Iceland Refuses to Power New Bitcoin Farms Amid Electricity Shortages

Iceland Refuses to Power New Bitcoin Farms Amid Electricity Shortages

Cryptocurrency mining is among several energy-intensive industries hurt by a power deficit in Iceland. The country’s main utility is now rejecting requests to connect new coin minting facilities to the grid, after cutting supply to aluminum smelters and fish factories.

Iceland Turns Away New Crypto Miners to Deal With Lack of Energy

Iceland’s largest utility, Landsvirkjun, has been forced to limit energy supplies to power-hungry industrial customers including aluminum producers and fish processing plants. The restrictions have been applied to consumers with curtailable short-term contracts as well. Data centers mining digital currencies are among the affected enterprises and the company has been turning away new bitcoin miners.

Landsvirkjun explained the need for the reduction citing a malfunction at a power station and the low water reservoir levels, Bloomberg reported. The supplier also faced a delay in sourcing electricity from an external producer. The utility announced on Tuesday that the cuts were effective immediately.

Unusually high demand for electricity has been another key factor for the deficit, noted Tinna Traustadottir, executive vice president of sales and customer service at Landsvirkjun. Iceland’s giant smelters have been a major consumer for decades but a growing number of cryptocurrency miners, attracted by the island nation’s cheap energy, are now playing a role, too.

Crypto mining companies such as the Canadian Hive Blockchain Technologies and the Hong Kong-listed Genesis Mining and Bitfury Holding are among those that are already operating coin minting facilities in the country. Landsvirkjun said, however, that it’s now rejecting requests from new customers in the mining sector.

The company further elaborated that due to limitations of Iceland’s distribution system, it cannot serve load points from the country’s biggest power station, Karahnjukavirkjun. The plant is located in the eastern part of the country while the island’s western region is mainly the one experiencing deficits.

News of Iceland’s troubles with electricity shortages comes after two other Nordic nations, Sweden and Norway, voiced concerns about the rising energy needs and growing environmental impact of cryptocurrency mining. In November, Swedish regulators called for an EU-wide ban on crypto mining. A couple of weeks later, the Norwegian government indicated it may support Sweden’s proposal.

Do you think Iceland will lift the restrictions for new crypto mining farms once it deals with its current power deficit? Tell us in the comments section below.

Iceland cuts power to new Bitcoin miners

Starting December 7, no new requests for power from Bitcoin mining operations will be accepted from the country’s energy utility service.

National Iceland electrical company Landsvirkjun has cut the amount of power it will provide for some industries, including aluminium smelters and Bitcoin miners.

A representative from the island’s power utility reported it has been forced to reduce energy allocations to southwestern Bitcoin miners and various industrial facilities due to a series of issues including a problem at a power station, low hydro-reservoir levels and accessing energy from an external supplier.

Mining operations have long been attracted to the country due to its abundance of geothermal energy which is harvested to create a cheap and plentiful supply of renewable energy. But from Dec. 7 for an unknown period of time, any new requests for electricity from mining operations will be rejected, according to Landsvirkjun.

Canada’s Hive Blockchain Technologies, Genesis Mining, and Bitfury Holding are the three main Bitcoin mining companies that have opened facilities in Iceland.

For nearly a decade, miners have tried to realize the promise of environmentally-friendly Bitcoin mining in Iceland. In 2013, Cloud Hashing moved 100 miners to Iceland. In November of 2017, Austrian company HydroMiner GmbH raised about $2.8 million in its initial coin offering (ICO) to install mining rigs directly at Icelandic power plants.

Less than 1% of the country’s electricity is generated from non-renewable sources.

Related: UN’s COP26 climate change goals include emerging tech and carbon taxes

The country’s aluminum smelting industry has been hit hardest by the distribution failure. Aluminum prices rose 1.1% on Dec. 7 to reflect the bottleneck in supply created by a recent surge in demand and the present power supply crunch.

Globally, green blockchain initiatives have come into vogue in 2021. COP26 conference thought leaders in Glasgow, Scotland addressed energy-intensive Bitcoin mining. The conference saw the launch of the GloCha United Citizens Organization (UCO) for action on Climate Empowerment. It will utilize blockchain technology to advance climate change objectives.