Iceland might tax cryptocurrency miners

Iceland might tax cryptocurrency miners

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Iceland, whose electricity is almost entirely produced from renewable sources (hydro and geothermal), might tax the profits of the cryptocurrency miners in the country, as per a comment of Smari McCarthy, an MP from the Pirate Party, quoted by AP.

“Under normal circumstances, companies that are creating value in Iceland pay a certain amount of tax to the government,” McCarthy told The Associated Press. “These companies are not doing that, and we might want to ask ourselves whether they should.”

Besides, the Icelanders have become quite skeptical of the financial industry after the bank collapse in 2008, after which they sent 29 top bankers to jail for fraud and market manipulation.

“We are spending tens or maybe hundreds of megawatts on producing something that has no tangible existence and no real use for humans outside the realm of financial speculation,” McCarthy said, questioning the value of bitcoin mining for Icelandic society. “That can’t be good.”

According to recent data, it is expected that this year Iceland will use more electricity to mine cryptocurrencies, than to power its homes.

Johann Snorri Sigurbergsson, a business development manager at the energy company Hitaveita Sudurnesja, said he expected Iceland’s virtual currency mining to double its energy consumption to about 100 megawatts this year. That is more than households use on the island nation of 340,000, according to Iceland’s National Energy Authority.

With an abundance of relatively cheap and “green” electricity, Iceland has been quite attractive for energy-hungry industries like aluminum and iron ore smelting and now for cryptocurrency mines, as well. In addition to the energy, Iceland is also attractive because of its cool climate, which allows for natural cooling of the facilities.

In the past few months, the soaring prices of cryptocurrencies, whose algorithms get more and more complicated and energy consuming, have driven many mining facilities to move to Iceland. According to Sigurbergsson, the influx of e-mails inquiring about electricity prices of Hitaveita Sudurnesja and the available quantities, is constant.

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