Deep in the rural Iceland right at the heart of the arctic, lie some of the world’s largest Bitcoin mining facilities. With the recent surge in the Bitcoin currency, miners are now at a round the clock production to cater the growing market of Bitcoin.
An obvious question then arises, what is bitcoin mining? To understand mining, you first have to know that Bitcoin runs on a block-chain system. Miners are people who verify and add transactions to the block so as to keep the whole system running. These people are rewarded in Bitcoins.
Mining Bitcoin can be done at home but profits are low unless maybe one is harmed with the right infrastructure.
As a result, many companies have come up with multi-dollar investment and infrastructure for mining Bitcoins. They erect big data centers that take up an insanely large amount of power to solve incredibly hard algorithms thus needed for Bitcoins to be mined.
Why Iceland is the new hub for mining Bitcoins
Iceland has become a hub for these data companies for a number of reasons.
For one, the small country enjoys a cold climate (being in the North Pole and all) and this is extremely vital for mining companies since the computing process involved in mining bitcoin generates a lot of heat. Cooling the machines naturally cuts the expenditure costs ultimately resulting in greater profit margins. The free cold air is just piped to the gigantic servers to cool them.
The country also boasts an abundance of cheap and stable renewable energy from geothermal wells and hydroelectric pools which is advantageous to the companies since the process takes up a lot of electricity. Apart from reducing energy costs by up to 83%, these two factors also result in lower carbon emissions, something that has become increasingly important to most business companies today.
Genesis and BitMine: Bitcoin cloud mining services
One big company based in Iceland is the Genesis mining. Genesis is a cloud mining company that allow customers to mine Bitcoins using their infrastructure for a fee. This way, there is no need to invest in expensive mining equipment.
Genesis mines both Bitcoin and Ethereum and is thought to be one of Iceland’s biggest power consumer.
Another big player in Iceland in bitcoin mining is BitMine whose cloud hashing model allows users to benefit by offering contracts that return some piece of the crypto currency produced. They are currently operating at one petahash per second which generates up to 4,000 Bitcoins per month valued at around $78M from current exchange prices.
Why Bitcoin is illegal in Iceland: the Foreign Exchange Act
Ironically, trading Bitcoin is illegal in Iceland according to their Foreign Exchange Act, a rule among others set by the Icelandic government designed to stop capital flight packaged in Bitcoins.
Iceland had just risen from the ashes of a financial crisis like the proverbial phoenix and it owed its new found success to the implementation of stringent measures on banking and money systems to address the crisis.
Some included high taxes on residents and travelers and control on bankers’ bonuses just to mention a few. These new laws enabled Icelanders to mine and own bitcoin, but not treat it as a currency in their country.
In conclusion, due to its favorable climatic conditions, Iceland has become the most cost effective area to set up a bitcoin mining company. Anyone looking to invest in the mining business should definitely consider Iceland as their head quarters.