How Could Crypto Miners Play Havoc in Iceland’s Economy?
It is quite natural that when a particular industry is booming, the country’s economy also stands to gain. Similarly, if the boom bursts it will have serious repercussions on the state of the economy. This is the situation that is worrying the government in Iceland, which is known to encourage miners of cryptocurrency due to the availability of cheap power. The prices of most of the digital coins have plunged after the December high, and that causes a big worry among the officials.
Currently, opinion differs on the emerging cryptocurrencies with some pointing a bleak future while others expect it to be the future. Iceland is worried as to what will happen if the current boom ends abruptly. Such a situation would be devastating for the country, which is still to come out of the wounds of financial imbroglio crippling its economy about ten years back. Its finance minister, Bjarni Benediktsson, indicated that the threat from digital coin sector could not be removed as a risk factor though the country has only 334,252 inhabitants, wired.co.uk reported.
As far as miners of the virtual asset, Iceland is a data center have since there is plenty of geothermal, as well as, renewable hydropower apart from stable temperatures. The climate is a key factor in offering natural cooling effect for the hosted equipment. Significantly, the country’s major part of energy comes from renewable sources driven by volcanoes. These are necessary factors for mining any digital coin, be it bitcoin or ethereum because of extremely energy-intensive nature. Therefore, it is no secret that the country gets enough requests.
Verne Global data center’s security and quality manager, Styrmir Hafliðason indicated about multiple requests from miners per week. However, he disclosed that there was no alternative but to ignore such requests since his data center could not take up the capacity scale its server farms at the required speed to mine digital currencies. That also demonstrated the constraints side of the country.
The ambiguity and the highly volatile nature of virtual currencies price are bothering several sectors like politicians, bankers, and regulators. They are pondering as for whether to tame the sector and at the same time wonder whether the bonanza could turn out to be next universal risk. It is not an easy task to gauge the sector that is not only nascent but also involves various other factors.
However, Hafliðason continues to remain bullish on the cryptocurrency and mining. He is also not worried about any sudden crackdown on digital coin sector by either Europe or any other regulators. He thinks that it would not have any effect on Iceland as a whole since virtual currency is not part of the real economy. On the other hand, they are held in private data centers as zeros.
Interestingly, approximately 90 percent of the power consumption of data center was confined to the cryptocurrencies mining last year. In the current year too, it is predicted to grow further. KPMG thinks that it would become a big risk for the domestic industry since the volatility makes vulnerable to disruption.