How did Iceland, the land of ice and fire, become the most intense country for Bitcoin mining?

The epic scenes of "Game of Thrones" are believed to be dream destinations for fans, with Iceland being one of them due to its abundant hydro and geothermal power, cool climate, and stable regulations, making it the country with the highest per capita Bitcoin mining power in the world.

Fully Powered by Renewable Energy in Iceland

Iceland, with abundant hydro and geothermal resources, has developed an impressive power system based on renewable energy. This system consists of dozens of hydro and geothermal power plants and a transmission network that surrounds the island.

69% of Iceland's electricity comes from hydro power, while 31% comes from geothermal power, making it one of the rare countries in the world completely powered by renewable energy, along with Norway. Iceland is the world's most electricity-rich country, with per capita electricity generation almost double that of second-ranked Norway. In addition to being self-sufficient, Iceland is also not affected by energy crises resulting from conflicts like the Russia-Ukraine war, and can even supply excess electricity to aluminum smelters and Bitcoin miners.

Unstable Power Supply as an Advantage for Miners

According to reports from hashrateindex, electricity prices in Iceland are set by the national utility company Landsvirkjun. It is Iceland's largest power producer, wholly owned by the Icelandic state, and also holds most of the shares in the national grid.

Landsvirkjun, along with two private power producers, sells electricity directly to power-intensive industries such as aluminum smelters and Bitcoin miners through long-term fixed-price contracts. Large users consuming over 10 MW can connect directly to the transmission system or sign power purchase agreements with generators, allowing them to access cheaper electricity than other users.

Another unique aspect of Iceland's electricity, which poses a challenge but also provides an advantage to Bitcoin miners, is the presence of non-guaranteed power. This power, which may be interrupted during periods of low hydro or geothermal generation, comes with short notice and irregular timing, making it unsuitable for regular consumers or users with high electricity demands. Previously, this surplus power could not be sold and would go to waste, but Bitcoin miners now utilize it, giving them a significant pricing advantage.

Cool Climate and Stable Regulation Favorable for Miners

One of Iceland's advantages is its cool climate, with the capital Reykjavík experiencing average monthly temperatures ranging from 1 to 12 degrees Celsius between the coldest and hottest months. Miners can easily conduct air-cooled operations without the need for additional cooling infrastructure, leading to longer machine lifespans. The low failure rates in cold climates also mean lower maintenance requirements, reducing operational costs.

Political stability in Iceland is another reason why miners are attracted to the country. In recent years, miners in many places have faced political or regulatory opposition, including increases in electricity taxes, mining suspensions, and even mining bans. Iceland is considered a more miner-friendly country in terms of politics.

However, the biggest obstacle Icelandic miners face is obtaining new power sources. In recent years, the country has seen little to no construction of new power plants, leading to increasingly scarce electricity. With the maximum capacity of waterfalls and volcanoes being utilized, significant growth in the Bitcoin mining industry in Iceland is unlikely in the coming years.

Domestic companies involved in mining in Iceland include Greenblocks, Advania Data Centers, and Borealis Data Center. Additionally, many international participants currently or previously operating in Iceland include Genesis Mining, Bitfury, Hive Blockchain, Bit Digital, and Startmining.