Since then, the world of Bitcoin mining has changed dramatically. Different countries have become new havens for miners. A European country has become the country with the largest computing power per capita in the world. Thanks to cheap electricity, Iceland was one of the first countries to conduct industrial-scale bitcoin mining.
According to bitcoin mining researcher Jaran Mellerud, the country’s entrepreneurial locals can also be attributed to the industry’s growth. The Icelandic Bitcoin mining industry is estimated to consume nearly 120 megawatts, equivalent to 1.3% of global hash rate production. Considering Iceland has a population of only 370,000, it is the largest producer of hash rate per capita.
In other countries, cryptocurrency miners can find more affordable electricity. In fact, electricity rates in Iceland have historically been slightly more expensive than in other Nordic regions such as northern Norway and northern Sweden. So, what makes Iceland such a lucrative place to live?
A key advantage, as Mellerud points out, is that Arctic states have complete isolation of their power systems from the rest of the world. This apparently protects participants from rising electricity prices around the world. On top of that, there is no interconnection between Iceland and mainland Europe, which makes Iceland insulated from fuel prices because all of its electricity comes from renewable sources.
Miners have been operating in the region for nearly a decade without any major issues with regulators, potentially making it the most stable bitcoin mining jurisdiction in the world. Electricity supplies in Iceland have become increasingly scarce over the past few years. The development of new power plants also appears to have stalled. As a result, power distribution for new data centers has become nearly impossible.
This can be solved by building new power plants. But plans for any such development are very limited. Iceland is powered by volcanoes and waterfalls, thus making it the most electricity-rich country in the world. Electricity is therefore expected to remain cheap due to the very low marginal production costs of hydro and geothermal.
Another line of defense for miners in the small European country against rising electricity prices is long-term fixed-price electricity contracts.
