Bitcoin’s green Nordic haven running out of surplus electricity

19 April, 2021 12:00 AM printer

BEIJING: The Nordic region is losing its edge in green Bitcoin mining, just as the industry faces growing scrutiny for its carbon emissions and everyone from Elon Musk to mom-and-pop investors pile in.

Iceland, Sweden and Norway have been popular mining locations because of an abundance of geothermal, hydro and wind power. China, where most coins are mined, relies mainly on coal. That Nordic power surplus is set to dwindle as aluminum smelters, oil rigs and steel makers thirst for renewable energy, report agencies.

“There could be very little excess energy in 2021 and 2022,” said Hordur Arnarson, chief executive at Landsvirkjun, Iceland’s national utility. “Because of the climate issues we see a lot of very interesting segments that are growing rapidly and several of them need electricity.”

The coins are mined by computers that process complex algorithms in halls as big as airport hangars. That makes electricity one of the key inputs, consuming as much power as thousands of households. And it keeps growing. Bitcoin mining now uses 66 times more electricity than in 2015 and carbon emissions from the process may face increasing regulation, Citigroup said in a recent report.

Emissions from mining coins in China are expected to peak in 2024, releasing as much carbon dioxide into the atmosphere as all of Italy, according to a study published in Nature Communications.

Iceland was the pioneer in green mining. Until four years ago, it hosted as much as 8 per cent of global Bitcoin production, the Icelandic Blockchain Foundation said, a figure that’s now down to less than 2 per cent. The University of Cambridge put the contribution even lower at 0.35 per cent in April 2020, the most recent data available. By comparison, China accounted for 65 per cent then.

Iceland’s biggest electricity consumers are the giant smelters built decades ago to benefit from the cheap power. With aluminum prices surging, plants owned by Rio Tinto and others will consume more electricity after a slowdown in 2020, according to Landsvirkjun.

It’s unclear exactly how many cryptocurrency miners operate in the region. Hive Blockchain Technologies from Canada has expanded mining at home as well as in Iceland and Sweden this year. Hong Kong-listed Genesis Mining has facilities in Sweden and Iceland. Bitfury Holding has also been active on the volcanic island. None of them responded to questions about the region’s future role.

Gisli Kr. Katrinarson, chief commercial officer at AtNorth, Iceland’s biggest data center operator and home to some miners, says he does not see an energy shortage.

As Bitcoin sailed through $60,000 for the first time this month, Daniel Fannar Jonsson, chief executive at new mining company GreenBlocks, is bullish.