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Oil Should Stay In Triple Digits: Analyst

Iceland Cuts Electricity To Crypto Miners Amid Power Crunch

Due to low hydropower generation, Iceland has seen a shortage of electricity supply in recent days to the point where its biggest utility curtailed power to some industrial activities, data centers, and cryptocurrency mining.

Iceland generates nearly 100 percent of its electricity from renewable energy sources, with hydropower generation accounting for around 73 percent of power supply and geothermal power representing the other 27 percent of electricity generation.

This week, however, low levels of hydro reservoirs, a fault at one power station, and a delay in obtaining electricity from a third-party provider led to the reduction—effective immediately—of electricity to data centers, aluminum smelters, and fish meal factories, the national power company of Iceland, Landsvirkjun, said in a statement on Tuesday.

Landsvirkjun is also rejecting all requests from new customers for cryptocurrency mining, the company added.

Apart from the low hydro levels and issues at a power plant, record electricity demand in recent weeks has also played a part in the decision to reduce supply to industrial customers and data centers, Tinna Traustadottir, executive vice president of sales and customer service at Landsvirkjun, told Bloomberg.

Crypto mining operations are large in Iceland, where 100 percent of the electricity comes from hydro or geothermal power. A total of 8 percent of all Bitcoins have been mined in Iceland, according to the Icelandic Blockchain Foundation cited by DW.

But the large power consumption of cryptocurrency mining—although it could be considered ‘green’ in Iceland because of the 100-percent renewable electricity supply—is further straining the grid when demand is high and hydro resource levels low, as is the case this week.  

Iceland is not the only country to reduce power for crypto activities. Kazakhstan, for example, has struggled with an energy crunch and has recently started to ration electricity to the country’s biggest consumers, likely targeting cryptocurrency mining operations.   

By Charles Kennedy for Oilprice.com

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