Iceland’s largest utility, Landsvirkjun, has been forced to limit power supplies to some of the country’s energy-intensive industrial customers. Among the activities included in the measure are aluminium producers, fish processing plants and crypto mining data centres.
Iceland curbs crypto mining
A combination of different factors drove Landsvirkjun towards this extreme decision. Among them, low levels of hydroelectricity reserves, a malfunctioning power plant and a delay in the supply of energy from an external producer were the main reasons for the decision. The power utility announced on Tuesday that the cuts would take effect immediately.
This news comes as a thunderbolt to cryptocurrency miners, who had settled in the Nordic country because of its favourable energy conditions. Its territory produces a large amount of geothermal energy, thus ensuring clean and cheap energy, a perfect mix for mining, which needs large amounts of energy to function.
But the increase in mining activity is said to be one of the reasons for the sudden energy deficit, according to Tinna Traustadottir, executive vice-president of sales and customer service at Landsvirkjun. China’s ban on mining has prompted many cryptocurrency mining data centres to relocate to other countries, including Iceland, due to its low raw material costs.
Among the major cryptocurrency mining companies, Canadian Hive Blockchain Technologies, Genesis Mining and Bitfury Holding, listed in Hong Kong, are two giants. Electricity operator Landsvirkjun has said it will now turn down applications from new mining customers.
Sweden and Norway to ban mining
But while Iceland restricts mining due to energy concerns, Sweden and Norway seem to be moving towards a total ban on mining in their respective countries.
At the end of November, Erik Thedéen, director of the Swedish Financial Supervisory Authority, and Björn Risinger, director of the Swedish Environmental Protection Agency, wrote a letter to the EU explicitly calling for a ban on cryptocurrency mining if the Paris climate accords were to be respected.
Norway was quick to respond to this call, when local government minister Bjørn Arild Gram expressed serious doubts about the sustainability of cryptocurrency mining in an interview with Euronews Next.
According to him, this activity is certainly capable of bringing long-term benefits, but it would still be difficult to justify the extensive use of renewable energy for this kind of activity.
Björn Risinger recently stated:
“It is currently possible to drive a mid-size electric car 1.8 million kilometres using the same energy it takes to mine one single Bitcoin. This is the equivalent of forty-four laps around the globe. 900 bitcoins are mined every day. This is not a reasonable use of our renewable energy”.
A ban by the two Nordic countries would be a blow to the mining sector, considering the low cost of electricity guaranteed in both Sweden and Norway, thanks to the large contribution made by renewable energy.