Iceland's bitcoin miners may leave the country without enough energy

“Four months ago, I could not have predicted this trend.”
February 14, 2018, 1:30am
Cover image: In this photo taken on Jan. 18, 2018, large clouds of steam rise into the sky from the Svartsengi geothermal power station in Grindavík, Iceland. (AP Photos/Egill Bjarnason)

Bitcoin mining in Iceland is sucking up so much energy that officials are worried they soon won't have enough power to run the country.

In the last six months, miners have been flocking to the island nation, where abundant and cheap renewable energy and arctic air (to keep servers from overheating) make it a bitcoin miner’s paradise. But the energy-intensive process of mining cryptocurrency threatens to overwhelm the country’s energy infrastructure. If it continues apace, it’ll eat more energy than all of Iceland’s residents would consume before the end of the year.

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“Four months ago, I could not have predicted this trend,” Johann Snorri Sigurbergsson, a business development manager at the energy company HS Orka, told the Associated Press. Now he expects the energy demands from cryptocurrency miners will double the country’s energy consumption estimates, and end up using more energy than all Icelandic households.

Sigurbergsson told the Washington Post that almost every day for the past six months, he’s received a call from a foreign company looking to set up mining operations in the country. And if they were to accept all the requests, they would run out of energy.

“If all these projects are realized, we won’t have enough energy for it,” Sigurbergsson told the BBC.

The way bitcoin works, miners, as they’re called, task themselves with verifying bitcoin transactions on a global ledger, where all bitcoin transactions are recorded. In exchange, they’re rewarded in bitcoin. The way the currency is structured, there will eventually be a cap at 21 million bitcoin in circulation, which means there are about 4 million left to mine. The more bitcoins are in circulation, the more computing power it takes to verify the transactions.

As a result, miners are constantly seeking out cheap and reliable energy sources to power their computers. And Iceland has plenty of that. The country’s grid is powered entirely through its abundant sources of renewable energy, a combination of hydroelectric and geothermal power.

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But Icelandic politicians aren’t entirely thrilled with the cryptocurrency boom hitting their shores. Smári McCarthy‏, of Iceland’s Pirate Party, wants to see cryptocurrencies flourish in Iceland but hopes that they’ll be regulated by a similar set of rules that govern the trading of stocks and bonds.

Bitcoin mining is using a ton of energy globally. A single transaction uses the same amount of energy as the average U.S. household in a week, and, as of November, bitcoin was using more energy than about 160 countries. It’s expected to use more power than the entire world does today by 2020.

Cover image: Large clouds of steam rise into the sky from the Svartsengi geothermal power station in Grindavík, Iceland. (AP Photos/Egill Bjarnason)