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Bitcoin: Is Scandinavia’s cryptoboom coming to an end?

, May 6, 2021, 0 Comments

Europe’s Nordic countries are popular for sustainable cryptomining because electricity there is cheap and mainly comes from renewable sources. But other industries also want to take advantage of this green energy.

bitcoin-cryptocurrencies-marketexpress-inBitcoin is a real electricity guzzler. Depending on the estimate, the global energy required for mining the most successful cryptocurrency is between 67 and 121 terawatt-hours a year. That is about half of what all data centers — for the internet, cloud computing, the entire financial sector and all other cryptocurrencies — consume. Germany’s entire annual power consumption is just over 500 terawatt-hours.

That is why Bitcoin and the entire blockchain technology on which it is based are suspected of harming the climate. Especially since currently about 80% of the hash rate, the combined computing power for mining and processing Bitcoins, is provided in Asian countries. And none of them generates more than a quarter of its electricity from renewable sources. In addition, another combined 15% of the computing power comes from Russia and the US, which are not exactly pioneers in green energy.

Sustainable mining in the far north?

That’s why Bitcoin mining in Scandinavia is considered a green way out of this dilemma. Iceland was one of the trailblazing countries. According to the Icelandic Blockchain Foundation, 8% of all Bitcoins have been mined there. Using geothermal and hydroelectric power, state-owned Landsvirkjun and other energy companies generate nearly 100% of the island’s electricity.

It’s so cheap that for years there has been talk of laying an undersea cable to the UK to deliver green power to Europe, where it’s much more expensive. Instead, the decision was made to attract energy-intensive industries to the island, including aluminum smelters and the blockchain industry.

One of the first companies to build a Bitcoin mine in Iceland was Genesis Mining in 2013. Its founders include Philip Salter, who is now chief technical officer of affiliate Genesis Digital Assets and can sum up the island nation’s advantages in one line. “There are no political or geopolitical risks, the infrastructure is very reliable and the electricity is sustainable and incredibly cheap,” he told DW.

Iceland is reaching its limits

Meanwhile, however, the country’s generation capacity is reaching its limits: “There could be very little excess energy in 2021 and 2022,” Landsvirkjun CEO Hordur Arnarson told Bloomberg recently. Therefore, the cost advantage of Iceland’s electricity is on the line.

In recent years, the cryptocurrency mining industry has already grown much faster elsewhere. Today Iceland’s global share of Bitcoin mining has fallen below 2% or even 1% depending on who’s counting. Mining pioneer Salter says he can understand why Icelanders don’t want to sacrifice their unique natural resources for more power capacity. Besides, there are alternatives.

The Scandinavian mainland is also a popular location for mining companies. Norway has already overtaken Iceland in terms of hash rates. Salter thinks that Sweden also has what it takes to become a hotspot for Bitcoin prospectors. “Especially in the north of the country, where we also operate a mining farm, the conditions are comparable to those in Iceland,” he said.

Is Scandinavia in for the same fate?

Renewable energy is available in such large quantities in Scandinavia that some countries hardly know what to do with it. “The Nordic region has for the front year an expected oversupply of power of nearly 30 terawatt-hours a year under average weather conditions,” Olav Johan Botnet, an energy analyst at Norwegian market researcher Volue Insight, told DW.

However, the demand for electricity from heavy industry is also growing there, especially for the production of “green steel.” Here, iron is processed into steel using renewable electricity and green hydrogen instead of coal. Sustainable hydrogen is also produced from water using renewable electricity.

Two consortia have big plans in northern Sweden. In the small town of Boden, which is also home to the Genesis Bitcoin mine, and in the nearby port city of Lulea, two huge plants are to be built by the end of the decade.

The 15 terawatt-hours of electricity already generated annually by hydroelectric plants and the 10 terawatt-hours to be generated by Europe’s soon-to-be largest onshore wind farm are not expected to be enough to meet demand.