Bitcoin mining is swallowing up power resources in Iceland

13 Feb 2018600 Views

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Northern Lights over Kirkjufell, Grundarfjordur town, west Iceland. Image: Obebee/Shutterstock

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Iceland is expected to use more energy processing bitcoin transactions than powering homes this year.

Increasing general interest in cryptocurrencies such as bitcoin is having a myriad of effects around the globe, but one major aspect is a sudden increase in energy consumption.

Iceland, with a population of just 340,000 people, is seeing this problem firsthand, according to the BBC.

Johann Snorri Sigurbergsson is a spokesperson for Icelandic energy company HS Orka and he estimates that electricity use at bitcoin mining data centres is likely to exceed that of every single home in the country.

Cryptocurrency energy demands

Many people are keen to enter the world of cryptocurrency mining, Sigurbergsson said, adding that if all the potential projects are realised, the country simply won’t have enough energy for them.

Data centres that are mining bitcoin receive small rewards when the programs they run solve complex mathematical problems, generating revenue.

Sigurbergsson noted: “What we’re seeing now is … you can almost call it exponential growth, I think, in the [energy] consumption of data centres.”

He added that there is such an abundance of data centre proposals that giving all of them the green light would be impossible.

Iceland’s bitcoin farms

Iceland is powered almost totally by renewable energy sources, from geothermal and wind to hydroelectricity, and its climate is ideal for keeping data centres cool. There is currently a cluster of bitcoin farms in operation in Keflavík, about 50km south-west of Reykjavík.

Some politicians are concerned about the spike in interest in bitcoin.

Smári McCarthy, an Icelandic member of parliament for the Pirate Party, was critical of the endeavours: “We are spending tens or maybe hundreds of megawatts on producing something that has no tangible existence and no real use for humans outside the realm of financial speculation. That can’t be good.”

According to The Associated Press, McCarthy is considering the possible taxation of bitcoin mining firms such as the one in Keflavík. He tweeted: “Another factor is risk to Iceland. It’s kind of obvious that if a substantial part of the bitcoin mining network is in one country, then that country is a juicy target for electronic attacks.

“We need to consider our national security ramifications. So, what I’ve been proposing primarily is not taxes. Instead, I’d like to establish a few ground rules.

“For instance, banks, pension funds and so on that are critically important to our economy should have rules that limit their exposure, like with other types of assets.”

The cryptocurrency boom is raising a lot of concerns about the energy required to power the mining projects. Recent research from Sandbag demonstrated that bitcoin mining is one of a few emerging additional power demands specific to the digital economy, as well as video streaming.

Ellen Tannam is a writer covering all manner of business and tech subjects

editorial@siliconrepublic.com