cloudy
Saturday February 24th, 2018 3:06AM

New gold rush: Energy demands soar in Iceland for bitcoins

By The Associated Press
Related Articles
  Contact Editor

KEFLAVIK, Iceland (AP) — Iceland is expected to use more energy "mining" bitcoins and other virtual currencies this year than it uses to power its homes.

With massive amounts of electricity needed to run the computers that create bitcoins, large virtual currency companies have established a base in the North Atlantic island nation blessed with an abundance of renewable energy.

The new industry's relatively sudden growth prompted lawmaker Smari McCarthy of Iceland's Pirate Party to suggest taxing the profits of bitcoin mines. The initiative is likely to be well received by Icelanders, who are skeptical of speculative financial ventures after the country's catastrophic 2008 banking crash.

"Under normal circumstances, companies that are creating value in Iceland pay a certain amount of tax to the government," McCarthy told The Associated Press. "These companies are not doing that, and we might want to ask ourselves whether they should."

The energy demand has developed because of the soaring cost of producing and collecting virtual currencies. Computers are used to make the complex calculations that verify a running ledger of all the transactions in virtual currencies around the world.

In return, the miners claim a fraction of a coin not yet in circulation. In the case of bitcoin, a total of 21 million can be mined, leaving about 4.2 million left to create. As more bitcoin enter circulation, more powerful computers are needed to keep up with the calculations — and that means more energy.

The serene coastal town of Keflavik on Iceland's desolate southern peninsula has over the past months boomed as an international hub for mining bitcoins and other virtual currencies.

Local fishermen, chatting over steaming cups of coffee at the harbor gas station, are puzzled by the phenomenon, which has spawned oversize construction sites on the outskirts of town.

Among the main attractions of setting up bitcoin mines at the edge of the Arctic Circle is the natural cooling for computer servers and the competitive prices for Iceland's abundance of renewable energy from geothermal and hydroelectric power plants.

Johann Snorri Sigurbergsson, a business development manager at the energy company Hitaveita Sudurnesja, said he expected Iceland's virtual currency mining to double its energy consumption to about 100 megawatts this year. That is more than households use on the island nation of 340,000, according to Iceland's National Energy Authority.

"Four months ago, I could not have predicted this trend — but then bitcoin skyrocketed and we got a lot more emails," he said at the Svartsengi geothermal energy plant, which powers the southwestern peninsula where the mining takes place.

"Just today, I came from a meeting with a mining company seeking to buy 18 megawatts," he said.

At the largest of three bitcoin "farms" currently operating within Keflavik — called "Mjolnir" after the hammer of Thor, the Norse god of thunder — high metal fences surround 50 meter-long (164 foot) warehouse buildings stacked with computer rigs.

The data centers here are specially designed to utilize the constant wind on the bare peninsula. Walls are only partial on each side, allowing a draft of cold air to cool down the equipment.

"What we are doing here is like gold mining," said Helmut Rauth, who manages operations for Genesis Mining, a major bitcoin mining company. "We are mining on a large scale and getting the gold out to the people."

Genesis Mining, founded in Germany, moved to Iceland in 2014 when the price of bitcoin fluctuated from $350 to $1000.

Today, one bitcoin is valued at about $8,000, according to tracking site Coindesk, after peaking at almost $19,500 in December.

The currency took a hit in January when China announced it would move to wipe out its bitcoin mining industry, following concerns of excessive electricity consumption.

Rauth said bitcoin should not be singled out as environmentally taxing. Computing power always demands energy, he argues.

"How much energy is needed for credit card transactions and internet research? Cryptocurrencies have the same global impact," he said.

In the capital, Reykjavik, some are more skeptical about bitcoin.

The last time Iceland was an international 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 political turmoil following the crash swept the upstart Pirate Party into Iceland's parliament, where it currently holds 10 percent of seats.

Pirate Party legislator McCarthy has questioned the value of bitcoin mining for Icelandic society, saying residents should consider regulating and taxing the emerging industry.

"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."

  • Associated Categories: Associated Press (AP), AP National News, Top General short headlines, AP Business, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Utilities
© Copyright 2018 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Rio kicks off Carnival parade with anti-establishment tone
There are some Brazilians who aren't likely to find much to enjoy about the start of Rio de Janeiro's world-famous Carnival parades: the mayor, the governor and the president
3:58PM ( 20 minutes ago )
Kenworthy embracing LGBT flag-bearer role in Pyeongchang
US skier Gus Kenworthy is vigorously embracing an unofficial role at the Winter Games as flag-bearer for the LGBT community
3:42PM ( 35 minutes ago )
New gold rush: Energy demands soar in Iceland for bitcoins
Virtual currency mining companies establish base in Iceland
3:37PM ( 41 minutes ago )
Associated Press (AP)
UK official warns Oxfam to hand over all info on sex case
British official warns Oxfam that it may lose government funding if the anti-poverty charity doesn't hand over all the information it has about a sexual misconduct scandal in Haiti.
1:52PM ( 2 hours ago )
States look to lower drug costs, consider Canadian imports
States consider ways to reduce prescription drug costs, including Canadian imports
1:47PM ( 2 hours ago )
Poof! Ivy League glee club's gender restrictions disappear
The Whiffenpoofs, Yale's world famous glee club, is ending its more than century-old tradition of being a male-only a cappella group
1:42PM ( 2 hours ago )
AP National News
The Latest: Russian minister says jet crash had no survivors
Russian President Vladimir Putin has postponed a planned trip to Sochi to closely monitor the investigation of the passenger plane crash outside Moscow that had no survivors
11:12AM ( 5 hours ago )
South Africa's Ramaphosa says power transfer to be finalized
South Africa's deputy president consolidates control of the government, promising to conclude a power transition in which he would succeed President Jacob Zuma
11:07AM ( 5 hours ago )
As Olympics shift to sports, what on Earth just happened?
Let's review: A very odd political weekend in Pyeongchang comes to an end, and the actual Olympics take center stage _ for now, at least
10:36AM ( 5 hours ago )
Top General short headlines
Merkel defends coalition deal against critical party members
German Chancellor Angela Merkel has pushed back against critics within her own conservative party who said the Christian Democrats didn't reach a good coalition deal with the country's main center-left party
2:24PM ( 1 hour ago )
The Latest: Russia: Passengers on crashed plane were locals
Russian officials say all passengers aboard the airliner that has crashed outside Moscow are believed to have been residents of the region that was the plane's destination
10:03AM ( 6 hours ago )
India's Modi in UAE to boost ties with Gulf Arab states
India's Modi in second UAE visit seeking stronger economic, cultural ties with big-spending Gulf Arab states
9:33AM ( 6 hours ago )
AP Business
Even when not at fault, Amtrak can bear cost of accidents
Amtrak may well end up paying for accidents even if it doesn't cause them.
5:52AM ( 10 hours ago )
India, China vie for influence as crisis unfolds in Maldives
As a political crisis plays out in the Maldives, heavyweights China and India are vying for strategic dominance in the picturesque Indian Ocean nation
3:54AM ( 12 hours ago )
Who's at fault in Amtrak crash? Amtrak will pay regardless
Amtrak will likely end up paying crash victims' legal claims with public money _ even if investigators find a private railroad at fault
10:36PM ( 17 hours ago )
AP Business - Economy
Pennsylvania race to test how tax law plays with voters
A Pennsylvania congressional race offers an early test of Democrats' and Republicans' arguments over the new tax law
12:03PM ( 1 day ago )
In Pennsylvania, tax arguments from Dems, GOP get early test
A Pennsylvania congressional race offers an early test of Democrats' and Republicans' arguments over the new tax law
12:39AM ( 1 day ago )
US stocks swing back to gains, Dow up 330 on turbulent day
Wall Street caps day of wild swings with a rally; Dow climbs 330 points
9:07PM ( 1 day ago )
AP Business - Financial Markets
Turkey slams Cyprus for gas search, blocks rig with warships
Turkey's foreign ministry has again criticized the Cyprus government for a "unilateral" offshore hydrocarbons search after Turkish warships prevented a rig from reaching an area off Cyprus where it's scheduled to start exploratory drilling for gas.
5:33AM ( 10 hours ago )
Oklahoma pulling up red carpet offered to wind industry
Amid budget crunch, Oklahoma pulls up red carpet offered to wind industry, now considering new taxes
10:47AM ( 1 day ago )
This week in odd news: Lettuce lizard; Dog and pony show
This week in odd news: Woman says store-bought lettuce had a 3-inch lizard in it; Snow go if it's two days old: Romanian study finds it's safe to eat snow that's a half-day old; Woman finds neighbor's dog taking a ride her one-eyed pony
8:27AM ( 1 day ago )
AP Business - Industries
For US in Syria, end game gets murkier as IS shrinks
The closer the U.S. gets to its original goal in Syria of stamping out the Islamic State group, the murkier the end game becomes
5:22PM ( 2 days ago )
Venezuela election could trigger deeper sanctions, exiles
Analysts say the Venezuelan government decision to plow ahead with presidential elections amid a deepening crisis risks spurring international sanctions targeting the country's oil exports
4:44PM ( 2 days ago )
Dow industrials drop another 1,000 points as selling spreads
Stocks plunged again, sending the Dow industrials down 1,000 points, as investors continued to get out of the market after signs of rising inflation last week.
4:37PM ( 2 days ago )
AP Business - Utilities
Rio kicks off Carnival parade with anti-establishment tone
There are some Brazilians who aren't likely to find much to enjoy about the start of Rio de Janeiro's world-famous Carnival parades: the mayor, the governor and the president
3:58PM ( 20 minutes ago )
Kenworthy embracing LGBT flag-bearer role in Pyeongchang
US skier Gus Kenworthy is vigorously embracing an unofficial role at the Winter Games as flag-bearer for the LGBT community
3:42PM ( 35 minutes ago )
Alex Bowman puts No. 88 on the pole at Daytona
Alex Bowman wasted no time stepping into Dale Earnhardt Jr.'s old ride
3:28PM ( 50 minutes ago )
White House grappling with fallout from aide's resignation
The White House tries to stem the fallout from how it handled a senior aide's resignation after allegations of spousal abuse
3:24PM ( 54 minutes ago )
'Fifty Shades Freed' commands $38.8 million to top charts
"Fifty Shades Freed" has topped the North American box office in its first weekend in theaters
3:22PM ( 56 minutes ago )