Iceland cuts power supply, Turns away new Bitcoin miners

National Iceland electrical company Landsvirkjun has slashed the quantity of energy it will supply for some industries, including aluminum smelters and Bitcoin (BTC) miners.

A lack of energy in Iceland has driven the island’s main utility, Landsvirkjun, to decrease reserves to some industrial clients, such as aluminum smelters, data centers, and fish meal factories, as well as turn away new Bitcoin miners.

Low hydro reservoir levels, a malfunction at an energy station, and a pause in receiving power from an external producer led to the removal, effective immediately, the company said on Tuesday. In addition to fish-feed plants, the reductions apply to large customers on curtailable short-term contracts. Market demand also played a part, said Tinna Traustadottir, executive vice president of sales and customer service at Landsvirkjun. 

Mining operations have long been attracted to the country due to its surplus of geothermal energy, which is gathered to make an affordable and large supply of renewable energy. But from Tuesday for an unknown period, any new requests for electricity from mining operations will be denied, according to Landsvirkjun.

Bitcoin mining in Iceland

Canada’s Hive Blockchain TechnologiesGenesis Mining, and Bitfury Holding are the three main Bitcoin mining companies that have extended facilities in Iceland.

For nearly 10 years, miners have tried to discover the guarantee of environmentally friendly Bitcoin mining in Iceland. In 2013, Cloud Hashing moved 100 miners to Iceland. In November 2017, Austrian company HydroMiner GmbH raised about $2.8 million in its initial coin offering to install mining rigs directly at Icelandic power plants.

Less than 1% of the country’s electricity is produced from non-renewable sources.

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

The country’s aluminum smelting industry has been beaten badly by distribution failure. Aluminum prices increased 1.1% on Tuesday to recollect the blockage in supply created by a recent surge in demand and the present power supply crunch.

Worldwide, green blockchain industries have come into popularity in 2021. COP26 meeting thought leaders in Glasgow, Scotland addressed energy-intensive Bitcoin mining. The conference saw the launch of the GloCha United Citizens Organization for action on Climate Empowerment. It will use blockchain technology to promote climate change goals.

“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 circumstance and with appropriate notices.”

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