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As a result of Iceland’s power shortages, the country’s main utility company, Landsvirkjun, has cut supplies to some industrial clients such as aluminum smelters, data centers and bitcoin miners.
The cut, which takes effect immediately, was caused by low water levels in the reservoir, a problem at the power plant and a delay in purchasing electricity from an external source.
The reductions apply to large clients with redundant short-term contracts. Record demand is also playing a role, according to Tinna Traustadottir, Landsvirkjun’s executive vice president of sales and customer service.
Crypto miners are attracted by cheap energy
Iceland’s largest energy consumers are huge smelters built decades ago to use cheap energy. However, cryptocurrency mining operations were a later addition to Iceland’s economic environment, attracted by the low cost of electricity needed to mine new coins as demand and prices soared after the financial crisis.
Canadian-based Hive Blockchain Technologies Ltd., Genesis Mining Ltd., registered in Hong Kong, and Bitfury Holding BV are among the firms that have set up operations in Iceland to take advantage of electricity costs.
As of today (Dec 7), all electricity requests from new e-currency mining customers are being denied, Landsvirkjun said.
While Bitcoin has been showing volatility lately, in dollar terms it is growing more than 70% year on year, reaching an all-time high of around $ 69,000 in November.
Bitcoin mining on a global scale
It is worth noting that this is not the first time Bitcoin mining operations have been called into question around the world. Recently, two CEOs of Sweden have proposed limiting cryptocurrency mining to meet climate commitments, while the restrictions on bitcoin mining in China are well documented.
In addition, data from Finbold showed that the estimated annual Bitcoin consumption of 143 TWh as of May 5, 2021 is at least eight times higher than the combined consumption of 17 TWh by Facebook and Google.
However, with the adoption of Bitcoin as legal means of payment in El Salvador, the country continues to make strides in the cryptocurrency sector after officially mining the first Bitcoin using volcanic energy.
Ultimately, volcanic energy ushers in a new era of sustainable mining, which is plagued by negative press over its carbon impact. It is noteworthy that Bitcoin’s detractors used the asset’s impact on the environment as an excuse to completely ban it.
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