Iceland is a highly developed country in Europe. It is one of the five Nordic countries and is close to the Arctic Circle. Glaciers and volcanoes coexist on a large scale and it is called the "Land of Ice and Fire". 11% of the country is covered by glaciers and has many rivers, with huge potential for hydroelectric power generation. There are as many as 30 active volcanoes in the country, and geothermal resources are extremely rich. The capital of Iceland is called Reykjavik, which is called "Smoking Bay" in Icelandic.
Iceland can also be said to be the country with the richest renewable energy generation resources. Its power system consists of dozens of hydroelectric and geothermal power plants and a transmission network around the island. Hydropower is the main pillar of Iceland's power system, accounting for 69% of electricity generation, followed by geothermal power generation, which accounts for 31% of its total electricity.
In particular, the local climate conditions are almost perfect for Bitcoin mining, and its stable cold climate provides natural cooling for mining operations. Even in summer, the temperature in Iceland is only between 7°C and 12°C. The capital Reykjavik has an average temperature of only 11°C in July and an average temperature of -1°C in January, which can be described as low temperatures all year round.
The year-round low temperature condition can not only cool down the large amount of heat energy generated during the mining process, thereby ensuring the stable operation of the mining machine system, but also allow the mining machine to maintain low maintenance requirements and operating costs.
With so many favorable conditions, miners have become important customers of Iceland's power sector. Due to Iceland's small population (370,000), it has also become the world's largest per capita Bitcoin computing power producer.
When it comes to specific electricity prices, they are completely set by Iceland's state-owned enterprise Landsvirkjun, which is the largest electricity producer in Iceland and owns most of the national grid system. It sells electricity directly to corporate users at a long-term fixed price through contract binding. Large users of more than 10 megawatts can directly connect to the transmission system or sign a contract directly with the power generator to obtain cheaper electricity.
Over the past five years, the price of electricity provided by Landsvirkjun has remained relatively stable between $0.051/kWh and $0.071/kWh. In 2022, the average price was $0.063/kWh.
Mining companies involved in Bitcoin mining in Iceland include Greenblocks, GenesisMining, Bitfury, HiveBlockchain, tartmining, Advania/Borealis, etc. The latest news is that last month, BitDigita, a Nasdaq-listed company in the United States, purchased another 2,500 Bitcoin mining machines and placed them in Iceland.
Genesis Minin, a Bitcoin mining company, has been operating mines in Iceland since 2013. Its founder Philip Salter once commented on the region: "There are no domestic political or geopolitical risks, the infrastructure is very reliable, and electricity is sustainable and cheap."
As we have mentioned before, overseas regions - the United States, Laos, the United Arab Emirates and Kyrgyzstan. If these countries are to be scored comprehensively, including electricity prices, electricity price risks, regulatory environment, political risks and operating conditions, Iceland can be identified as a region with the highest scores.
From the perspective of miners, cheap electricity and cold climate are important, but what they care most about is the predictable rule of law and high political stability in the location.
In the past two years, many overseas miners have encountered various regulatory issues in different countries, including increased taxes or higher electricity prices, but the most fatal blow is the sudden suspension of business or even administrative orders to ban mining.
Miners are also increasingly aware of the importance of operating their businesses in a friendly and stable jurisdiction.
Therefore, the good news is that mining and the aluminum industry, as large electricity consumers, have become the two main pillars of Iceland’s economy. The development of Bitcoin mining accounts for a proportion second only to another high-energy-consuming industry in Iceland - aluminum smelting (Iceland uses 70% of its electricity for aluminum manufacturing, making it the world’s tenth largest aluminum producer).
However, the bad news is that due to the lack of new power plant construction plans in Iceland in recent years, the stock of electricity resources may not increase significantly in the next few years, which means that it will become increasingly difficult for new miners in Iceland to obtain cheap electricity allocation.
Finally, it is worth mentioning that Iceland once had a developed financial industry. During the 2008 financial crisis, it became the first European country to go bankrupt because its central bank was insolvent. Now we know that the birth of Bitcoin originated from Satoshi Nakamoto’s reflection on this financial crisis. Historical lessons have also given the Icelandic people a deeper understanding of Bitcoin.
A media outlet once interviewed an Icelandic native and asked him what he thought of Bitcoin. His answer was: "Banks will bankrupt the country, but Bitcoin will not." #BTC