Iceland is well on its way to becoming the cryptocurrency mining hub of the world in 2018. According to a report in the Associated Press, Iceland will consume more power in 2018 for bitcoin mining/cryptocurrency mining than for household usage. The primary reason why Iceland is the preferred choice of cryptocurrency miners is due to the cold weather. Moreover, Iceland has plenty of renewable power which is more affordable as well.
These favorable conditions have made it one of the most preferred destinations for cryptocurrency miners. According to Icelandic businessmen, Johan Snorri Sigurbergsson associated with Hitaveita Sudurnesha which is an energy company in Iceland has estimated that the amount of energy utilized for cryptocurrency mining in Iceland will double this year. This will mean that over a 100 MW of power will be consumed for cryptocurrency mining. This is more than the power which is consumed by the citizens of Iceland. The total population of Iceland is around 0.34 million.
According to him, the main reason for this sudden rise in cryptocurrency mining is the sudden increase in the price of Bitcoin. He further added that there are many companies looking to buy power between 10 MW to 20 MW.
The amount of power required by Bitcoin mining hardware is immense. It also requires heavy cooling. The need for cooling is minimized due to the cold weather. This automatically makes mining in Iceland much more conducive. Currently, cryptocurrency mining is also undergoing a tectonic shift. The proof of work system is being replaced by the proof or stake system. This will be conducive for miners using renewable sources of power.
Local cities attracting mining operations:
In Iceland, there are quite a few local cities which are attracting big mining operations. One such city is Keflavik, which is a coastal town. It is home to some of the biggest mining operations in the country. As these mining operations are exposed to elements of weather, natural cooling is possible.
This phenomenon is not just exclusive to Iceland. In the United States, mining companies are moving to Washington to make use of the cheaper electricity. This resulted in the grid of the State becoming overloaded requiring it to buy 100 MW of extra power. Similarly, cheap electricity attracted bitcoin miners to New York as well.
Taxation on Bitcoin mining:
According to a member of Iceland’s Pirate party, Smari McCarthy, the government might look at taxing the cryptocurrency mining profits. According to a viewpoint, Bitcoin mining is akin to creating value for the economy.
In the longer term, however, authorities are not sure how cryptocurrency mining can actually help the economy.