We are sorry to see Iceland go from the World Cup, but fact is fact and I think it ties into the headline quite well. The real story here is that the Icelandic Government have recently aired concerns regarding cryptocurrency mining and the damage it could potentially have on Iceland’s economy.
First off, we should bear in mind that Iceland are still recovering from a financial crisis, one which occurred just a decade ago and is therefore still lingering on. The problem, as stipulated by the government is the fact that Iceland is a paradise for cryptocurrency mining operations. The country is naturally cooled and set amongst vast, open spaces. These naturally cool spaces are perfect for the installation of mining equipment, on a colossal scale as simply put, companies don’t need to spend tonnes of money on ensuring the equipment is cooled. Moreover, Iceland runs off numerous different renewable energy resources, from geothermal energy generation to hydroelectric power, meaning energy is cheap, accessible and less damaging to the environment.
So, free natural cooling, cheap natural energy, and, loads of space to build. It’s a cryptocurrency miners heaven.
The problem here is that already, according to a report by KPMG, 90% of the countries data-centre power consumption was used in cryptocurrency mining last year. See the full report here- http://www.si.is/media/_eplica-uppsetning/The-Icelandic-Data-Center-Industry-FINAL.pdf
This in turn, creates two new problems. First of all, high energy consumption which speaks for itself, the next big issue however is that as this demand rises, cryptocurrency mining may very well become a big industry in Iceland. The worry is, that since the markets are so volatile, supply and demand will not match up and therefore, if the need for mining decreases suddenly due to volatility, Iceland will be left with a number of companies, running huge mining operations that are suddenly about to lose a lot of money. Leading to another sovereign financial crisis.
It is a bleak outlook but given the sensitivity of finance in Iceland it is a very important consideration.
The very essence of this is that Iceland can’t afford the risk involved with investing in cryptocurrency mining now, because in 10 or 20 years’ time, the demand for mining may no longer be there. Sadly though, many fear that it is already too late for this. With 90% of the countries data-centre power consumption being used in mining, it’s clear why this could be the case.