By
Steve Muchoki
April 18th, 2024
More Bitcoins are in circulation, more powerful computers are needed to keep up with mathematical calculations which means more energy required for mining.
Icelandic power experts believe that this year Iceland will use more energy for mining Bitcoins and other cryptocurrencies than it uses for powering homes.
Johann Snorri Sigurbergsson, a spokesman for Icelandic energy firm HS Ork, notes an “exponential” rise in Bitcoin mining in the country saying that if all the planning mining projects are realized there won’t be enough energy for them.
For Bitcoin mining computers connected to the global Bitcoin network should solve complex mathematical problems and receive Bitcoins as rewards for their work. And it should be noticed that it is quite a profitable activity, especially when performed at a large scale.
Currently, Iceland’s Bitcoin mining activities utilize around 840 gigawatt hours of electricity to power computers and cooling systems annually, at the same time most of the country’s homes use around 700 gigawatt hours.
Iceland is quite an attractive location for miners. And there are several reasons for large virtual currency companies to choose this North Atlantic island country as their base.
As for functioning of the computers that create Bitcoins, enormous amounts of electricity are required, it is important to find a source of cheap power. Having a small population of just 340,000, Iceland is powered almost entirely by renewable energy, mostly geothermal, hydroelectric, and wind that the country is rich in. That’s why miners here can find quite affordable conditions for their activity as well as super fast fiber-optic networks that are used for internet connections.
Moreover, cold climate of the country plays an important role in ensuring crypto utilities don’t overheat. Mining hardware generates large amounts of heat, but thanks to weather conditions in Iceland companies can exclude expenses for additional temperature control.
According to experts, there are no grounds to predict any decline of interest of foreign companies in establishing their data centres in Iceland. A lot of them are waiting for an opportunity to place their centres there though it is impossible to satisfy all their requests. If Iceland approved all of the proposed Bitcoin mining projects, there simply wouldn’t be enough electricity to supply them all. Especially, taking in consideration the fact that there are no any restrictions on the electricity usage by miners, but, for example, in China such limitations have been already proposed.
Nevertheless, the value of thriving mining industry for the country is quite a disputable issue as for mining neither a huge staff no large capital investments are needed. Moreover, there are no taxes introduced. That’s why there is an obvious reason for the government to consider steps to implement tax in the industry.
Meanwhile, it’s worth mentioning that any limitations and regulations introduced can significantly affect the industry and cryptocurrencies’ prices as it was in January when Chinese government decided to establish regulations for miners.
At the press-time, according to the data from CoinMarketCap, Bitcoin is traded for $8,487.54 with a market cap of $143 bln.
Despite all the above mentioned facts some experts are skeptical about the future of the country as a global mining centre reminding a situation when Iceland was an international hub for finance but after a giant bank crash, the country became one of the symbols of the global financial crisis in 2008.