Iceland ramps up Bitcoin mining

As global governments scramble to crack down on cryptocurrency, Iceland has seized the opportunity offered by Bitcoin mining.

This year, it’s expected that Iceland will spend more money on energy to mine Bitcoin than it will to power homes.

The country has an abundance of geothermal and hydroelectric power plants, which has attracted the attention of virtual currency mining companies.

Digital miners are now flocking to establish bases on the island.

Massive amounts of energy are needed to power the computers used to mine cryptocurrencies, and Iceland is seen as a perfect base.

In a refreshing change, the Icelandic Government has been extremely welcoming to this rapidly growing industry.

Iceland’s new virtual currency mining ventures are expected to double the country’s energy consumption to around 100 megawatts this year, according to business development manager at the energy company Hitaveita Sudurnesj, Johann Snorri Sigurbergsson.

More power used to mine Bitcoin than power homes

According to Iceland’s National Energy Authority, that is more than households use on the island nation with a population of just 340,000.

Speaking from the Svartsengi geothermal energy plant, which powers the southwestern peninsula where the mining takes place, Sigurbergsson said:

‘Four months ago, I could not have predicted this trend – but then bitcoin skyrocketed and we got a lot more emails.

“Just today, I came from a meeting with a mining company seeking to buy 18 megawatts.”

According to Metro, among the main attractions of setting up bitcoin in Iceland is the natural cooling for the computer servers and the competitive prices for Iceland’s abundance of renewable energy. The energy demand has developed because of the soaring cost of producing virtual currencies. Computers are used to make complex calculations that verify a running ledger of all the transactions in virtual currencies around the world.

In return, the miners claim a fraction of a coin not yet in circulation. In the case of bitcoin, a total of 21 million can be mined, leaving about 4.2 million left to create.

As more Bitcoin enter circulation, computers need to get more powerful to keep up with the calculations – and that means more energy.

Not all politicians agree

The growth has prompted a small amount of resistance from politicians.

Smari McCarthy, a lawmaker for Iceland’s Pirate Party, suggested taxing the profits of bitcoin mines.

“Under normal circumstances, companies that are creating value in Iceland pay a certain amount of tax to the government,” McCarthy said.

“These companies are not doing that and we might want to ask ourselves whether they should.”

McCarthy questioned the value of bitcoin mining for Icelandic society, saying residents should consider regulating and taxing the emerging industry.

“We are spending tens or maybe hundreds of megawatts on producing something that has no tangible existence and no real use for humans outside the realm of financial speculation,” he said.

“That can’t be good.”