The stunning success of cryptocurrencies around the globe has had a more unexpected repercussion on this island of 340,000: It could soon result in an energy shortage in the middle of the Atlantic Ocean.
China and South Korea have already banned bitcoin mining due to problems with a lack of control over fraud and money laundering, and in China's case, concern over the amount of power that the activity sucks from the electricity grid.
The sudden demand for energy has overwhelmed Iceland's energy companies. "The economics of bitcoin mining mean that most miners need access to reliable and very cheap power on the order of 2 or 3 cents per kilowatt hour".
"Four months ago, I could not have predicted this trend - but then bitcoin skyrocketed and we got a lot more emails". He reports that he had just met with a mining company wanting to buy 18 megawatts.
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. "We are mining on a large scale and getting the gold out to the people".
What do you think about the environmental costs of large-scale Bitcoin mining? Alternatives to the current energy-consumption-heavy method of mining have been proposed, like using a Proof-of Stake system instead of Proof-of Work, or using renewable energy to power mining computers.
The last time Iceland was an worldwide hub for finance, the venture ended with a giant bank crash, making the country one of the symbols of the 2008 global financial crisis.
The rapid growth has prompted Iceland's Pirate Party lawmaker Smari McCarthy to suggest taxing bitcoin and cryptocurrency mining operations in the country if only to add to the coffers of the island nation.
'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, ' he said. "That can't be good".