Iceland has become a refuge for Bitcoin miners as energy costs soar and regulatory pressure on cryptocurrency operations mount in the US and other countries.
The volcanic island runs almost entirely on hydroelectric and geothermal power that it historically creates a surplus of. And miners have tapped that power for their energy-intensive computers. Not only does Iceland have an abundance of renewable energy but its cool climate is attractive to overworked data centers.
“Up until the mining industry showed up here in Iceland, the vast majority of this non-guaranteed power was not a sell-able product, so we are essentially buying power that nobody else can buy,” said Daniel Jonsson, CEO of GreenBlocks, an Icelandic data center service provider that focuses on the use of renewable energy for mining and blockchain validation.
The non-guaranteed power is essentially the excessive but unstable energy generated from Iceland’s power grid that aluminium smelters, greenhouses and households don’t want to buy, said Jonsson.
Another advantage “of the Icelandic electricity system is its total isolation from the rest of the world, protecting it against global electricity price inflation,” a research report by crypto-mining service provider Luxor Technologies said.
Bitcoin miners are in constant search of cheap power because they use specialized energy-hungry computers to validate records of transactions on the blockchain and earn rewards in the form of the token. Thousands of such computers, or Bitcoin mining machines, stack on top of each other in data centers.
The Icelandic Bitcoin mining industry consumes around 120 MW, according to an estimate by Luxor, “with a population of only 370,000, Iceland is the most Bitcoin-mining-dense country on the planet.”
Some environmentalists worry the exponential electricity demands of crypto will inevitably result in more power plants, which could damage Iceland’s unique ecosystem.
Bit Digital Inc. Chief Executive Officer Samir Tabar considers his mining company to be eco-friendly. The New York-based miner announced in June that as part of a deal with GreenBlocks it is expanding its mining presence in a facility in Iceland.
“It’s been very important for us as a company to draw from renewable sources of power,” said Tabar, while standing next to one of Iceland’s active volcanoes.
“Ninety-nine percent of our entire fleet happens to be carbon free, thanks to some of these sources of energy, like volcanic energy,” he added, referring to the amount of mining machines his company operates.