Author| Jaran Mellerud
Hashrate Index Chinese Content Partner Release
Thanks to increasing power capacity, and the possibility for miners to sell waste heat to mature district heating in the country, Finland is becoming an increasingly attractive location for Bitcoin mining. This article is the latest in our “Bitcoin Mining Around the World” series, which has previously covered Sweden, Norway, Iceland, Paraguay, and Kyrgyzstan.
Exploring the Undeveloped Mining Frontier of Europe – Finland
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Finland has always lagged behind its Nordic neighbors in Bitcoin mining. While miners flocked to Norway, Sweden, and Iceland, utilizing stranded hydroelectric power in those countries, Finland has not received as much attention due to relatively expensive power. Currently, Finland has a Bitcoin mining capacity of only 40 MW, accounting for only 0.3% of the global hash rate.
As discussed in this article, Finland is more likely than its Nordic neighbors to see more Bitcoin mining growth in the coming years. While the industries in Norway, Sweden, and Iceland are facing growth obstacles, Finland has huge potential as the industry is yet to be developed and has a large untapped power capacity. Finland can be considered the undeveloped mining frontier of Europe.
Although Finland’s mining industry is currently insignificant, it is believed that it will soon catch up with its neighbors. It is very likely to develop a Bitcoin mining capacity of 300 MW within the next two years.
The Nuclear Power Heaven of the Nordic Region
Finland has a diversified mix of electricity systems, with 89% of its electricity coming from non-fossil sources, making it highly attractive to miners who focus on ESG. Nuclear power is the backbone of the system, accounting for 35% of the power supply in 2022, with the remaining 19% from hydro, 19% from biomass, 16% from wind, and the remaining 11% from oil, coal, natural gas, and solar.
Figure 1: Combined Finnish Power System
Finns have never been afraid to go against the mainstream. While other European countries strongly opposed nuclear power and even began phasing out reactors in the 2000s, Finns believed that “we must build the largest nuclear reactor in Europe”.
The fact proves that the pragmatism of Finns has finally paid off. In April 2023, when anti-nuclear Germans are struggling to maintain their lighting, Finns launched their new Olkiluoto III reactor. The nameplate capacity of the reactor is 1,600 MW, with an expected capacity factor of 90%, and can generate 12.6 TWh of electricity per year. Therefore, Finland’s nuclear power is expected to account for 55% of its electricity, up from 35% in 2022. This makes Finland’s nuclear power share the second highest in the world, second only to nuclear pioneer France.
The hardworking Finns are not satisfied with their nuclear power achievements, they are also vigorously expanding wind power capacity in the western coastal areas. After massive wind power construction in the past 10 years, 4.8 GW of wind power generation in 2022 accounted for 16% of the country’s electricity. Finland plans to more than double its wind power capacity by 2028.
Figure 2: Finnish wind power capacity trend
In addition, Finland plans to build 7 GW of solar energy by 2030. However, due to Finland’s poor solar energy conditions, the capacity factor of these solar farms may be relatively low, so their contribution to the country’s electricity production will not be as large as wind and nuclear power. However, it may still achieve low electricity prices (on sunny days).
The influx of nuclear, wind, and solar power capacity is crucial for Finland, as they can achieve annual power surplus and reduce its dependence on imports. Finland has always suffered from a huge power deficit, and it has been compensated by importing from neighboring Russia, Sweden, and Norway. As part of the EU’s sanction plan, Finland stopped importing electricity from Russia in 2022. With its increasing power generation capacity, Finland will be self-sufficient in electricity and may even become a net exporter. This is good news for Bitcoin miners who export electricity through the Bitcoin network.
As the capacity for nuclear, wind, and solar energy grows rapidly, the Finnish power grid’s need for flexibility is also increasing. Nuclear energy provides the base load, which is not easy to adjust, while wind and solar power generation depend on the weather, making them less stable and uncontrollable. As the flexibility of the supply side decreases, the Finnish power grid will have to rely more on the demand side to make up for the lack of flexibility in the form of demand response.
Finnish miners can earn an annual income of $70,000 per megawatt by providing demand response capabilities, and the market is expected to grow significantly in the future. Just like in some months, Texas miners earn more by shutting down their production than by mining Bitcoin, Finland is in the same situation.
Finnish electricity prices will trend downward
The price of electricity in Finland has historically been slightly higher than in neighboring countries Norway and Sweden, but with the influx of nuclear and wind power, prices are bound to fall. Finnish electricity prices are expected to converge with those in northern Sweden, and may even be lower.
As shown in the figure below, Finnish electricity prices have dropped significantly since April. The price in northern Sweden has also dropped accordingly, due to the close power transmission links between the two countries.
Figure 3: Comparison of electricity prices in the Nordic countries in 2023
As Finnish electricity prices converge with those in northern Sweden, from a pure cost perspective, Finland looks like an increasingly attractive location for Bitcoin mining. With more wind and solar energy generation coming online in the next few years, prices are expected to continue to fall.
Figure 4: Distribution of electricity prices in Finland in May
May was the first full month after Finland’s new 1,600 MW nuclear reactor came online. Let’s take a look at the price distribution for this month. Using the Antminer S19j Pro, a Finnish miner who buys electricity on the spot market can achieve 94% uptime in May, with an average electricity price of $37 per megawatt hour. This is quite impressive.
We also see negative electricity prices in May due to a large amount of wind and hydro production. This phenomenon was rare before the nuclear reactors came online, and is expected to become more common with more wind and solar capacity online in the coming years. The fluctuating prices are advantageous for Bitcoin miners to “play” the electricity market by buying spot electricity and registering for demand response programs.
Due to heating demands in the winter, Finland’s electricity prices historically show a clear seasonal difference. Although May has always been a relatively cheap month, even with the new nuclear and wind capacity, electricity prices between December and March will still be relatively expensive. Therefore, miners who purchase spot electricity will have slightly lower uptime in the winter than in the summer.
Bitcoin Miners Bring “Warmth” to Finnish Homes
Finland’s winter is severe, so Finns have established one of the world’s most complex regional heating systems. These systems currently provide heating for about 50% of the country’s households and are still growing year by year.
Regional heating companies currently generate heat by burning bark, coal, oil, natural gas, or peat. Due to EU directives, customer requirements, and the fact that most bark is imported from Russia, they are eager to switch to less polluting fuel sources.
Fortunately, Finland’s Bitcoin miners have offered a solution to this problem. By providing mining waste heat to regional heating companies, they help carbonize the heating system and reduce imports from Russia.
For regional heating companies, the benefits are obvious, but what do Bitcoin miners get in return? There are two main benefits. First, regional heating companies pay them a heat subsidy of $15 to $30 per megawatt-hour. Therefore, miners have an extra source of income that effectively reduces a lot of electricity costs. The second benefit is a significant increase in political positioning. Once miners are integrated into Finland’s regional heating system, it is difficult for Finnish regulators to curb the industry, which also benefits public relations.
Finnish miners have a unique advantage in becoming world leaders in heat recovery. The future of Nordic Bitcoin mining includes smaller facilities reusing their heat, and Finland will lead the way with its extensive district heating systems.
Political stability, reasonable regulation
In recent years, miners in many places have faced political or regulatory opposition in the form of increases, suspensions, and even bans on mining electricity taxes. As a result, Bitcoin miners around the world are increasingly aware of the importance of operating in a politically stable jurisdiction.
Finland is widely regarded as one of the safest and most politically stable countries in the world. It is definitely the kind of country that is calm. Of course, there are certainly many other “Bitcoin-friendly” countries, but these countries are usually politically unstable, and miners can only live at the whim of a group of rulers. Once other people come to power, the situation could change completely, as they might throw out the entire Bitcoin mining industry. But Finland is not such a country, so it is very safe to deploy mining operations there.
However, like most countries, Bitcoin’s political stance in Finland is also incorrect. Its neighboring countries Sweden and Norway have recently canceled all data centers’ eligibility for reduced electricity taxes, and miners’ electricity taxes have increased significantly overnight. Finnish miners currently pay a power tax of 0.00068 USD/kWh and are expected to maintain this status in the future.
Finland’s Bitcoin mining industry is small and not politically substantial. Finnish politicians have more important concerns than a 40 MW Bitcoin mining industry. However, as I explained in this article, Finland’s Bitcoin mining industry can grow towards several hundred MW, and then it will become so large that Finnish politicians may start to care.
Assuming Finnish politicians start to oppose the mining industry and want to increase their taxes. They will have a hard time doing this because Finland does not have its own data center tax laws. Finnish miners are simply classified under “industry.” For Finland to specifically increase electricity taxes for miners, they will have to create a new tax law and a brand new tax bracket. This is much more challenging than increasing electricity taxes for data centers in Norway and Sweden.
Overall, Finland is a politically stable country with acceptable mining regulation conditions.
Cold climate creates perfect mining conditions
Climate conditions are a key but often overlooked consideration in Bitcoin mining. Miners operating in cool environments can use firmwares such as LuxOS to overclock, increase operating times, minimize cooling infrastructure needs, increase machine lifespan, and reduce maintenance requirements. These advantages combined can bring significant efficiency improvements to mining operations.
Finland’s climate is advantageous for Bitcoin mining. In the capital Helsinki, the daily average temperature ranges from -4°C (25°F) to 18°C (65°F) in the coldest and hottest months. It is worth noting that Helsinki is located in the southern part of the country, so most feasible Bitcoin mining locations in Finland will be colder.
Finland also has high air quality. Pollution is almost nonexistent, and there are few dust and pollen particles in the air. This reduces the filtering requirements and can improve machine lifespan and performance.
Cool climate and clean air are the main advantages in mining in Finland.
Finland is a Bitcoin mining frontier in Europe that remains largely undeveloped. Historically, its Nordic neighbors Norway, Sweden, and Iceland absorbed much of Europe’s Bitcoin mining demand, but with those places becoming increasingly crowded, Finland’s abundant available capacity looks increasingly attractive.
With Europe’s largest nuclear reactor now operating fully and several gigawatts of wind and solar capacity planned for the coming years, Finland’s electricity prices will drop significantly. Just these lower prices alone are enough to attract significant Bitcoin mining business.
In addition, Bitcoin miners can play a key role in providing district heating for Finnish homes through Finland’s district heating system. Finnish district heating suppliers are eager to move away from traditional district heating fuel sources such as oil and coal, and Bitcoin miners can help them by providing waste heat. Finnish Bitcoin miners have a unique advantage in becoming world leaders in heat recovery.
Finnish miners have three potential sources of income: mining, demand response, and heat sales. This, combined with the possibility of lower electricity prices in Finland, will make Finnish Bitcoin miners highly competitive globally. I believe that Finland is the last frontier of Bitcoin mining in Europe and I expect the industry to grow to several hundred megawatts in the coming years.
Figure 5: An overview of various indicators of the Finnish Bitcoin mining industry