Will this European island become the new paradise for Bitcoin mining?

Iceland has become a haven for Bitcoin miners. The reasons include regulatory pressure in other countries and cheap electricity prices on the island.

Iceland's bitcoin mining industry consumes about 120 megawatts, according to a research report by cryptomining service provider Luxor Technologies. With a population of only 370,000, Iceland is "the country with the highest bitcoin mining density" on the planet.

Industry on the volcanic island is powered almost exclusively by hydropower and geothermal energy, of which a surplus was generated in the past. In addition, the cool climate favors the operation of mining facilities.

"Until the mining industry emerged here in Iceland, most of that non-guaranteed power [the overproduced power] was not a marketable product," Daniel Jonsson, CEO of GreenBlocks, an Icelandic data center service provider that specializes in using renewable energy for mining and mining Blockchain validation, told Bloomberg.

The non-guaranteed power is essentially the excess but "unstable" energy generated by Iceland's power grid that aluminum smelters, greenhouses and homes do not want to buy, Jonsson said.

Another advantage "of Iceland's electricity system is that it is completely isolated from the rest of the world, protecting it from global electricity price inflation," Luxor notes in its report. Miners depend on cheap electricity to be profitable. Since renewable energy has high overproduction, miners are increasingly settling in these areas.