Power cut of industries in Iceland, turns away new Bitcoin miners

Power cut of industries in Iceland, turns away new Bitcoin miners

Shortage of power has resulted in Iceland’s main utility, Landsvirkjun, reducing supplies to some industrial customers including Bitcoin miners. These customers include several aluminum smelters, data centers, and fish meal factories, as well as turn away new Bitcoin miners.

Low hydro reservoir levels, a malfunction at a power station, and a delay in obtaining power from an external producer led to the reduction, effective immediately, the company said on Tuesday.

 In addition to fish-feed plants, the reductions apply to large customers on curtailable short-term contracts.

The demand also played a big role, said Tinna Traustadottir, executive vice president of sales and customer service at Landsvirkjun.

Biggest power consumers of Iceland

The biggest electricity consumers of Iceland are its giant smelters built decades ago to profit from cheap power. She also said they tend to secure their power supply for the long term. Moreover, adding that one aluminum customer “had a limited reduction in electricity supply.”

Aluminium prices and Bitcoin miners

Aluminium is one of the most energy-intensive industrial metals to produce. So, traders are supporting supply cuts as the regional energy crunch deepens.

The smelters tend to have power contracts with other sellers. When their supply is reduced, they propose Landsvirkjun for short-term contracts that often contain clauses allowing supply to be curbed, Traustadottir said. “In the big picture, this will have a limited effect” on the smelters, she told in an interview. 

Aluminium prices are hiking day by day. Prices have reached a 13-year high in October as Chinese producers faced a supply crunch. The renewed surge in power price is creating new risks to supply in Europe. Aluminium prices surged 1.1% to $2,616.50 a ton on Tuesday.

Problem with Bitcoin miners

A more recent member of Iceland’s industrial landscape is the cryptocurrency miners. These crypto miners are attracted by the cheap electricity needed for mining new coins after demand and prices have skyrocketed. Notwithstanding recent volatility, in dollar terms, Bitcoin is up more than 80% year to date and hit an all-time high of roughly $69,000 in November. Some of the companies that have set up shop in the country include  Hive Blockchain Technologies Ltd. from Canada, Hong Kong-listed Genesis Mining Ltd., and Bitfury Holding BV. All power-supply requests from new clients mining electronic coins have now been rejected, Landsvirkjun said.

Century Aluminum Co.’s Grundartangi and Rio Tinto Plc’s smelter are both in the western area that’s suffering shortages, while Alcoa Corp.’s Fjardaal plant sits in the East Fjords with ample power. 

“The reservoir levels in Iceland are relatively low, however, we do not currently expect disruptions,” Century said in an email.

“We do not anticipate any significant issue at this juncture, as 90% of our power at Fjardaal is secured,” Alcoa spokesman Jim Beck said. “We are monitoring the situation and staying in contact with our energy provider about the other 10% of our energy supply, which could potentially be reduced by half under certain circumstances and with appropriate notices.”

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