For some time, Bitcoin mining operations have sought and found refuge in Iceland, one of the few places in the world with affordable energy.
Iceland’s massive reserves of renewable energy have given it an abundance of electricity.
In a bid to reduce operational costs, which can be significant in the energy-intensive process of Bitcoin mining, miners have been setting up shop in the country for a while now.
Bitcoin mining is largely a continuous process and therefore, a constant supply of energy is necessary. But since Bitcoin mining equipment can consume staggering amounts of energy, finding cheap power is the only way to keep operational costs low.
The problem is, because it takes a lot of energy to run a Bitcoin mining setup, Iceland has begun to feel the toll.
A worrying trend released by the country’s National Energy Authority indicates that Bitcoin miners will be consuming close to 100 megawatts by the end of 2018—a figure that is larger than the collective energy consumption of all 340,000 households in Iceland.
Smari McCarthy, a prominent figure in Iceland’s Pirate Party, stepped forward with the idea to establish a few economic ground rules to be applied to Bitcoin miners.
According to him, Bitcoin mining is no different from any of the other operations that have their profits subject to tax regulations by the Icelandic government.
Furthermore, the rising energy consumption indicates that Iceland may soon have to create more renewable energy sources to sustain the influx, and that is a costly affair.
McCarthy’s sentiments were possibly echoed by the majority of Icelanders, who believe companies that generate profits in the nation should be rightly regulated.
Speaking to The Associated Press, McCarthy openly voiced his concerns about Bitcoin’s lack of tangibility and use outside the financial field.
Spending hundreds of megawatts in energy to produce digital currency, according to him, was not the wisest allocation of resources.
The fact that Bitcoin mining could consume more power than all the households in the country was, perhaps, a wakeup call.
The energy demand by cryptocurrency miners is only going to grow as Bitcoin’s value rises. Considering that no one can correctly predict its future trends, there is no telling when the demand for affordable energy will go down.
This is why many believe it’s a crisis waiting to happen, and one that McCarthy has seen early enough to propose preventative measures.
Applying tax regulations to Bitcoin miners will certainly not be the most popular outcome for this conundrum, but if it comes to pass, Iceland tax authorities assert that it will be for the greater good.
Regulating the mining of Bitcoin wi`ll reduce the energy consumption while generating revenue to build more energy plants.
But Iceland has no preexisting laws to regulate digital currency and everything surrounding it. Thus far, it is impossible to speculate how this will resolve.