- Prime Minister (PM) Katrín Jakobsdóttir wants to pivot Iceland’s energy utilization on farming instead of Bitcoin (BTC) mining firms.
- The Nordic island country aims to increase its food sustainability and ensure fair power distribution among households and industries.
Iceland PM Wants to Prioritize Farming Instead of Bitcoin Mining
Iceland has stood as a strategic location for Bitcoin mining over the years. It has been considered a haven for this industry due to its abundance of renewable and cheap energy coupled with a favorable climate for cooling mining rigs. However, the rising number of crypto mining operators in the area is already becoming a cause of concern for its leadership.
Jakobsdóttir, who’s been serving as the nation’s PM since 2017, stated in an interview with the Financial Times that Iceland imports 50% of its vegetable supply and nearly 100% of its grain supply. This comes amid its energy-rich landscape, which puts it in the lead among the top 10 energy producers worldwide.
Based on Luxor’s 2021 estimates, Iceland produces over 50 MWh of electricity per capita. Approximately 80% of these come from hydroelectricity plants and 20% are generated by geothermal sources. Meanwhile, the country’s population is only approximately 370,000.
From these figures, roughly 120 MWh of power is directed to Bitcoin mining facilities. Jakobsdóttir believes the demand will further increase as Bitcoin miners are now reportedly upgrading their equipment to intensify their operations on the way to the halving around April 20.
Although it is generally known that Iceland’s climate and terrain only hold limited agricultural potential, its teeming energy supply could be converted into facilities capable of sustaining temperatures ideal for various crops. The country’s PM showed particular interest in corn production to mitigate its food dependency on imports, especially now that the threat of trade disruptions is becoming more imminent due to global conflicts. This remains a challenge though as they compete for energy allocation with the growing number of Bitcoin miners.
Bitcoin Halving
The fourth Bitcoin halving next month serves as a bullish event for investors as it tightens the supply of the digital asset amid its growing institutional demand. This will reduce Bitcoin mining rewards from the present 6.25 BTC per block to 3.125 BTC. Consequently, the lower rewards will reduce the existing average daily production of BTC from 900 to 450 units.
Taking the current investment climate for Bitcoin into consideration, the lower supply could further push the prices up due to the massive buying pressure created by its widening institutional adoption, specially by spot Bitcoin exchange-traded fund (ETF) issuers. This, in turn, will incentivize Bitcoin miners to step up their game by increasing their hashrate to boost their chances of securing the limited block rewards.
With the dilemma it is facing, if Iceland suddenly decides to limit the activities or impose stricter tariffs toward Bitcoin mining operations, these firms will be forced to relocate elsewhere and the country would risk missing out on this very lucrative industry.