Sweden Busts 18 Data Centers for Secretly Mining Crypto

Sweden’s tax agency identified irregularities in 18 locally operating companies, finding that they hid their involvement in crypto mining, it said Wednesday.

The investigation, which spanned from 2020 to 2023 and focused on data center operations, revealed that they deliberately exploited tax incentives for which they were ineligible.

Patrik Lillqvist, head of the agency’s intelligence unit, explained that the companies’ actions constituted an attempt to secure undue tax advantages. In response, the agency is demanding an additional 990 million Swedish krona ($91 million) in taxes, including value-added tax (VAT) and surcharges.

The report highlighted difficulties investigators encountered in determining the true purpose of data center operations and the identities of those utilizing the computing resources. In a significant number of cases, investigators faced challenges establishing the nature of the business conducted at these facilities.

Unreported Income from Crypto Mining in Sweden


Further, the report details instances where crypto mining data centers submitted misleading or incomplete information regarding their business activities.

“There is an incentive for unscrupulous actors to conceal their cryptocurrency mining operations and instead claim that they are conducting VAT-liable business activities. In this way, tax revenues disappear from the country in the form of incorrect payments from the state, unpaid output VAT, and unreported crypto assets,” Lillqvist added.

The tax authority further expressed concerns regarding potential money laundering activities. Due to their exclusion from the Money Laundering Act, crypto mining data centers currently operate outside the scope of regulatory oversight. This lack of supervision raises the risk of illicit financial transactions.

It also said it was difficult to quantify the total amount of crypto mined and subsequently sold, including the associated sales figures. Consequently, there is a significant risk of unreported sales leading to additional income tax losses for the government.

Companies Employ Misleading Tactics to Hide Crypto Mining


According to the report, ten decision outcomes were appealed to higher authorities. In eight instances, the courts upheld the initial findings and rejected the companies’ appeals. One appeal resulted in a partial victory for the company, with the court granting a modified ruling.

In one instance, Datorhall AB reported its business activities to the authorities as consulting services, data center operations, and development of high-performance computing products. However, investigation revealed a singular customer for Datorhall – a foreign company with a related party. Notably, Datorhall’s computing infrastructure consisted solely of equipment dedicated to crypto mining.

Another company, Datacenter AB reported its business activities involved the sale of computing power for graphic design and artificial intelligence applications. However, the tax agency procured web browsing history and chat messages from various company representatives. This analysis revealed a significant discrepancy – 93% of the company’s online searches pertained to crypto mining, with less than 1% demonstrably linked to graphic film creation.

In one chat message, a Datacenter AB rep wrote: “How computers are used can never be controlled, so they can ban it as much as they want, it will not make any difference.”

A few days later, another rep wrote: “Yes, and crypto will be the last word we mention to anyone from day one. We are a data center with operations and computers that customers use for graphic films and artificial intelligence.”

Swedish Central Bank Chief Wary of Bitcoin Integration


The Governor of Sweden’s Central Bank expressed reservations last month regarding Bitcoin’s extensive integration into the country’s financial system. Their concerns stemmed from the speculative nature of Bitcoin and the potential for significant investor losses.

The post Sweden Busts 18 Data Centers for Secretly Mining Crypto appeared first on Cryptonews.



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