Tuesday 21 August 2018

Energy demands soar in Iceland in race for bitcoins

A worker walks along a row of computer rigs that run around the clock ‘mining’ bitcoin inside the Genesis Mining cryptocurrency mine in Keflavik, Iceland. Photo: AP Photos/Egill Bjarnason
A worker walks along a row of computer rigs that run around the clock ‘mining’ bitcoin inside the Genesis Mining cryptocurrency mine in Keflavik, Iceland. Photo: AP Photos/Egill Bjarnason

Egill Bjarnason in Keflavik

Iceland is expected to use more energy mining bitcoins and other virtual currencies this year than it uses to power its homes.

With massive amounts of electricity needed to run the computers that create the precious bitcoins, large virtual currency mining companies have established a base in Iceland, a chilly North Atlantic island blessed with an abundance of renewable energy from geothermal and hydroelectric power plants.

The relatively sudden growth of the new industry has prompted Smári McCarthy, a lawmaker for Iceland's Pirate Party, to suggest taxing the profits of bitcoin mines.

The initiative is likely to be well received by Icelanders, who are sceptical of speculative financial ventures after suffering a catastrophic banking crash in 2008.

"Under normal circumstances, companies that are creating value in Iceland pay a certain amount of tax to the government," Mr McCarthy said.

"These companies are not doing that and we might want to ask ourselves whether they should."

The energy demand has developed because of the soaring cost of producing virtual currencies.

Computers are used to make complex calculations that verify a running ledger of all the transactions in virtual currencies around the world.

In return, the miners claim a fraction of a coin not yet in circulation. In the case of bitcoin, a total of 21 million can be mined, leaving about 4.2 million left to create. As more bitcoin enter circulation, computers need to get more powerful to keep up with the calculations - and that means more energy.

The serene coastal town of Keflavik on Iceland's desolate southern peninsula has over the past months boomed as an international hub for mining bitcoins and other virtual currencies.

Among the main attractions of setting up bitcoin mines here is the natural cooling for the computer servers and the competitive prices for Iceland's abundance of renewable energy.

Irish Independent

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