As the world wakes to the environmental cost of cryptocurrency mining, an Icelandic hobbyist has stumbled upon a green alternative
Krista Hannesdóttir’s cryptocurrency mining operation is, by her own admission, tiny. But the modest setup, pumping out virtual currency in a small former fishing factory near Iceland’s Keflavík Airport, could help solve one of crypto’s biggest dilemmas.
Cryptocurrency mining requires massive amounts of energy. The perpetual algorithm churning of servers extracting bitcoin uses 22 terawatt-hours (TWh) of energy per year – almost as much as the entire country of Ireland. Iceland’s crypto mining industry, one of the world’s most vibrant thanks to cheap, geothermal energy, saps around 840GWh – more than the homes of the country’s 334,252 citizens.
Politicians and Icelanders are beginning to warn about crypto’s environmental impact, in a country whose ethereal natural beauty brings it over 2.2 million visitors each year. Multinational miners like BitFury and Genesis, both of whom occupy space at Ásbrú, a sprawling former US Air Force base in Keflavík, can only be profitable at large scale, so huge are their electricity demands.
Hannesdóttir, a mathematics teacher by day, has discovered a way to be small and competitive. She pays farmers for their excess geothermal energy, installs crypto mining equipment and uses the machines’ excess power for other uses, like heating. “Farmers have a lot of storage space, so it’s easier for us to move our equipment to their location,” she says. “You can also heat up the storage space, which is quite clean. So generally speaking, it’s reducing rent, and reducing energy cost.”
This “mutually beneficial” relationship allows Hannesdóttir to be profitable without the need to scale: her fishing factory rig, in the small seaside town of Sandgerði, comprises 180 fan-cooled P102 GPU machines, and extracts £7,876-worth of the Ethereum cryptocurrency each month. The building’s owner, whose vintage Ford Mustang sits below the rig, likes that Hannesdóttir’s project keeps his pride and joy warm in the biting Icelandic winter.
Don’t confuse Hannesdóttir, a self-described socialist, for an altruist: ultimately, like almost all crypto miners, the bottom line is paramount. “We want to be profitable, as all companies want to be,” she says. “We want to be [environmentally] useful – if we can.”
At first it wasn’t easy to convince farmers they needed dozens of strange machines whirring away in their barnyards. “We really had to explain what it was, that it’s a machine that makes money and uses energy,” says Hannesdóttir. “People are wary, obviously, because it sounds too good to be true. But in reality it’s really beneficial for us to get energy and space at a lower cost.”
The farmers are keeping quiet about the crypto-riches being generated on their land. The scheme threatens to jeopardise subsidies they receive for geothermal energy use, and the legality of the whole operation is unclear. The shadowy process raises the question of how miners can contribute to anything beyond their own wallets in Iceland.
Jason Scott Katz, founder of Iceland’s Pirate Party, thinks miners should offer more. “We should tax the miners in the cryptocurrency they’re mining,” he says. “That’s way out there but it would be interesting. Or some sort of consumption tax on the electricity because now they’re thinking of damming more places for the miners.”
Hannesdóttir, who speaks with a calculated reticence commensurate with Iceland’s crypto community, began the experiment three years ago, hooking up several GPUs “for fun”. She then began to research crypto’s environmental effects. They aren’t pretty – though still a fraction of the energy consumed by Iceland’s pollutive aluminium smelting sector, the single largest factory for which uses over five times that of the entire crypto market.
And Hannesdóttir is not alone. A handful of projects around the world are attempting to solve crypto’s eco problem. French firm Qarnot has created a heater that mines crypto while warming homes. Last November two builders from Siberia heated a house with two bitcoin mines, operating at a profit of £327 per month.
“Eliminating waste is one of the most significant potential benefits of cryptocurrency, but eco-friendliness is incompatible with the mining component used in ones like bitcoin,” says Colin LeMahieu, creator of Nano, a blockchain payment platform. “The only way a cryptocurrency can be eco-friendly is by building it into the system.”
Hannesdóttir agrees that crypto mining, in its current form, is completely unsustainable. “There is basically no reason to mine, other than the effect of decentralisation.” Perhaps, then, energy exchanges like hers can help crypto mining achieve the lofty goal set by bitcoin creator Satoshi Nakamoto: to change the way the world works, without harming it in the process.