Due to the recent lack of electricity in Iceland, Landsvirkjun, the country’s main energy supplier, has decided to reduce the supply of some industrial customers, including aluminum smelters, data centers, fish meal factories and Bitcoin mining companies.
The drop, which took effect immediately, was caused by low hydro reservoir levels, a power plant difficulty and a delay in collecting energy from an external source, according to what the company stated in a December 7 statement with Bloomberg.
The reductions also apply to significant customers with short-term contracts, and according to Tinna Traustadottir, senior vice president of sales and customer service at Landsvirkjun, record demand is also a factor that played a role in this matter.
Crypto miners attracted by low costs
Iceland’s largest energy users are massive smelters that were built decades ago to take advantage of the locally available cheap energy. However, cryptocurrency operations have been a more recent addition to Iceland’s economic environment, driven by the low cost of energy needed to mine new coins, as demand and prices have risen following the financial crisis.
Hive Blockchain Technologies Ltd., a Canadian business, Genesis Mining Ltd., a Hong Kong-listed company, and Bitfury Holding BV are among the companies that have set up shop in Iceland to take advantage of the country’s low energy prices.
According to Landsvirkjun, on December 7th, all energy requests from new customers who wanted to mine cryptocurrencies were rejected.
Despite recent volatility, Bitcoin has gained over 70% so far in USD value, reaching an all-time high of nearly $69,000 in November.
Bitcoin mining worldwide
It is also noteworthy here that this is not the first time that Bitcoin mining activities have been questioned worldwide. Just last month, Sweden’s financial and environmental regulators have called for a European Union wide ban on Proof of Stake cryptocurrency mining, in order to meet climate obligations, while China’s Bitcoin mining restrictions have been widely publicized.
Moreover, statistics are showing that the estimated annual use of Bitcoin of 143 TWh on May 5, 2021 is at least eight times higher than the combined consumption of Facebook and Google of only 17 TWh.
However, taking a look at El Salvador’s case, with the introduction of Bitcoin as the legal currency, the nation is making huge progress in the cryptocurrency business after the successful mining of the first Bitcoin using purely volcanic energy.
We should observe here that volcanic energy can bring in a new era of sustainable active mining, which, despite that, has received some unfavorable attention due to its carbon footprint. In particular, Bitcoin skeptics cited the environmental impact of the asset as a main justification for proposing a total ban.
With everything that is going around the world currently, it’s hard to say with a certain degree of certainty what is going to happen next in the crypto markets. However, it is unlikely that we are going to see any EU wide bans on cryptocurrencies anytime soon, or that the United States would be taking any drastic measures. Most likely, we are going to see new regulations regarding the markets, which isn’t necessarily a negative thing for crypto adoption. From everything we’ve learned so far from the cryptocurrency markets, we know one thing for sure – they are here to stay.
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