|
|
| Fig. 1: Iceland's cold climate and abundant geothermal energy sources draw cryptocurrency miners from around the world. (Source: Wikimedia Commons) |
Cryptocurrencies such as Bitcoin transact across decentralized networks spread across the world. In lieu of a central authority monitoring payments, each cryptocurrency relies upon a blockchain, a digital ledger which chronologically and publicly records transactions in the cryptocurrency. Therefore, computers must solve complex mathematical problems in order to mine, transact, and track cryptocurrencies. [1,2]
Large-scale cryptocurrency mining can be highly lucrative. However, cryptocurrency mining also requires an enormous amount of energy, not only to run the computations but also to keep the massive computers from overheating. Although the total electricity consumption worldwide is difficult to calculate, some upper-bound estimates compare this quantity to Ireland's total energy usage. [1]
It turns out that Iceland (Fig. 1) is a good place to mine cryptocurrency because energy is relatively inexpensive. With over twenty-five active volcanos and innumerable hot springs fed by underground reservoirs of steam and hot water, Iceland's geography provides abundant geothermal energy. In addition to producing only one-sixth of the carbon dioxide one would expect from a relatively clean natural-gas power plant, this form of energy can also be up to eighty percent cheaper than fossil fuels in direct use. It is also available every day of the year, unlike wind and solar energy. As a bonus, Iceland's natural climate reduces the need for artificial cooling. [2]
Attracted by these favorable conditions, cryptocurrency miners have flocked to Iceland in droves. [1] Companies have inundated the country with requests to open new crypto-mining data centers powered by cheap energy that they can also tout as "green." The rush to Iceland shows no signs of stopping. [1] Early in 2018, a spokesman for major Icelandic energy firm HS Orka reported receiving approximately daily calls from foreign investors interested in setting up data centers. [3]
HS Orka predicts that in 2018, electricity usage at data centers for Bitcoin mining alone will hit approximately 840 gigawatt hours. This is greater than the combined energy consumption of every household in Iceland, a country of about 340,000 people. [1] If every potential investor follows through, there may not be enough energy for everyone. [3]
Meanwhile, some are skeptical that the influx of cryptocurrency miners actually benefits Iceland. A member of the Icelandic parliament has pointed out that cryptocurrency mining requires minimal onsite staff and leaves few taxes. [1] A former Icelandic presidential candidate has tweeted that cryptocurrency mining is a waste of energy. Additionally, Bitcoin and other cryptocurrencies are highly volatile. Bitcoin notoriously peaked over $19,000 in late 2017 and plummeted below $6,000 just a few months later. About 800 other forms of cryptocurrencies are now worth nothing. [2] Iceland has reason to wary when the future of an industry is unclear; its 2008 banking crisis is a painfully recent memory. [4]
Nevertheless, Iceland's economy needs to diversify and lessen its reliance on fishing, tourism, and aluminum smelting. Iceland's energy leaders are betting that while cryptocurrency may or may not be a fad, the data centers being established will provide infrastructure for new technology incubators. The chief commercial officer at Iceland's largest data center, Advania, has remarked that Iceland is gaining the knowledge and experience to operate and maintain blockchain systems that will likely prove critical for artificial intelligence and deep learning applications from self-driving cars to automatic translators. [1,2] Advania has already partnered with Stanford University's Living Matter Lab to simulate the way human hearts might respond to new drugs. The worldwide demand for computing power currently exceeds the supply; the Icelandic Institute for Intelligent Machines believes that the data centers currently used to mine Bitcoin will be instrumental in filling this need. [2]
© Jenny Vo-Phamhi. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
[1] C. Baraniuk, "Bitcoin Energy Use in Iceland Set to Overtake Homes, Says Local Firm," BBC News, 12 Feb 18.
[2] R. Sigurdardottir and N. Rigillo, Extreme Bitcoin Mining Aids an Unexpected Revolution in Iceland," Bloomberg, 3 Jul 18.
[3] E. Bjarnason, "Energy Riches Fuel Bitcoin Craze for Speculation-Shy Iceland," Associated Press News, 11 Feb 18.
[4] M. O'Brien, "The Miraculous Story of Iceland," The Washington Post, 17 Jun 15.
