Despite the three month downtrend in bitcoin price, the mining industry is growing rapidly without showing any signs of slowing down. Because of its natural characteristics, countries such as Iceland have become the preferred target for companies to deploy their mining operations. Companies have flooded the country with requests to open new cryptocurrency mining operations in recent months, and this is stretching Iceland’s electricity generation capacity.

Unfortunately, this may result in an energy shortage in the small country. According to The Washington Post, the country has received at least one request from cryptocurrency companies per day in the last three months. 

This new rush, what many experts describe as the 21st-century gold-rush, has caused the power demands to skyrocket in the country. Germany’s Genesis Mining was one of the first companies moving to Iceland about three years ago, many have followed since. Mining operations are now exceeding Icelanders’ own private energy consumption. It is feared that energy producers won’t keep up with rising demand if more companies enter the country for mining operations.

Johann Snorri Sigurbergsson, a representative from Icelandic energy producer HS Orka said:

“There was a lot of talk about data centres in Iceland about five years ago, but it was a slow start. 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.”

Johann Snorri Sigurbergsson

Iceland has large amounts of ‘clean’ energy in the form of hydropower and geothermal 80 percent of its energy is produced in hydroelectric power stations. The cold climate makes it a perfect spot for mining centres that use the cool air as ventilation to avoid hardware overheating.

Energy research and consulting group Rocky Mountain Institute associate Sam Hartnett stressed:

“The economics of Bitcoin mining mean that most miners need access to reliable and very cheap power on the order of 2 or 3 cents per kilowatt-hour. As a result, a lot is located near sources of hydropower, where it’s cheap.”

Sam Hartnett

While many experts consider the “mining” industry as a new source of income for the country, which was traditionally a low-budget airline hub and tourist haven, others show a lot of concerns about its possible financial unsustainability.

There is a disagreement the real energy-consumption cryptocurrency mining is causing on Iceland’s power grid; some analysts believe that this number is likely smaller than feared. The Washington Post estimates that as of last December, Bitcoin used no more than 0.14 percent of the world’s generated electricity, less than the total electricity used in gold mining.

Bitcoin electricity mining consumption

For now, Icelanders still see the ‘Bitcoin rush’ as a profitable business and good for the economy, but if their lights start going out they’ll most likely change their tune.