According to Oilprice.com, Iceland has one of the least energy-conscious populations in the world. This fact might seem counterintuitive, given their extreme cold temperatures, but with that reality combined with their reliance on geothermal and hydroelectric power, it makes sense. These low energy prices make Iceland an attractive place to mine Bitcoins, and as a result, Bitcoin is on track to double Iceland’s energy consumption to around 100 megawatts this year. In other words, mining Bitcoin will use more electricity than all of Iceland’s 340,000 households.
Oilprice.com notes that “Mining bitcoins requires a great deal of computing power which in turn needs a lot of electricity to solve the mathematical puzzles that reward miners with cryptocurrency.” CryptoCurrency Online also points out that “Arguably, mining is the heart of the entire bitcoin affair – and due to its concept of baked-in digital scarcity, the computational problems associated with mining blocks, confirming transactions, building what is referred to as the blockchain or distributed ledger, mining has become a lucrative business.” Lucrative enough, in fact, for a Bitcoin mining company to seek to buy 18 megawatts of electricity for mining purposes alone.
Smari McCarthy, a legislator in the formerly quiet pro-Bitcoin Pirate Party, is concerned that such a high volume of electricity is being used to create something that has primarily only fueled speculation and hasn’t generated any tax revenues. It’s understandable that legislators in Iceland would be concerned with speculation, given that Iceland was hit hardest in per capita terms by the 2008 financial crisis. Yet, with the likelihood that cryptocurrencies will be the future of money, it may not be a good idea to avoid supporting Bitcoin mining altogether, either.
As the world tries to comprehend the nuances of cryptocurrencies, we can expect more ups and downs, as the value of Bitcoin has lately demonstrated. If the only cost occurs in the use of cheap electricity, Iceland will surely benefit. One can only hope they do not have to suffer through another speculation bust before it all works itself out.