Iceland is ‘Europe’s last Bitcoin mining refuge,’ but concerns emerge

[Hydrogen]

On 21 February, Bitcoin BTC mining researcher Jaran Mellerud published a report on the state of Bitcoin mining in Iceland. He noted that the European country is the world’s largest hash rate producer per capita.

According to Hashrate Index, Iceland has become one of Europe’s last Bitcoin mining havens. In addition, the island nation has vast amounts of stranded hydro and geothermal energy.

The researcher estimated that the country’s BTC mining industry consumes around 120 megawatts of electricity. This equates to a global hash rate of 1.3%, which isn’t much. Iceland, on the other hand, has a population of around 370,000 people, making it the largest hash rate producer per capita.

Iceland is the most electricity-rich country in the world, thanks to its volcanoes and waterfalls. It generates nearly twice as much as the second-placed country on the list, Norway, Europe’s largest Bitcoin mining hub. In fact, the two countries are the only ones in the world that are entirely powered by renewable energy.



Image link:  https://i.ibb.co/r6TBb8z/energy-per-capita.jpg

Bitcoin miners have, however, reported that obtaining energy allocations for new data centers is becoming increasingly difficult in Iceland. This implies that the potential for growth will most likely remain at current levels in the foreseeable future.

In December 2021, National Iceland electrical company Landsvirkjun reduced the amount of power it will provide to certain industries, including Bitcoin mining. The reasons cited for this decision were a series of issues, including a problem at a power station, low hydro-reservoir levels and accessing energy from an external supplier.

United Kingdom-based mining group Cloud Hashing relocated 100 miners to Iceland in 2013. HydroMiner GmbH, an Austrian company, raised approximately $2.8 million in its initial coin offering in November 2017 to install mining rigs directly at Icelandic power plants.

The network hash rate reached an all-time high of 318 exahashes per second (EH/s) this week. It is now hovering just below those levels, having risen by 25% since the beginning of the year.


https://ambcrypto.com/iceland-is-europes-last-bitcoin-mining-refuge-but-concerns-emerge/

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Iceland is known as the only country in the entire world who jailed bankers for their role in the 2008 financial crisis. This factoid could contribute to bitcoin miners pursuing it as politically neutral territory where they might someday build an industry. Iceland's cold weather is also claimed to drastically reduce server cooling costs. The high number of geothermal power plants in the area producing electricity in an environmentally friendly manner at low cost also could make the country attractive for crypto mining ventures.

I'm not certain if iceland could be considered europe's last crypto mining refuge. But it is an interesting claim.

Is it possible that bitcoin's dive below $20k was more damaging to the global crypto mining industry than realized?

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[STT]

Iceland has thermal power long term so Im not surprised its an ideal candidate also a very low base of population in the country.  They clearly would want the investment to support the economy in some way but most provisions are for long term investment and energy contracts would likely reflect that.  BTC mining would need to sign up for 5 years perhaps to be especially welcome over other alternatives such as aluminum smelting etc.

[Die_empty]

It seems Iceland is naturally built for bitcoin mining based on its population, electricity generation, and weather conditions. And the government of this nation deserves some praise for being friendly to bitcoin. The reason for the difficulty in getting electricity allocation seems to be genuine and when the situation improves I believe more miners would be brought on board. Like you rightly pointed out the drop in the price of bitcoin has some negative impact on the profitability of mining which in turn will affect the economic benefits that Iceland receives from this important sector. But with the gradual recovery of the price of bitcoin, we might start seeing the light at the end of the tunnel.

[stompix]

The researcher estimated that the country’s BTC mining industry consumes around 120 megawatts of electricity. This equates to a global hash rate of 1.3%, which isn’t much.

Iceldn has produced around 18Twh of electricity, taking the standard model available now (not preorder), it can power up around 600k miners, which would make between 15-20% of the total hashrate. That is using all the energy for mining (no cooling or anything else), and shutting down every other industry, hospital, school, and nightlamp in the country. So the fact that they still produce 1.3% is a feat of its own since that requires close to 8% of all the electricity produced in the country, again, assuming only relatively new gear, with half of the electricity going to the industry.
Now, that 8% is giving ~$100 million in bitcoin revenue a year, Iceland exports 2.3 billion! in aluminum and that created 4000 permanent jobs.

You do the thinking on what they will choose to supply with electricity. 

[davis196]

The researcher estimated that the country’s BTC mining industry consumes around 120 megawatts of electricity. This equates to a global hash rate of 1.3%, which isn’t much.

Iceldn has produced around 18Twh of electricity, taking the standard model available now (not preorder), it can power up around 600k miners, which would make between 15-20% of the total hashrate. That is using all the energy for mining (no cooling or anything else), and shutting down every other industry, hospital, school, and nightlamp in the country. So the fact that they still produce 1.3% is a feat of its own since that requires close to 8% of all the electricity produced in the country, again, assuming only relatively new gear, with half of the electricity going to the industry.
Now, that 8% is giving ~$100 million in bitcoin revenue a year, Iceland exports 2.3 billion! in aluminum and that created 4000 permanent jobs.

You do the thinking on what they will choose to supply with electricity.  

Yeah, but I guess that Iceland could potentially boost their electricity production from geothermal sources.
Nobody is saying that Iceland should stop supplying the houses, schools, hospitals and the "brick and mortar" industry with electricity in order to reallocate it to the Bitcoin mining farms. That would be ridiculous.
Increasing the capacity of the geothermal industry would require massive investments. I don't know how "crypto friendly" Iceland currently is and will this "crypto friendly status quo" remain in the future.  Perhaps the crypto haters and FUDsters in the country would try to stop any investments that are related to the crypto mining industry because "Bitcoin/crypto is wasting energy." or some random BS explanation.

[stompix]

Increasing the capacity of the geothermal industry would require massive investments. I don't know how "crypto friendly" Iceland currently is and will this "crypto friendly status quo" remain in the future.  Perhaps the crypto haters and FUDsters in the country would try to stop any investments that are related to the crypto mining industry because "Bitcoin/crypto is wasting energy." or some random BS explanation.

Massive investment coming out of... government money who would profit how from this?
Yeah, I know, taxes and profits from mining but at current prices and assuming full profit, not deduction not anything else Iceland will gain 2 cents per 5 cents spent per kwh, this if they would sell the electricity at production costs, thus they could simply sell it at 6 standard rate as usual for business and munch on those taxes the aluminum industry and the billions they are making. Besides, who would invest in billions in energy capacity for something that might be totally unprofitable even with current prices in one year, thus the government wouldn't gain a penny and it would be left with extra capacity nobody needs.

The clear indicator of why this won't work is there for everyone to see!
Remember Bukele's geothermal volcano mining?

[Hispo]

Even though I can see the advantageous conditions of a country as Iceland can have for the Bitcoin mining in comparison to other countries in Europe. I personally believe that in the future there will be even more relevant places for miners to settle.

Perhaps, the fact Iceland is not part of the European Union could be in favor of the Bitcoin mining there, as some European politicians and movements seek to challenge the PoW model in the continent. They have tried before and could not write it into law, but that does not mean they won't try again.

https://cointelegraph.com/news/european-parliament-votes-against-pow-ban-providing-huge-relief-to-the-crypto-industry

[hugeblack]

I do not know if these statistics are accurate or we have the ability to verify their accuracy (members of the mining board can give us more details)
But if there is evidence, it indicates the decentralization of mining, so that if one country imposes restrictions, other countries can fill the shortage, or rather miners can move freely between countries whenever they find a better opportunity.

[coupable]

Iceland is considered a relatively isolated country so that its policies do not arouse all that interest.  This gives Iceland partial autonomy, since international parties don't care much about what happens there.  The mining sector is almost thriving in Iceland better than the rest, and the sector does not face any problems except for being affected by the boycott campaign pursued by the rest of the countries adopting mining.  It can be said that the entire sector has entered into a wave of boycotts by the countries that tolerated it.  Iceland is considered to maintain a kind of balance between market dues and countries' orientations in general.  And Iceland is considered one of the first countries to support crypto services companies.

[Smartprofit]

It is believed that the northern European countries are the most progressive countries.  In these countries, the polar winter lasts for many months. 

During the winter months, people are at home near the hot hearth.  They read books, work on the Internet, think, communicate with each other.  The harsh climate forces them to introduce the latest achievements of scientific and technological progress into their lives. 

In addition, the Icelanders are direct descendants of the Vikings - brave and purposeful people, descendants of legendary travelers, traders and conquerors.  The cold climate of Iceland creates ideal conditions for mining the first cryptocurrency. 

Therefore, I expect from the government and parliament of Iceland more liberal legislation in the field of mining and cryptocurrency trading.

[stompix]

It is believed that the northern European countries are the most progressive countries.  In these countries, the polar winter lasts for many months. 

During the winter months, people are at home near the hot hearth.  They read books, work on the Internet, think, communicate with each other.  The harsh climate forces them to introduce the latest achievements of scientific and technological progress into their lives.

You have a completely wrong image of the climate in Europe, probably watched too many Christmas cartoons or listen to some crazy propaganda about us freezing to death in our igloos or something. Europe is not that cold frosted place in which you stay in the dark and cold under 10 meters of snow for months, not even the northern countries are like that.
Seriously, this shit needs to end:

Iceland is considered a relatively isolated country so that its policies do not arouse all that interest.

Iceland is part of the EEA, EFTA, and Schengen, it's not isolated at all, more like almost fully integrated and it would be a member of the EU if it weren't for those fishery disagreements, the only real reason it's not willing to join the EU, and that might change since now the UK is out of it, the main reason for the disagreements. 

[Synchronice]

It is believed that the northern European countries are the most progressive countries.  In these countries, the polar winter lasts for many months. 

During the winter months, people are at home near the hot hearth.  They read books, work on the Internet, think, communicate with each other.  The harsh climate forces them to introduce the latest achievements of scientific and technological progress into their lives. 

You have a completely wrong image of the climate in Europe, probably watched too many Christmas cartoons or listen to some crazy propaganda about us freezing to death in our igloos or something. Europe is not that cold frosted place in which you stay in the dark and cold under 10 meters of snow for months, not even the northern countries are like that.

Actually, he is right. Northern European countries, overall, Nordic Countries are very cold for a long time. Actually, they aren't as cold as they were years ago but still they have very long dark winters. And it's right again that they are the most progressive countries, at least in IT industry. There are a lot of very popular Swedish companies: Skype, Spotify, Ikea, Ericsson, etc.

Have a look at The Digital Economy and Society Index (DESI). Nordic countries are leading in charts. This doesn't mean that other European countries aren't doing well, not definitely but if we keep in mind the population of Nordic countries, they are definitely doing very well.

While we may say that cold climate pushes them to innovate and improve their quality of life, the first question that remains unanswered for me is: Why did humans decide to settle and live in cold climates when humans feel more comfortable in warm? But this is a question of history, not economics

[Flexystar]

I am not certain about if bitcoin's dive below 20K can trigger the global control over reducing the environmental issues but I am damn sure if they continue to see Iceland as one of the potential bitcoin hub then they are going to disturb the mother nature at its best. The problem starts when human's start colonizing a place or corner of the land and start doing their chores. We are greedy. They will build mega structures of geothermal plants, mining farms, more people residing nearby in the want of having hob opportunities etc. This can trigger the nature in negative way because what Iceland has currently is due to it's less population and geo location. Soon if it gets populated all of sudden then it may impact the nearby nature, change the environmental conditions, glaciers, sea life anything can start disturbing with this. I am not sure if I have thought this correctly but on logical node, this seems to be future to me.

[naikturun]

However, it is possible that a drop in the price of bitcoin below $20k could have negatively impacted the profitability of crypto mining operations, particularly for those with high energy costs. This could have led to a decline in the number of new mining ventures being established, as well as a consolidation in the industry as smaller operations were forced to shut down due to the lower profitability.

[goaldigger]

However, it is possible that a drop in the price of bitcoin below $20k could have negatively impacted the profitability of crypto mining operations, particularly for those with high energy costs. This could have led to a decline in the number of new mining ventures being established, as well as a consolidation in the industry as smaller operations were forced to shut down due to the lower profitability.

This has been the problem of mining, the cost of mining is not a joke and with the current value of Bitcoin, miners might find it more difficult to sustain their mining business which many forces to shut down their rig. Well, if this is true then it will be a big problem to many and considering the next halving where it will lower the amount of the miner that can be mined, it will surely affect our supply but I think its value will be more reasonable, they just have to hold on tight for now and look for a possible alternatives.

[Lucius]

~snip~
While we may say that cold climate pushes them to innovate and improve their quality of life, the first question that remains unanswered for me is: Why did humans decide to settle and live in cold climates when humans feel more comfortable in warm? But this is a question of history, not economics

Maybe it used to be warmer there than today, or maybe people simply got used to the cold, considering that the seas that surround those countries are still very rich in fish and other sea creatures that serve as food for humans. Regardless of the fact that I live much further south, I personally would rather choose such a climate than one in which the summer temperatures regularly exceed 40 degrees Celsius, with the addition that in the last ten years we have also had regular strong summer storms accompanied by strong winds, rain and hail.


As for geothermal energy, it is not specific only to Iceland in the sense that it exists there, but that they actually use it to the maximum. When we look at the map of geothermal sources in Europe, it is evident that in some parts there are far more of them than in Iceland, but they are not very little used. Denmark and Hungary have perhaps the greatest potential, and some other countries are already seriously thinking about building more geothermal power plants, because it is actually clean energy that is under our feet. Taking everything into account, maybe Iceland is not the last refuge for crypto miners - although the anti-mining movement in the EU has been very active in recent years.

[Emitdama]

The researcher estimated that the country’s BTC mining industry consumes around 120 megawatts of electricity. This equates to a global hash rate of 1.3%, which isn’t much.

Iceldn has produced around 18Twh of electricity, taking the standard model available now (not preorder), it can power up around 600k miners, which would make between 15-20% of the total hashrate. That is using all the energy for mining (no cooling or anything else), and shutting down every other industry, hospital, school, and nightlamp in the country. So the fact that they still produce 1.3% is a feat of its own since that requires close to 8% of all the electricity produced in the country, again, assuming only relatively new gear, with half of the electricity going to the industry.
Now, that 8% is giving ~$100 million in bitcoin revenue a year, Iceland exports 2.3 billion! in aluminum and that created 4000 permanent jobs.

You do the thinking on what they will choose to supply with electricity. 

I think they do not really need to choose between anything. Producing energy is not something that is stable all the time, you can keep producing more and more. I do not know where Iceland produces their energy, assuming it is not solar lol, but they are producing a good amount obviously, which means that there is really no reason why they shouldn't do more.

They can't have 100% of all miners, they can't mine all the bitcoins, and they can't just hire 4000 more people, or 40000 more people and sell more aluminum forever neither. So the best case would be producing more energy, and doing both if possible, mine as much bitcoin as they can, and sell as much aluminum as they can, and do other things too if they can.

[stompix]

Actually, he is right. Northern European countries, overall, Nordic Countries are very cold for a long time. Actually, they aren't as cold as they were years ago but still they have very long dark winters.

If a country is cold it doesn't mean all the population is living in arctic conditions.
Look at the table I posted above, 25-50 of the population in Scandinavian countries are living in areas that have a milder climate as Beijing for example during winters, just because in Nunavut there are almost no temperatures above -20C in winter doesn't mean it's representative since there are only 50k people living there.
Common, stop picturing all Scandinavians like reindeer herders.

While we may say that cold climate pushes them to innovate and improve their quality of life,

Ulan Bator is far colder than any of those, how much innovation have you seen coming from there in the last 5 centuries?

I think they do not really need to choose between anything. Producing energy is not something that is stable all the time, you can keep producing more and more. I do not know where Iceland produces their energy, assuming it is not solar lol, but they are producing a good amount obviously, which means that there is really no reason why they shouldn't do more.

Yes, they do, if they could produce all the energy they wanted they would simply have had more aluminum plants built already.
But geothermal has also capacity problems, you can't just drill every square meter and extract heat from every single rock as that would simply lead to the wells cooling too fast to extract any meaningful energy, plus there are cost due to different depths, so no, there is an infinite resource available and the one that is still left as untapped potential is far costlier than what they have now, which would lead to higher and not so attractive prices.

Do you really think they just sat there for 30 years not doign a thing and had to be told by a bitcoin miner guy that they can build more?

[YUriy1991]

What makes this industry globally significant is that mining cryptocurrencies is an expensive endeavor and Not everyone is convinced that crypto mining will remain profitable in Europe, and competition is increasing.

what is interesting is that mining companies also diversified into other cryptocurrencies after the bitcoin slump.
yes, They may want to pay more attention to how their top cryptocurrency is performing. While bitcoin's dip below $20k may have helped attract more miners to Iceland, any further dip from here would threaten the same company's own profits.

I think the concern referred to is the long-term impact of market volatility on the global crypto economy itself.

[el kaka22]

It is not going to be easy to get governments accept that bitcoin mining is a profitable thing not just for the miner but for the nation as well. Iceland would have a lot of profit from the taxes they can charge to miners, but also all the money that miners would pay to electricity companies, and even the people who work in these mining factories will be Icelanders who would spend it back into the country, and ALL of that money would come from bitcoin, which would be their best ideal situation.

How could that be something bad for the nation? It will be something that benefit the whole nation at the same time and should be supported for sure.