According to figures from the National Energy Authority, in 2020, there were over 37% more electricity sales to data centers than to the total number of homes, hospitals, retirement homes, churches, kindergartens, schools, colleges, universities, and ships in the ports in all of Iceland. A large part of this electricity sold to data centers is used for Bitcoin mining.
Cryptomining a resource sink
Bitcoin mining is the process of creating new bitcoins by solving complex mathematical problems, also referred to as hashing puzzles, which verify transactions in the currency. When a problem is solved and the bitcoin is mined, the miner receives a reward. In March 2022, the price of Bitcoins was around $39,000 USD. A miner would receive 6.25 bitcoin as incentive for completing a block, which would equate $243,750 USD.
However, cryptocurrency mining is extremely challenging, costly, and only sporadically rewarding. Nowadays, to mine competitively you need very powerful computer equipment, which can cost tens of thousands of dollars, and will use a significant amount of energy.
Energy “a very limited resource”
Auður Anna Magnúsdóttir, director of the Icelandic Environment Association (Landvernd), says that the electricity that is harnessed in Iceland is poorly utilized. She explains to Fréttablaðið that this shows “that there are no priorities in energy sales in Iceland. Energy is a very limited resource and we must use it in a sensible and profitable way. Sacrificing Iceland’s natural pearls, which are unique in the world solely for digging for electronic currency, is unacceptable.”
Nature over profits
The Economist’s list of the least efficient energy use amongst nations of the world, finds Iceland in third place, tied with Mozambique. Congo takes first place, and the island states of Trinidad and Tobago are second. The list reflects a calculation of how much GDP a country receives for each unit of energy produced. Auður explains that this means that energy companies made agreements with giant international companies, selling electricity to them.
Auður believes that Icelandic nature has been destroyed forever, only to increase profits of large companies. She says: “The majority of electricity production in Iceland is therefore bound by very unfavorable agreements with companies that have never and will never pay income tax on profits in this country. That is why so little income is created per unit of energy in Iceland”
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