Cryptocurrency mining attracted lots of public discussion last year, much of which revolved around environmental concerns over the rising amounts of electricity used by mining farms. These facilities exist exclusively to solve complex mathematical puzzles with their thousands of state-of-the-art ASICs. In return, miners earn a fraction of a coin not yet in circulation.
News emerged over the weekend indicating a continuation of this contentious growth trajectory. Speaking at the Svartsengi Power Plant, Jóhann Snorri Sigurbergsson (Business Development Manager; HS Orka) predicted that Iceland’s cryptocurrency mining industry will see its 50 megawatt (mW) usage double this year. 100 mW is roughly the amount used by the 334,000 (approximately) citizens of the nation.
Of course, such exorbitant energy consumption by the crypto mining industry only exists due to the prevalent blockchain security method known as Proof of Work (PoW). It is incorrect to accuse the actual blockchain technology of demanding this rate of energy. There are several alternative mechanisms that can secure a network without using anywhere near as much energy as PoW. Proof of Stake (PoS) is one such method, and will soon secure the Ethereum network after it transitions from PoW.
With that said, Iceland has long proven a popular choice for prospective cryptocurrency mining enterprises, particularly after China recently cracked down on the industry.
Low electricity costs on the North Atlantic island appear a lucrative factor for these miners. Rates are relatively cheap due to an abundance of renewable energy available from hydroelectric and geothermal power plants. This availability is set to increase yet again, with research also being conducted on ways to harness the country’s plentitude of wind power.
Situated on the outskirts of the Arctic Circle, the cold climate of Iceland also contributes to low utility costs for miners. Although expensive, mining hardware must be kept cool so as to prevent overheating. Utilising Iceland’s natural elements, the exteriors of mining facilities are deliberately only partially constructed; providing huge financial savings.
Encouragingly, the innovative industry continues to strive for a reduced carbon footprint. In April, the MoonLite Project (MNL) will begin the construction of their inaugural mining farm. Uniquely, 100 percent of its consumed energy will be generated from hydro, geothermal, and wind sources.
Even the stalwarts of the Icelandic mining scene continue to grow. Recently, the CEO of Genesis Mining, the world’s largest cryptocurrency cloud mining provider, announced the imminent construction of “bigger farms than [they] have ever built.”
Despite the burgeoning industry, local resistance lingers. Recently, lawmaker Smari McCarthy, in representing the Pirate Party (holder of 10 percent of parliamentary seats), publicly suggested taxing profits of miners, saying:
Companies that are creating value in Iceland pay a certain amount of tax…[they] are not doing that and we might want to ask ourselves whether they should.”
Whilst the issue of company tax remains, there is no doubting that Iceland’s local economy has indirectly benefitted from cryptocurrency mining. Enterprises such as electricity plants and building contractors have incurred boosts in revenue, whilst jobs have been created to facilitate the need for on-site security, maintenance technicians, and other staff. These beneficiaries go on to spend more domestically; benefitting the broader economy.