Iceland has been a prominent destination for mining of Bitcoins as almost 98% of the electricity in Iceland is generated from renewable sources such as geothermal energy. Also, the cold climate of Iceland is favourable for Bitcoin mining farms which are required to kept cool which can drive up electricity bills in places with warmer weather.
Iceland’s OUE or the power usage effectiveness is at 1.03, which is more than twice compared to its European neighbors, who have an average power usage effectiveness of 1.78. Due to this, Iceland houses international mining firms such as BitFury, Genesis who have set up operations in Iceland to take advantage of Iceland’s natural resources and lower electricity cost. But, these Bitcoin mining giants are being overshadowed by various local Bitcoin mining firms setting up operations in Iceland. The financial crisis of 2008 followed by the devaluation of the Icelandic Krone by almost 60% can be a possible reason motivating the establishment of mining farms.
The prevalence of Bitcoin mining in Iceland has led to the consumption of electricity by mining farms to overtake the electricity consumption of the Icelandic household with a population of 340,000 living on a tiny island. Earlier this year, in a significant heist, over 600 mining rigs were stolen which drew global attention to these small-scale local mining operations.
But, in December 2017, the Bitcoin mining business face some challenges after the price of BTC crashed from its all-time high of $ 19783 to its current price of $ 6362. This crash in Bitcoin price caused many Bitcoin mining operations all over the world to mine Bitcoin par with its cost and in many cases at a loss, which led to the speculation of the demise of the mining boom in Iceland.
In an interview with the Red Herring, the Chairman of Borealis Data Centre, Halldor Jorgensson confirmed that Iceland will pursue other blockchain related ventures with the existing infrastructure created for mining Bitcoins. Halldor Jorgensson further went to state that the demand in Iceland has shifted towards achieving a pure blockchain related business rather than Bitcoin mining and the Bitcoin wave has enabled Iceland to build an infrastructure for Blockchain associated businesses.
Halldor Jorgensson further believes that the entire Bitcoin crash issue has settled down to normal levels and in case another wave arises, the existing infrastructure can be used. Even though Bitcoin mining has suffered from a more or less permanent diminishing in Iceland, the current players in the Bitcoin mining space can explore other blockchain related ventures instead of shutting down entirely as the blockchain industry is a fast-growing industry and is estimated to reach a valuation of $2.3 billion by 2021.
