The worldwide cryptocurrency craze has created a modern-day gold rush in Iceland, which has become hub for cryptocurrency mining. But this rush is not without its downside. It could result in the country running out of electricity in the near future.
Cryptocurrency is created is through a process called mining, in which cyber miners race against each other to solve complex mathematical problems that require extensive computing resources. This means not only expensive computer hardware, but also cheap and reliable energy to run them. For a mining operation to be economically feasible, electric power costing no more than 2 or 3 cents per kilowatt must be obtained. It also important to locate mining operations in cool climates, in order to keep computers from overheating.
All this makes Iceland very attractive to cryptocurrency miners. The country, which is surrounded by ocean and also has many rivers and hot springs, is not only cold but has an abundance of cheap hydroelectric power. Around 80% of their power comes from water. But even it has limits.
Cryptocurrency mining operations in Iceland are already using more electricity than all the country’s 340,000 residents combined, and the country’s energy companies think that if demand for electricity continues to spike, they could literally run out of it.
Johann Snorri Sigurbergsson, who is the spokesperson for an energy company called HS Orka, said that initial interest in setting up cryptocurrency mining centers in Iceland began five years ago, but that it wasn’t until 6 months ago that demand for electricity from mining operations started to skyrocket. He went on to say that if every mining company that has expressed interest in setting up operations in the country actually does so, they will not have sufficient electricity.
So far this has not dissuaded mining operations from setting up shop there, which is creating a very unpredictable situation for everyone concerned.