Cryptocurrency mining in Iceland is using so much energy, the electricity may run out

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The value of bitcoin may have stumbled in recent months, but in Iceland it has so far only known only one direction: upward. The stunning success of cryptocurrencies around the globe has had a more unexpected repercussion on this island of 340,000: It could soon result in an energy shortage in the middle of the Atlantic Ocean.

As Iceland has become one of the world’s prime locations for energy-hungry cryptocurrency servers — something analysts describe as a 21st century gold-rush equivalent — the industry’s electricity demands have skyrocketed, too. For the first time, they now exceed Icelanders’ own private energy consumption and energy producers fear that they won’t be able to keep up with rising demands, if Iceland continues to attract new companies bidding on the success of cryptocurrencies.

Companies have flooded Iceland with requests to open new data centres to “mine” cryptocurrencies in recent months, even as concerns mount that the country may have to slow down investments amid an increasingly stretched electricity generation capacity.

“There was a lot of talk about data centers in Iceland about five years ago, but it was a slow start,” Johann Snorri Sigurbergsson, a spokesman for Icelandic energy producer HS Orka, told The Washington Post. “But six months ago, interest suddenly began to spike. And over the last three months, we have received about one call per day from foreign companies interested in setting up projects here.”

“If all these projects are realized, we won’t have enough energy for it,” Sigurbergsson was quoted as saying.

The Associated Press first reported the surge in demand.

In this photo taken on Jan. 18, 2018, large clouds of steam rise into the sky from the Svartsengi geothermal power station in Grindavík, Iceland. With massive amounts of energy needed to obtain bitcoins, large cryptocurrency mining companies have established a base in Iceland.

Every cryptocurrency in the world relies on a so-called blockchain platform, which is needed to trade with digital currencies. Tracking and verifying a transaction on such a platform is like solving a puzzle because networks are often decentralized and there is no single authority in charge of monitoring payments. As a result, transaction involves an immense number of mathematical calculations, which in turn occupies vast computer server capacity — which requires a lot of electricity.

The bitcoin rush may have come as a surprise to locals in sleepy Icelandic towns that are suddenly bustling with cryptocurrency technicians, but there’s a simple explanation to scientists. “The economics of bitcoin mining mean that most miners need access to reliable and very cheap power on the order of two or three cents per kilowatt hour. As a result, a lot are located near sources of hydro power, where it’s cheap,” Sam Hartnett, an associate at the nonprofit energy research and consulting group Rocky Mountain Institute, told The Washington Post in December.

Located in the middle of the Atlantic Oceans and famously known for its hot springs and mighty rivers, Iceland produces about 80 per cent of its energy in hydroelectric power stations, compared to about six per …read more

Source:: Nationalpost

      

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