Our perspective on the energy crisis
Several industries and private consumers are being affected by the increased electricity prices. A common misconception is that businesses that operate data centers contribute to this increase. To better disprove this misconception, we must look at factors that are having an impact.
What affects the prices of electricity?
Several coal-fired and nuclear power plants have been shut down, and the focus has shifted to renewable energy production. This implies that a stable power source has been replaced by a more unstable one.
The reason why renewable energy production is unstable is because how much energy produced is dependent on the weather. We see such a drastic increase in electricity prices because the production has decreased.
Electricity prices in Norway
Historically speaking, electricity prices in Norway have been low compared to other European countries. Electricity is transported using transmission lines, allowing countries to export and import surplus electricity. These transmission lines connect Norway to the European market; therefore, prices are affected.
Norway is divided into five parts regarding the pricing levels of electricity, as an example the areas in the southern regions are experiencing higher price levels than the northern regions. The reason for this difference is because the southern regions are located closer to other European countries.
Flexibility regarding consumption
Kryptovault purchases the electricity used to operate data centers from the energy supplier Energi Salg Norge.
According to Espen Fjeld, CEO of Energi Salg Norge, all electricity consumption contributes to affect the prices. However, the combined consumption in Norway is at the same level it has been in the past. Therefore, there are no indications that the industry Kryptovault operates in contributes to affecting electricity prices. Because the data center industry has flexibility regarding its consumption, it can contribute to the price level not increasing.
“Kryptovault does not affect the electricity prices, on the contrary, they have flexibility regarding their consumption, which can contribute to prices not increasing. “ Espen Fjeld, CEO of Energi Salg Norge.
The Kryptovault facility in Hønefoss is an old paper factor that previously consumed electricity. Kryptovault, therefore, uses electricity that the factory otherwise would have used.
How does this affect Kryptovault?
The increased electricity prices have had a negative impact on Kryptovault because it is the single largest cost of operating a data center. We have been forced to minimize our production by 60% due to a 300% increase in electricity-related expenses, negatively impacting our financial result.
The energy crisis we are currently experiencing affects Kryptovault, other businesses and consumers. The industry is not contributing to increased electricity prices, but it may contribute to prices not increasing because of the flexibility of data centers consumption.