You might not know it, but Iceland is in the midst of a digital currency boom. The small yet highly innovative island nation has positioned itself as one of the biggest digital currency mining havens on the planet.
Digital currency has become such a major industry within Iceland that many sources now report that energy consumption of digital currency mining facilities will soon exceed that used by normal homes within their borders—a global first.
In Iceland, Bitcoin and Altcoin mining have become so popular that scenes seemingly out of fictional techno-thrillers are beginning to occur. Just this month (March 2018), eleven people were arrested for involvement in what’s been called the “Big Bitcoin Heist” wherein approximately 600 mining rigs, worth almost $2 million USD, were stolen.
But how did the Bitcoin boom come about in Iceland? And why has this normally tranquil, green, wintry island attracted so much attention from the blockchain community?
Iceland’s energy abundance
As you can imagine, having mining rig after mining rig set up in a commercial facility, all running 24/7/365, takes a lot of power. Some mining facilities have gone to energy utilities in Iceland with the intent to purchase 18 megawatts at a time. That’s the equivalent of powering 180,000 100-watt light bulbs, assuming a lossless system.
Iceland not only provides energy sources that are notably cheaper than most places around the globe, but they also derive most of this energy from natural sources.
For example, about 15% of energy generated in the U.S. is from renewable resources, whereas Iceland boasts rates of nearly 100% renewable energy thanks to hydroelectric and geothermal sources.
This fact helps soothe environmentalists who have decried Bitcoin’s negative impact on the environment due to mining’s constant power consumption. That said, many digital currency networks are working to lower the energy consumed by their networks by researching better methods and implementing greener energy policies.
Studies such as one completed by Credit Suisse demonstrate that Bitcoin mining will not, in fact, lead to some kind of “Environmental Armageddon.” The two forms of power that are particularly advantageous for digital currency in Iceland are geothermal and hydroelectric energy.
Renewable energy via geothermal
Volcanoes are a common source of heat and energy in Iceland. Their geothermal power plants produce approximately 30% of Iceland’s energy, and geothermal heating keeps homes warm and heats water in approximately 87% of houses in Iceland.
Renewable energy via hydroelectric
Thanks to new hydroelectric power stations installed in 2014, approximately 72% of the country’s electricity production is achieved via the massive energy potential produced by the combination of precipitation and extensive highlands.
Icy cool server rooms
In most countries, server rooms require expensive cooling technology to prevent the equipment from overheating. In Iceland, this is much less of an issue. Miners aren’t required to spend the same on energy costs of running a cooling system as they would in most parts of the world. The result is that mining operations in Iceland are cheaper and more environmentally friendly than pretty much anywhere else in the world.
This is primarily due to Iceland’s location and below-average temperatures that keep mining operations cool and efficient.
Data availability
In Iceland, bandwidth costs are high compared to much of the world, which explains why little hosting is done despite cheap electricity and cool server rooms. However, with mining and blockchain data, there is little trafficked data, due to its redundant nature.
On the plus side, thanks to its location, Iceland boasts data cables that reach to both sides of the Atlantic.
These are many of the reasons that HIVE has chosen to invest in multiple mining facilities in Iceland. As long as the island nation’s energy resources and data infrastructure stay intact—and it looks like they will—the Icelandic digital currency mining boom will likely continue for years to come.