Iceland turns away new Bitcoin miners amid major energy shortage

Iceland’s largest energy distributor is turning away new Bitcoin miners as the country grapples with a major power shortage, reports Bloomberg.

Landsvirkjun is also cutting supplies to aluminum smelters, data centers, and fish meal factories.

The country’s shortage has been caused by low reservoir levels, a power station malfunction, and problems with obtaining power from one of the country’s external providers.

On Tuesday, Tinna Traustadottir, Landsvirkjun’s executive vice president of sales and customer service, said that record power demand was also to blame.

Bitcoin miners set up shop in Iceland

Like other mining hubs across the world, the promise of cheap, green energy has made the Nordic island nation attractive.

Canadian Hive Blockchain mines Ethereum, Ethereum Classic, and Zcash from its Iceland data centers. Its two locations consume close to 3.8 mega-watts of geothermal and hydropower.

Hong Kong-listed Genesis Mining claims it operates one of the largest Ethereum miners from its Reykjavík facility.

Netherlands-headquartered Bitfury also operates its data center close to the Icelandic capital. It claims to run its mining operation from 100% renewable energy sources.

Iceland’s blockchain mining industry in 2013.

Read more: Russia bails out Kazakhstan as Chinese Bitcoin miners suck power grid dry

Nordic countries have long offered attractive solutions for crypto mining firms, with relatively mild climates and cheap power.

Sweden and Norway also play host to a number of substantial mining operations.

However, Iceland’s energy industry has been warning of impending power issues since the start of the year.

In April, Hordur Arnarson, chief exec at Landsvirkjun told Bloomberg there could be “very little excess energy” in 2021 and 2022.

“Because of the climate issues we see a lot of very interesting segments that are growing rapidly, and several of them need electricity,” he added.

Bitcoin miners aren’t the biggest drain on the power supply

Bitcoin miners are flocking to Iceland but the biggest drain on the country’s power supply is its many aluminum smelters.

The energy-hungry industry normally brokers its power supply deals in long-term contracts with third-party providers.

When regional energy problems occur, smelters approach the nation’s largest supplier for short-term contracts which permits Landsvirkjun to reduce the supply.

The energy demands of Iceland’s aluminum producing industry have only been exacerbated as the price of the alloy surged to a 13-year high in October. It currently sits at over $2,600 a ton, up 30% from $2,000 a ton this time last year.

According to Landsvirkjun, smelters in the southwest of the country are most likely to bear the brunt of energy shortages.

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