Iceland is gradually transforming into another favorite destination for the mining of bitcoin and other cryptocurrencies. Some predictions say the mining operations could soon consume more energy than this island nation.
According to the Associated Press, big companies from the cryptocurrency mining sector are arriving to Iceland because of its renewable energy, mainly coming from geothermal and hydrological sources. Other important factor for these companies is the climate of Iceland. The lowe temperatures provide optimal cooling for the mining rigs.
The local blockchain mining industry has grown after the legislator Smari McCarthy from the Pirate Party of Iceland, proposed to collect taxes from the cryptocurrency mining industry. This initiative was backed up by the people of Iceland, despite the scepticism about the financial speculation and the banking crisis in the last years.
McCarthy, who is a parliamentarian, the co-founder of the Pirate Party of Iceland and an internet activist, said to the Associated Press that in normal circumstances the companies pay taxes to the state, but the blockchain mining industry is not doing so, and that is why the state is considering introducing fiscal responsibilities to this sector as well.
The scepticism comes from the times when Iceland was a financial paradise. When the major banks collapsed during the global financial crisis in 2008, everything changed and the political consequences brought the Pirate Party to the Icelandic parliament.
McCarthy maintains his mistrust about the role the cryptocurrencies could have on the Icelandic market: “We are consuming dozens or maybe hundreds of megawatts to produce something that is not tangible and does not have a real use outside the financial speculation. This could not be something positive.”
Keflavik is one of the towns where mining companies have arrived. The town is located on the poorly inhabited southern peninsula and the industry is located in the suburbs of Keflavik.
Johann Snorri Sigurbergsson, the manager of Hitaveita Sudurnesja, an electric company, assured Iceland could duplicate its consume of electrical energy, reaching 100 megawatts per year, thanks to the expansion of the cryptocurrency mining industry.
Sigurbergsson says the geothermal plant in Svartsengi started receiving emails from mining companies a few months ago. This coincided with the rise of the price of bitcoin in the last months. The manager said he had just came from a meeting with a mining company that was looking to acquire 18 megawatts of power on a yearly basis.
The mining centers are designed to allow the cold wind from the peninsula to enter the compound to cool the rigs. Parts of the center do not have walls, to provide better cooling of the machines. One of the participating mining companies is Genesis Mining, a famous mining company founded in Germany. The company moved to Iceland back in 2014.
Iceland is one of the regions popular among cryptocurrency mining companies. Other regions with cold climate and cheap electricity, such as the state of New York, also attract many mining companies. The state of New York is granting licenses to energy corporations, as well as certain benefits to the companies from the sector. Switzerland is another country where the cryptocurrency mining industry is expanding.
