Almost all of Iceland’s energy comes from renewable sources and a number of large virtual currency companies have started establishing bases for the energy-sapping task of mining cryptocurrencies.
But the demand for mining bases has sparked a dire warning with one firm insisting Iceland will not have enough energy for upcoming crypto mining projects.
Johann Snorri Sigurbergsson, a spokesman for Icelandic energy firm HS Orka, said there were a number of potential customers keen to join the country’s growing ranks of cryptocurrency miners.
He said: “If all these projects are realised, we won’t have enough energy for it.
“What we’re seeing now is, you can almost call it exponential growth, I think, in the energy consumption of data centres.
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“I don’t see it stopping quite yet.”
Mr Sigurbergsson expects bitcoin mining operations will use around 840 gigawatt hours of electricity to supply data centre computers and cooling systems, for example.
By contrast, he estimated that Iceland’s homes use around 700 gigawatt hours every year.
The sudden growth of the new industry prompted MP Smari McCarthy of Iceland’s Pirate Party to suggest taxing the profits of bitcoin mines.
He said: ”Under normal circumstances, companies that are creating value in Iceland pay a certain amount of tax to the government.
“These companies are not doing that, and we might want to ask ourselves whether they should.”
The initiative is likely to be popular with Icelanders, who are sceptical of speculative financial ventures after the 2008 banking crash.
Relative to the size of Iceland, the 2008 crash was the largest collapse experienced by any country in economic history.
Mr McCarthy questioned whether there are any benefits to Iceland by allowing cryptocurrency mining bases to be established without taxation.
He said: “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.
“That can’t be good.”