First you get the bitcoin, then you get the power outages?

Iceland May Introduce Bitcoin Mining Tax to Counter Soaring Energy Consumption

Iceland May Introduce Bitcoin Mining Tax to Counter Soaring Energy Consumption

Nearly all of Iceland's energy comes from renewable sources and a number of large virtual currency companies have started establishing bases for the energy-sapping task of mining cryptocurrencies.

That's according to Johann Snorri Sigurbergsson, a spokesperson for Icelandic power firm HS Orka.

According to The Associated Press, McCarthy is considering the possible taxation of bitcoin mining firms such as the one in Keflavík. According to Iceland's National Energy Authority, the household energy utilization of Iceland is 340,000, which is not as much as the mining energy utilization.

Bitcoin mining thrives in Iceland, where energy is cheap, and internet connections use super fast fiber-optic networks. As a result, transaction involves an huge number of mathematical calculations, which in turn occupies vast computer server capacity - which requires a lot of electricity.

Bitcoin mining hardware requires a large amount of energy to perform the calculations to find "hashes", which then gives the miner a Bitcoin reward.

"I don't see it stopping quite yet", added Mr Sigurbergsson, referring to data centre projects.

He estimated that the county's homes, in contrast, use around 700 gigawatt hours every year. He claims that he is getting many calls from investors wanting to build centers in Iceland.

But many other analysts say the real figure is likely smaller, and several experts recently told The Washington Post that bitcoin - now the world's biggest cryptocurrency - used no more than 0.14 percent of the world's generated electricity, as of last December. A lot of them are waiting for an opportunity to place their centres there though it is impossible to satisfy all their requests.

The rapid growth has prompted Iceland's Pirate Party lawmaker Smari McCarthy to suggest taxing bitcoin and cryptocurrency mining operations in the country if only to add to the coffers of the island nation. If Iceland approved all of the proposed Bitcoin mining projects, there simply wouldn't be enough electricity to supply them all. "The economics of bitcoin mining mean that most miners need access to reliable and very cheap power on the order of 2 or 3 cents per kilowatt hour.

The value-to-Iceland/value-generated ratio is virtually zero".