October 26

Iceland: From Mining Site to Blockchain Hub

Iceland, with its cold climate and low-cost electricity, has attracted many crypto enthusiasts who sensed their great mining opportunity on the windy island at the Arctic Circle. After the onslaught reached its peak in December last year, the Icelandic mining business continues to decline. Experts now see the next – and possibly longer lasting – hype coming: the development of blockchain technology.

Iceland’s largest data center provider Advania had to contend with enormous demand from abroad last December. The cold climate and cheap electricity, 98 percent of which Iceland generates from geothermal energy, attracted many miners to the island. However, as the news portal Red Herring reported on September 23rd, Bitcoin’s fall and several thefts of mining computers soon cooled the mining euphoria. Instead of turning completely away from modern technology, many Icelandic companies are now concentrating on developing the blockchain.

Cowboys are moving out of Iceland

As a manager of Advania Red Herring pointed out, he had seen many “cowboys” who came to Iceland only because of mining and disappeared accordingly quickly. In particular, the cheap electricity had made the island the ideal location for Bitcoin mining. While the PUE, a value used to indicate the energy efficiency of a data centre, is 1.78 on European average, it is only 1.03 in Iceland. This makes Iceland almost twice as cost-efficient as many of its continental neighbours. So it is not surprising that many international mining companies such as BitFury and Genesis have found very cheap mining opportunities on the cold island.

Where a lot of money is suspected, imaginative criminals are not far away. Thus it came at the beginning of the year to several thefts of mining computers. Some of them could even have made it as far as China.

After mining comes the blockchain

The Icelandic government had not put a regulatory stop to the mining-hype. Nevertheless, it viewed the development with suspicion. The onslaught of a new branch of industry, which many still associate with the Silk Road, could not cause a storm of enthusiasm in politics. Nevertheless, he ensured that many people were interested in the world of Bitcoin and Co and the underlying blockchain technology. Halldór Jörgensson, Chairman of the Borealis Data Center, explains:

“The demand is for us to focus more on the pure blockchain business. So you could say that the Bitcoin wave, the big wave of Bitcoin demand, has helped us to build very quickly because there were really aggressive or interested parties who wanted to do something and we managed to build it. We firmly believe that the whole Bitcoin thing has been reduced to a level that isn’t as crazy as it was a year ago. We believe there is another wave that will take advantage of the infrastructure that was built during the Bitcoin mining phase.”