Cryptocurrencies may have dropped in value recently but that doesn’t mean that demand for them is slowing down.
In Iceland, a nation of only 340,000 people, the amount electricity being used to mine Bitcoin is predicted to soon outstrip the energy used to power all the homes in the country.
Johann Snorri Sigurbergsson, an employee of Icelandic energy company Hitaveita Sudurnesja believes that the energy required for Iceland’s crypto mining will soon double to 100 megawatts per year. According to Iceland’s National Energy Authority this will be more than all the houses in the island nation.
“Four months ago, I could not have predicted this trend – but then bitcoin skyrocketed and we got a lot more emails,” he said at the Svartsengi geothermal energy plant.
“Just today, I came from a meeting with a mining company seeking to buy 18 megawatts,” he said.
Iceland may seem like a strange choice for a Bitcoin haven, but a few unexpected factors make it an ideal location for crypto miners to ply their trade. An abundance of volcanoes and strong ocean current allows for a huge amount of hydroelectrical and geothermal plants which generate a vast amount of cheap, renewable energy. It makes it a no brainer for cryptocurrency mining companies who can reap greater rewards using fewer resources than usual.
A second key factor is the location of Iceland. Its northerly position means it is subject to cool Arctic air which removes the need for high cost air conditioning for the server rooms. It might seem like a small factor, but when considering the size of the computers and the fact they are on 24/7, 365 days a year, it can mean huge savings in the long run.
More and more energy is needed to mine Bitcoin every day due to the nature of the blockchain system it employs. Computers are used to undertake complicated calculations to verify any previous transactions which in turn rewards the miner with a part of a coin. As more and more transactions are verified the computations required become more and more complex and in turn require a greater amount of energy. As more energy is required, companies are increasingly looking to offset their costs and Iceland is becoming an increasingly attractive option.
The new craze for Icelandic crypto mining has concerned some people with the excessive energy consumption required to accommodate the surge in crypto mining. Snorri Sigurbergsson, spoke to the to the Washington Post about the increasing demand. “There was a lot of talk about data centres in Iceland about five years ago, but it was a slow start,” he said.
“But six months ago, interest suddenly began to spike. And over the last three months, we have received about one call per day from foreign companies interested in setting up projects here.”
“If all these projects are realized, we won’t have enough energy for it,” He said.
Smari McCarthy, a member of the Icelandic Pirate Party (an unconventional political party), raised concerns of a different nature about crypto mining business’s contribution to the Icelandic economy. “Under normal circumstances, companies that are creating value in Iceland pay a certain amount of tax to the government,” McCarthy told The Associated Press. “These companies are not doing that, and we might want to ask ourselves whether they should.”
Iceland was badly affected by the 2008 financial crash and as a result the nation is sceptical of any risky financial ventures. With demand increasing for this increasingly volatile market, time will only tell how this isolated island nations handles it’s new visitors.
