Blockchain technology and cryptocurrencies are becoming more popular by the day. Experts say that this industry will transform the world. Most of the enthusiasm is that the industry will change the world for the better and most of us remain optimistic. However, there is a dark side to the technology in terms of the immense energy used and the potential impact of this on gthe lobal climate.
Recent research conducted in the U.S. on energy consumed during cryptocurrency mining reported that the computer power that is required in the creation of one digital token is almost the same as the power used by the average American household in two years. Bitcoin already consumes 0.15% of the globe’s energy. While the power used might not be significant worldwide, some small countries are already feeling the effects. One of these countries is Iceland.
Energy Used by Miners in Iceland
Iceland is an island in the middle of Atlantic Ocean with a population of 340,000 people. Energy producers in this country are worried that their electricity is almost running out. According to HS Orka, an energy-producing firm based in Iceland, miners that are located in Iceland use much more electricity than all the homes in the country combined. HS Orka development manager Johann Snorri Sigurbergsson further pointed out that there are other projects that are underway, including new data centers being erected by miners, and that if all the projects are developed, the country might be short of the energy needed for use in the country. He further explains that approximately 840 gigawatts hours of electricity are consumed every year due to Bitcoin mining.
This energy is mainly used in the computer cooling systems and in the powering of computers used for mining. On the other hand, households in the country use approximately 700 gigawatts hours of electricity annually. The firm only signs contracts with foreign cryptocurrency mining investors who have intentions of working in the country on a long-term basis.
Iceland has become a highly sought-after location for energy-hungry cryptocurrency miners mainly because of low-cost energy. Almost 100% of the energy sources in Iceland is from renewable sources. This has attracted a lot of investors in Iceland wanting to build data centers in the country. Foreign cryptocurrency mining companies such as Germany’s Genesis among others, have found a safe haven in Iceland.
Another factor that has attracted cryptocurrency miners to the country is the cold climate. The climate prevents the overheating of equipment that usually produces a lot of heat. The cold climate allows miners to reduce the cost of annual temperature control costs that they incur in other countries. Energy producers such as HS Orka are now worried that they might not be able to keep up with the rising demand.
The country’s mining boom has also provided an opportunity for the Icelandic government to gain some revenue through taxation. Foreign firms that come to Iceland to invest and create value in the country are usually taxed by the government. However, professionals in the country are now of the view that these mining investors may not be creating any value for Iceland.
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