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In Iceland, bitcoin mining will soon use more energy than its residents

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Enlarge / The Icelandic town of Keflavik has emerged as a hub of Bitcoin mining.

Bitcoin-mining operations are set to overtake domestic residential energy consumption in Iceland later this year, according to a local energy company. As a result, one lawmaker is considering what could or should happen if Iceland continues to expand its role as a major bitcoin-mining hub.

Iceland, the North Atlantic island nation with a population of just 340,000, is powered almost entirely by renewable energy, mostly geothermal, hydroelectric, and wind.

Johann Snorri Sigurbergsson, a manager at energy firm Hitaveita Sudurnesja, told the Associated Press that he expected bitcoin mining to hit 100 megawatts this year.

“Four months ago, I could not have predicted this trend—but then bitcoin skyrocketed, and we got a lot more emails,” he said. “Just today, I came from a meeting with a mining company seeking to buy 18 megawatts,” he said.

Sigurbergsson told the BBC that he expects the bitcoin industry to exceed the roughly 700 gigawatt hours that all Icelandic homes require.

A cluster of bitcoin farms is now operating in Keflavik, the southwestern town home to the Reykjavik International Airport, roughly 50 kilometers southwest of the capital city. The data centers are naturally cooled by the Icelandic air, keeping costs down further.

Elsewhere, The Wall Street Journal reports that the town of Wenatchee, Washington (pop. 31,000), has also become a hub for Bitcoin mining, again due to relatively inexpensive hydropower. Given that China is reportedly considering curtailing bitcoin mining, companies are looking at alternatives for mining locations, including Canada.

“We are spending tens or maybe hundreds of megawatts on producing something that has no tangible existence and no real use for humans outside the realm of financial speculation,” Smári McCarthy, and Icelandic member of parliament told the AP. “That can’t be good.”

After being a digital activist for years, McCarthy, of the Icelandic Pirate Party, was elected to the Althing in 2016.

The AP story said that McCarthy was starting to think about whether bitcoin firms should be taxed as a result. On Twitter, he further explained that a “lot of details” of his viewpoint were not included in the story.

“Cryptocurrency mining requires almost no staff, very little in capital investments, and mostly leaves no taxes neither,” he wrote. “The value to Iceland / value-generated ratio is virtually zero. Closer to zero the higher the value of cryptocurrencies.”

“Another factor is risk to Iceland. It’s kind of obvious that if a substantial part of the bitcoin mining network is in one country, then that country is a juicy target for electronic attacks,” he continued. “We need to consider our national security ramifications. So what I’ve been proposing primarily is not taxes. Instead, I’d like to establish a few ground rules. For instance, banks, pension funds, and so on that are critically important to our economy should have rules that limit their exposure, like with other types of assets.”

McCarthy further explained in a brief Signal call with Ars that he would like to meet with bitcoin companies in Iceland so that he can “know what they are doing” as a way to foster better dialogue with them.

“My primary thing was this is a great innovation, we don’t know where it’s going, it’s a new thing, and new things should be developed and used but, at the same time, we need to be aware of the side effects that new tech can have on society,” he said. “We need to start talking with the community about some baseline rules. That doesn’t mean we’re going to relegate it out of existence; that wouldn’t help anybody.”

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