Lately, Iceland has faced low hydro levels and challenges at a power plant. This has caused it to reduce electricity supply to its crypto mining customers.
Iceland produces nearly 100% of its energy production from renewable energy sources.
Hydropower accounts for 73%, while geothermal accounts for the other 27%.
Iceland is reportedly the only developed nation today to reach this milestone.
High demand for electricity from crypto miners
Bitcoin mining is huge in Scandinavia, with Iceland leading the pack of “green mining,” using geothermal and hydroelectric power.
The demand for bitcoin mining is no surprise as this year alone, bitcoin’s price — the largest cryptocurrency by market capitalization —surged by about 80%. Even after last week’s brutal weekend sell-off.
Landsvirkjun, a state-owned energy company, and other energy companies produce nearly 100% of the island’s electricity.
According to a report from the Icelandic Blockchain Foundation, Iceland mines 8% of all bitcoins.
For years, Europe has tried to get green power through an undersea cable to reduce its cost of electricity to no avail.
Instead, deals were done to attract energy-intensive industries including crypto mining.
In 2013, Genesis Mining was founded as the first company to mine bitcoin in Iceland. It’s currently one of the leading cloud mining companies in the world.
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Other crypto mining companies operating in Iceland include Hive Blockchain Technologies Ltd from Canada and Bitfury Holding.
The demand for electricity in Iceland is attractive to most crypto miners. Speaking to DW, Phillip Salter, CTO, Genesis Digital Assets, said “There are no political or geopolitical risks, the infrastructure is very reliable and the electricity is sustainable and incredibly cheap.”
As more companies scramble for Iceland’s cheap and green energy, its generating capacity is reaching its limits.
As a result, Landsvirkjun announced a reduction in the supply of electricity to large users such as crypto mining companies.
In addition, the company also rejected all requests from new customers for energy purchases for cryptocurrency mining.
The state-owned electrical company said the distribution failure was also because of delays from a third-party electricity provider.
‘Green bitcoin mining’ the future
This latest development reveals the impact crypto mining operations have on the energy sector.
China, formerly a crypto mining powerhouse, recently announced a ban on cryptocurrency mining and other crypto-related activities.