Iceland's bitcoin mines 'could pinch all the power'

GETTYIceland has become a haven for cryptocurrency miners

GETTYIceland has become a haven for cryptocurrency miners

According to recent data, it is expected that this year Iceland will use more electricity to mine cryptocurrencies, than to power its homes.

Regardless of the potential profits, McCarthy is unsure about what Bitcoin mining can bring to Iceland, AP reported.

Iceland has a small population, of around 340,000 people. For the first time, they now exceed Icelanders' own private energy consumption and energy producers fear that they won't be able to keep up with rising demands, if Iceland continues to attract new companies bidding on the success of cryptocurrencies.

The energy used by Iceland's bitcoin mining market is experiencing "exponential growth", and data centers may use more energy than all of the country's homes in 2018, Johann Snorri Sigurbergsson from Icelandic energy company HS Orka told the BBC.

According to The Associated Press, McCarthy is considering the possible taxation of bitcoin mining firms such as the one in Keflavík.

Mining bitcoins requires a great deal of computing power which in turn needs a lot of electricity to solve the mathematical puzzles that reward miners with cryptocurrency.

GETTYBitcoin mining requires huge amount of energy and new bans makes the practice more difficult
GETTYBitcoin mining requires huge amount of energy and new bans makes the practice more difficult

The growth of Bitcoin since its inception has led to the need for more bitcoin mining and the demand for more data centers to do the mining. As a result, transaction involves an enormous number of mathematical calculations, which in turn occupies vast computer server capacity - which requires a lot of electricity.

Located in the middle of the Atlantic Oceans and famously known for its hot springs and mighty rivers, Iceland produces about 80 percent of its energy in hydroelectric power stations, compared to about 6 percent in the United States.

So with 30% of the country's electricity coming from geothermal power, the country's geothermal resources are fuelling bitcoin mining.

Some Icelandic politicians, however, are growing wary of the Bitcoin boom in the country. Prices are contained because almost all of the country's energy comes from renewable sources, prompting more mining companies to consider opening operations in Iceland.

"The value to Iceland.is virtually zero".

Smari McCarthy, a member of the Icelandic parliament for the Pirate Party, tweeted: "Cryptocurrency mining requires nearly no staff, very little in capital investments, and mostly leaves no taxes either".

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