Whether you're a Bitcoin maximalist, think it's a huge scam, or somewhere in between, what's not up for debate is that Bitcoin mining uses a lot of energy. It means consuming. To keep costs as low as possible, miners look for cheap energy. The lower your energy costs, the greater your profits. And few countries have lower energy costs than Iceland. An explosive increase in demand for cheap electricity means that Iceland has become a global hub for Bitcoin mining, but Iceland's Prime Minister Katrin Jakobsdóttir is not happy about this.
In a (paywalled) interview with the Financial Times (via crypto.news), Jakobsdottir outlined his vision for pivoting away from mining and toward more efficient use of energy, particularly food production. She specifically mentioned corn, as the island nation imports more than 50% of its vegetables and almost 100% of its grains.
As its name suggests, Iceland doesn't expect to grow fields full of sun-filled crops, but it does have access to affordable renewable energy such as hydroelectric and geothermal power. I'm blessed. One can imagine that if properly utilized and allocated, this country could increase food production without much difficulty.
But for that to happen, other market sectors will have to compete with Bitcoin miners' voracious appetite. They are preparing for the mining reward halving event, which is estimated to occur around April 20th. In other words, miners are trying to cut costs. Low remuneration makes Iceland even more attractive to large-scale miners.
As the value of Bitcoin rises and mining becomes more profitable, it is unlikely that the demand for electricity to power mining farms will decrease anytime soon.
Iceland is located on a ridge in the central Atlantic Ocean. It has been in the news in recent months thanks to a series of volcanic eruptions. This will make vast amounts of renewable energy available, but it will mean little if mining demand continues to increase at the expense of other sectors of the economy and households.
Iceland's concerns are just one part of a growing problem. Increased energy demand can put stress on local power grids, increase electricity costs, and is, of course, terrible for the climate. The U.S. Energy Information Administration report cites research from the Cambridge Center for Alternative Finance that says Bitcoin mining alone accounts for nearly 1% of global energy consumption, or the entire countries of Greece and Australia.
If the upward trend in Bitcoin prices continues, energy consumption, sustainability, and the impact of mining on regions such as Iceland will become topics of ever more urgent discussion.
