Iceland has attracted a number of large cryptocurrency mining companies to set up their base. It has been expected that this year the Island would be using more energy in bitcoin mining than powering its homes. This growth has led to the lawmakers to suggest regulating and taxing the crypto mining.
Energy consumption in bitcoin mining > Powering the Homes
It has been expected that Iceland is going to use more energy to mine the bitcoin than power its homes, this year. After China and Canada, Iceland is the next hot spot for the large companies invested in virtual currency mining. With an abundance of hydroelectric and geothermal power plants on this island, organizations are coming here to establish their base.
In order to create bitcoins, one needs massive amounts of energy to run their computers and mine the bitcoins. This makes the island a perfect base for bitcoin mining.
According to Johann Snorri Sigurbergsson, a business development manager at an energy company Hitaveita Sudurnesja, this year, the virtual currency mining of Iceland is expected to double its energy consumption to around 100 megawatts. As per Iceland’s National Energy Authority, the household energy consumption of Iceland is 340,000, which is less than the mining energy consumption.
A source from the Svartsengi geothermal plant, that powers the southwestern peninsula area where the crypto mining is done, said:
“Four months ago, I could not have predicted this trend – but then bitcoin skyrocketed and we got a lot more emails. Just today, I came from a meeting with a mining company seeking to buy 18 megawatts.”
The energy demand has increased due to the rising cost of producing virtual currencies. And one of the main attractions of Iceland as a mining base is its cold climate that provides natural cooling for the computer servers. Moreover, Iceland has an abundance of renewable energy available for this purpose.
Steep Growth in Crypto Mining forcing authorities to Tax crypto
The growth of the mining companies in Iceland has prompted the lawmaker of its Pirate Party, Smari McCarthy to come up with the idea of taxing the profits of bitcoin mines.
McCarthy has been quoted as saying to The Associated Press:
“Under normal circumstances, companies that are creating value in Iceland pay a certain amount of tax to the government. These companies are not doing that and we might want to ask ourselves whether they should.”
McCarthy has questioned the value of bitcoin mining for the society and further argues that the residents need to consider regulating as well as taxing the emerging crypto mining industry.
“We are spending tens or maybe hundreds of megawatts on producing something that has no tangible existence and no real use for humans outside the realm of financial speculation. That can’t be good.”
What do you think of the growth of mining companies in Iceland and the country’s move to regulate & tax them? Let us know below in our comment section.
I am an associate content producer for the news section of Coingape. I have previously worked as a freelancer for numerous sites and have covered a dynamic range of topics from sports, finance to economics and politics.