Over the past decade, cryptocurrency mining companies have doubled their search for countries with cheap power. Indeed, while it is lucrative and engaging, digital currency mining is notorious for consuming a large quantity of electricity. Predictably, this explains why crypto-mining companies tend to concentrate in countries that offer cheaper electricity. It is against this backdrop that the tiny European island of Iceland became a magnet for such companies.
The As-is Situation
Today, there are about 2,000 cryptocoins that are in existence in the global cryptocurrency industry. Traders exchange them on platforms which require verification. As you may know, special nodes perform this verification. However, the verification involves mathematical calculations that consume an enormous quantity of energy. Users (nodes) who confirm the process are called miners. The system rewards them for their efforts.
At the time the cryptocurrency market was making a stellar performance, mining was a super lucrative activity, but today’s cryptocurrency market dip made mining less attractive. Consequently, miners are constantly looking for ways to improve efficiency. Therefore, places like the Swiss Alps, Iceland, and Russia’s Siberia are the cynosure of all eyes now.
When it comes to crypto mining suitability, there are two key factors that make Iceland stand out: economic and geographical factors. The North Atlantic island has a well-developed infrastructure for generating hydropower, thus producing 80% of its energy from hydroelectric power stations. As you know, this energy source is renewable, demonstrating that the country has achieved a remarkable feat in power generation. In contrast, the United States trails, generating merely 6% of renewable energy from its vast power generation. In addition, the cold Arctic air cools the environment naturally, thus eliminating the need to invest in air-conditioning systems.
What It Means for Iceland
Today, digital currencies are reshaping the economy of the country by providing a source of revenue and creating jobs for her teeming population. Mostly known as a tourist attraction site, Iceland is quickly evolving into a tech hub. While this momentum is on, there is nonetheless a flipside to it. The bubble isn’t just rocketing electricity prices, it is straining the energy-generating companies in Iceland. Most importantly, one cannot rule out a nightmare scenario of this energy demand plunging the country into an unprecedented power crisis.
To tackle the challenge militating against these energy-hungry companies, Krista Hannesdóttir, an Iceland math teacher, devised a solution. In particular, the solution focuses on providing a technique for reducing the environmental and financial impacts of cryptocurrency mining operations.
In her scenario, Hannesdóttir pays the local farmers for excess geothermal energy and then converts the power generated through this source for her mining rig. So, the heat generated is not wasted as it is converted to other sources. Basically, she uses it for heating up staples and storage spaces, thus creating a win-win situation for the parties.
On the downside, this technique means that mining rigs are installed at various farms, which some farmers don’t really fancy due to noises from mining rigs. Accordingly, it took some convincing to get them to accept the offer.
This article should not be taken as, and is not intended to provide, investment advice. Users are ultimately responsible for the investment decisions he/she/it makes based on this information. It is your responsibility to review, analyze and verify any content/information before relying on them. Trading is a highly risky activity. Do consult your financial adviser before making any decision. Please conduct your thorough research before investing in any cryptocurrency and read our full disclaimer.
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