in Norway as cash management remains a priority, in the best interests of our equity holders,” said Holmes. HIVE also owns digital currency mining facilities in Iceland and Sweden.

HIVE claims the energy subsidy change represents a risk not only for cryptocurrency miners but for all energy intensive industries that are considering long-term capital investments, as “political forces appear willing to unilaterally propose changes to established frameworks that have attracted investment to the region”.

That point is arguably debatable considering that rival economies Sweden and Denmark are bolstering their power tax incentives for data centre building, as is France, so Norway would be brave to extend its power tax increases to other data centre segments. But the proposed law change has certainly stunned HIVE.

In a letter sent to debt holders associated with the Kolos acquisition, HIVE proposed changes to the loan agreement. The company has proposed extending the terms of the convertible loan of US$2.4m by one year, as “management assesses the impact that the Norwegian parliament’s proposed changes could have on future development plans and on the value of HIVE’s sole Norwegian asset”.

“The company intends to complete its assessment of the damages inflicted by the policy change upon the value of assets prior to the close of the fiscal year end on 31 March 2019,” it added.

Norwegian politicians maintain their decision is the right one for the country, even if crypto miners are tempted to move operations over the border to Sweden, for instance. They say crypto mining is “dirty” as it requires massive amounts of energy and generates too many emissions.



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here