Energy riches fuel bitcoin craze for speculation-shy Iceland

Posted: February 12, 2018 by oldbrew in Energy, geothermal, News
Tags: , ,

Bitcoin [image credit: BBC]

Renewable energy has an unwelcome customer: ‘Bitcoin emits the equivalent of 17.7 million tons of carbon dioxide every year’ according to one recent report. Unless or until its bubble bursts, that figure is expected to rise.

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, says AP News.

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.

Continued here.

  1. ivan says:

    Does it really matter how much CO2 is produced since we are seeing the benefits of increased plant and food production?

    Maybe one day the church of climatology will see the error of their IPCC writings and actually look at the real science, not their wishful thinking.

    Crypto currencies are the results of people losing confidence in the fiat currencies of the national banks as well as them not being happy with the amounts of their money (tax) the governments are wasting on such things as climate change.

  2. Curious George says:

    “The equivalent of 17.7 million tons of carbon dioxide” .. by “renewable” energy. Far fetched.

  3. oldbrew says:

    George – that’s the worldwide figure for Bitcoin energy use.
    – – –
    Bitcoin could cost us our clean-energy future
    By Eric Holthaus on Dec 5, 2017

    Today, each bitcoin transaction requires the same amount of energy used to power nine homes in the U.S. for one day. And miners are constantly installing more and faster computers. Already, the aggregate computing power of the bitcoin network is nearly 100,000 times larger than the world’s 500 fastest supercomputers combined.

    By July 2019, the bitcoin network will require more electricity than the entire United States currently uses. By February 2020, it will use as much electricity as the entire world does today.

    This is an unsustainable trajectory. It simply can’t continue.
    . . .
    It’s certain that the increasing energy burden of bitcoin transactions will divert progress from electrifying the world and reducing global carbon emissions. In fact, I’d guess it probably already has. The only question at this point is: by how much?
    – – –
    Something to talk about at the next fossil-fuelled IPCC climate conference 😎

  4. The Badger says:

    Bitcoin is used for many illegal and immoral activities. Many of the exchanges are run by dishonest people and many exchanges in the past have folded and run off with customers money. Alternative cryptocurrencies are often started as downright scams with premining and pump/dump scenarios on exchanges.
    Numerous bitcoin miners on a small scale are stealing electricity. Some on a larger scale are doing the same.
    In light of all this I would be interested to know what procedures or systems are in place in Iceland to ensure that the Bitcoin mining operations do not default on their power bills when the crypto coins crash (as is expected in many quarters) and/or do not somehow “cheat” the metering equipment.
    If it was me I would have a secured duplicate metering facility, payment for electricity IN ADVANCE and a substantial security bond equal to, say, 1 years worth of kWHrs. The risks in not doing so are quite high for this kind of operation and these kind of people.
    One might also have to look at other possible risks such as fire, pollution after a fire, insurance fraud and so on.

  5. stpaulchuck says:

    I hope for at least a crash of large proportions. I need a GPU array for a neural net I want to build but it’s pretty costly these days. I figure a deep and long drop will push a number of these small outfits out of the mining business and their equipment will go on the market at decent prices.

  6. stpaulchuck says:

    ivan says: February 12, 2018 at 2:14 pm
    Does it really matter how much CO2 is produced since we are seeing the benefits of increased plant and food production?

    Ivan, the issue is NEVER the issue. This is about money and control of the people. Please read UN Agenda 21 if you haven’t yet. Scary stuff. All the idiots running around the websphere raving about the Satanic Gases are merely the ‘useful idiots’.

  7. oldbrew says:

    Salon magazine mines crypto-cash with readers’ PCs

    If a reader chooses to block its advertising, US publication Salon will use that person’s computer to mine for Monero, a cryptocurrency similar to Bitcoin.

    Creating new tokens of a cryptocurrency typically requires complex calculations that use up a lot of computing power.

    Salon told readers: “We intend to use a small percentage of your spare processing power to contribute to the advancement of technological discovery, evolution and innovation.”

    Or the advancement of their income :/

  8. oldbrew says:

    Millions of Android users are at risk from ‘drive-by’ cryptomining
    Mark Jansen
    Digital Trends•15 February 2018

    By redirecting web traffic to a specific address, a device’s capabilities are hijacked by a bit of JavaScript code and harnessed to mine the cryptocurrency Monero. While this may seem like a relatively harmless — if ethically questionable — way of utilizing otherwise unused resources to generate wealth, the process that hijacks your device ratchets the CPU’s functions up to 100 percent and keeps them there. If kept up for long enough, this sort of constant usage can heavily damage a smartphone’s internal components, leading to potentially expensive repairs — or worse, a whole new device. Additionally, this process takes place without consent, raising concerns over user privacy.

  9. oldbrew says:

    BBC: Crypto-currency craze ‘hinders search for alien life’

    Seti (Search for Extraterrestrial Intelligence) researchers want to expand operations at two observatories.

    However, they have found that key computer chips are in short supply.

    “We’d like to use the latest GPUs [graphics processing units]… and we can’t get ’em,” said Dan Werthimer.

    Demand for GPUs has soared recently thanks to crypto-currency mining.

  10. oldbrew says:

    WUWT spotlights another way to make money out of Bitcoin…tax it.

    Californian Democrat Congressman: Bitcoin Needs a Carbon Tax
    Eric Worrall / 2 hours ago February 17, 2018

    The mind boggling energy burn required to verify each bitcoin payment or currency transfer is finally attracting the attention of Democrat Party climate advocates.

  11. oldbrew says:


    Ministry wants cryptocurrency farm in Murmansk
    February 19, 2018

    The region has the necessary cheap electricity needed, Deputy Minister Vyacheslav Kravchenko says.

    Since Bitcoin was established in 2009, more than thousand other digital currencies have been established. In cryptocurrency networks, mining is the validation of transactions, and the crypto currencies can be “mined” through specialized “farms”.

    Crypto-farms have recently popped up on numerous locations. Energy consumption is huge and cold climate and cheap electricity prices is a major benefit. Few years ago, company Genesis Mining built a major farm in Iceland.

    Russian authorities until recently expressed reluctancy to open up for cryptocurrency development in the country. However in late 2017, the stance shifted and President Putin even requested the establishment of a separate Russian cryptocurrency, the «cryptoruble».

  12. oldbrew says:

    Why energy-sapping bitcoin mining is here to stay
    February 22, 2018

    The enormous use of energy needed to mine bitcoin and other cryptocurrencies is proving to be very contentious, but alternative methods pose far too much of a security risk.

    The recent warning that electricity use at bitcoin mining facilities in Iceland may exceed that consumed annually by the country’s homes, which could in turn lead to a potential energy shortage, was slightly alarmist in tone. But it showcases the huge amount of computational power needed to mine cryptocurrencies.

    Is the current cryptocurrency mining process really as wasteful and “useless” as critics say, and is it in need of a more efficient and cleaner system?

    The current mining process is indeed resource-intensive and wasteful, but there is no magic fix in sight. Many would argue that it’s precisely the “useless” nature of cryptocurrency mining that keeps the system secure.

    Many would argue that it’s precisely the “useless” nature of cryptocurrency mining that keeps the system secure

    They might not argue that if their own home ran out of power due to bitcoin mining :/

  13. oldbrew says:

    Bitcoin heist: 600 powerful computers stolen in Iceland
    March 2, 2018

    Some 600 computers used to “mine” bitcoin and other virtual currencies have been stolen from data centers in Iceland in what police say is the biggest series of thefts ever in the North Atlantic island nation.

    Some 11 people were arrested, including a security guard, in what Icelandic media have dubbed the “Big Bitcoin Heist.” A judge at the Reykjanes District Court on Friday ordered two people to remain in custody.

    The powerful computers, which have not yet been found, are worth almost $2 million. But if the stolen equipment is used for its original purpose—to create new bitcoins—the thieves could turn a massive profit in an untraceable currency without ever selling the items.

    “This is a grand theft on a scale unseen before,” said Olafur Helgi Kjartansson, the police commissioner on the southwestern Reykjanes peninsula, where two of the burglaries took place. “Everything points to this being a highly organized crime.”

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