Bitcoin mining is an extremely energy intensive business and the North American Bitcoin miners are constantly seeking cheap renewable and sustainable energy located in other states and countries. Many are even prepared to set up operations in other continents to gain access to such power.
Bitfarms (BITF), a Canadian Bitcoin miner, has over the last 18 months extended its mining operations to South America, with sites in Argentina and Paraguay. Marathon Digital (MARA) recently signed a joint venture agreement, and are already operating in Abu Dhabi. Company executives have also recently traveled to consider mining opportunities in Africa.
Hive Digital (HIVE), another Canadian miner, also has mining operations in Iceland and Sweden. Bit Digital (BTBT) with operations across the U.S. and Canada, is the latest Bitcoin miner to venture overseas and has recently started a further operation in Iceland.
Why Iceland is perfect for Bitcoin Mining
Iceland is a volcanic island in Europe, with an abundance of cheap and renewable energy in the form of geothermal and hydroelectric power, both of which are very cheap and environmentally friendly. Nearly 100% of the island’s power grid comes from carbon free sources, which appeals to Bitcoin miners The colder climates even help to keep equipment cool, reducing the amount of energy used.
With a stable government, low business taxes, and a strong economy in place, Iceland provides an attractive location to Bitcoin miners.
Iceland produces more energy than it currently requires. A major issue for the country is how to actually use all of their excess energy. Bitcoin miners are already making use of this excess energy, reducing their carbon footprint and making the country the biggest Bitcoin producer per capita in the world.
Bitcoin miners are essentially buying excess power, or the ‘power of last resort’. This is power that no other industry wants to buy. Miners are unique in that they can switch on and off power usage at will, all in a matter of seconds.
Geothermal Energy
Iceland is located on the Mid-Atlantic Ridge, a tectonic boundary where the North American and Eurasian plates meet, resulting in a high level of geothermal activity, with magma and heat sources relatively close to the Earth's surface, providing geothermal reservoirs of hot water and steam beneath its surface.
To harness the geothermal energy, wells are drilled deep into these geothermal reservoirs, where hot water and steam at high temperatures and pressures are produced and brought to the surface through pipes.
The high-temperature steam extracted from geothermal wells is used to drive turbines in geothermal power plants. These turbines generate electricity, which is then distributed to the electrical grid, producing a significant portion of the country's electricity.
Bit Digital has been focused on delivering a high proportion of its energy from renewable sources. 99% of their entire fleet is carbon free, primarily due to the use of these types of energy.
Bitcoin mIning in the United Arab Emirates (UAE)
With temperatures soaring above 100 degrees Fahrenheit throughout the summer, the Middle East was probably the last place on earth you’d expect a Bitcoin miner to consider setting up operations.
A large amount of energy, totalling 4 Gigawatts (GW), is required to provide air conditioning during these hot months, which then significantly reduces in the winter months to 1GW.
This provides an opportunity to Bitcoin miners to utilize some of the excess energy during the cooler months, helping balance the power grid and bring some much needed revenues into the country allowing the government to continue to offer low cost energy to domestic users.
On May 9, 2023 Marathon Digital announced a partnership within the Abu Dhabi Global Markets (ADGM) with digital assets infrastructure company Zero Two to create two large-scale immersion Bitcoin-mining sites, as well as developed proprietary mining software. The larger 200 MW facility is situated in Masdar City, with another 50 MW facility located in the port zone of Mina Zayed.
The Joint Venture, of which Marathon Digital has a 20% stake, commenced mining in July and produced 16.8 Bitcoin in the first month, with a hash rate of 1.2 EH/s. In September the operation produced 50 Bitcoin, of which approximately 10 Bitcoin is the company’s share.
Construction is nearing completion at the second, larger site, at which point, the project expects to be achieving the full 7.0 EH/s to be online, by the end of 2023.
Bitcoin Halving 2024
The next halving is due to occur in April 2024, at which point Bitcoin rewards for mining will reduce by 50% from 6.25 to 3.125 Bitcoin, per block. Bitcoin miners will already be planning for this event by focusing on their current costs, which will need to be as lean as possible, and ensuring they have the most efficient mining fleet at the ready.
Many of the North American listed Bitcoin miners have already proved they are prepared to relocate and operate in areas that have excess cheap renewable energy available.
