Bitcoin mining is a notoriously energy-intensive process. Various estimates suggest the global Bitcoin network consumes between 67 and 121 terawatt-hours (TWh) of electricity annually. To put that in perspective, one terawatt-hour equals one billion kilowatt-hours. This staggering consumption represents roughly half the total energy used by the entire data industry, which includes internet infrastructure, cloud computing, financial systems, and other cryptocurrencies. For comparison, Germany’s total annual electricity consumption is just over 500 TWh.
This massive energy footprint has placed Bitcoin and its underlying blockchain technology under intense scrutiny for their potential climate impact. A significant concern is the geographic concentration of mining activity: approximately 80% of the global hash rate—the total computational power used to mine and process transactions—is located in Asian countries. None of these nations generate more than a quarter of their electricity from renewable sources. An additional 15% of the hash rate comes from Russia and the United States, which are also not leaders in green energy adoption.
The Nordic Appeal: Sustainable Mining in the Far North?
In this context, the Nordic regions have emerged as a potential green alternative for Bitcoin mining. Iceland was one of the pioneers in this space. According to the Iceland Blockchain Foundation, at its peak, the country was responsible for mining about 8% of all Bitcoin. Utilizing abundant geothermal and hydroelectric power, the state-owned utility Landsvirkjun and other energy providers generate almost 100% of the nation's electricity from renewable sources.
Iceland's electricity has been so inexpensive that there have been ongoing discussions about laying a submarine cable to the United Kingdom to export surplus green energy and help address high power costs in Europe. This affordability has attracted energy-intensive industries, including aluminum smelting and blockchain operations, to set up shop in Iceland.
Genesis Mining, a major Bitcoin mining company, began its operations in Iceland in 2013. Philip Salter, the company's co-founder and Chief Technical Officer, highlighted the country's advantages: "There is no domestic political or geopolitical risk, the infrastructure is extremely reliable, and the electricity is sustainably produced and unbelievably cheap."
Iceland’s Energy Advantage Diminishes
However, Iceland's energy production capacity is nearing its limit. "Energy production reached a saturation point in 2021 and 2022," Hordur Arnarson, CEO of Landsvirkjun, recently told Bloomberg. Consequently, Iceland's once-significant cost advantage for electricity is largely diminished.
The global cryptocurrency mining industry has expanded rapidly in other regions. Today, Iceland's share of the global Bitcoin hash rate has fallen to below 2%, perhaps even as low as 1%. Salter says he understands why Icelanders might be reluctant to sacrifice their unique natural landscapes solely to expand energy production for more mining.
Scandinavia: The New Mining Hotspot
The Scandinavian Peninsula has now become a hotter hotspot for mining. Norway has already surpassed Iceland in terms of total computational power dedicated to Bitcoin. Salter believes Sweden also possesses the right conditions to compete in the industry. "Especially in northern Sweden, where we also operate a mining facility, the conditions are comparable to those in Iceland," he noted.
Scandinavia is indeed rich in green energy. "There is such an abundance of renewable energy in Scandinavia that some countries almost don't know what to do with it all," said Olav Johan Botnen, an energy analyst at the Norwegian market research firm Volue Insight. "Under normal weather conditions, the Nordic region is projected to have a surplus of nearly 30 TWh of power in the coming year."
This surplus isn't going unnoticed. The region is also seeing growing power demand from its heavy industry sector, particularly for the production of "green steel." In this process, iron is transformed into steel using renewable electricity and green hydrogen instead of coking coal. The sustainable hydrogen itself is produced through electrolysis, using renewable electricity to split water molecules.
Two major projects are underway in northern Sweden. In the town of Boden, where Genesis Mining operates, and in the nearby port city of Luleå, two massive green steel plants are planned for construction within the next decade.
Interconnectors and Rising Prices
Botnen points out that Nordic countries aim to expand their renewable energy production further. However, as before, this expansion is most feasible in northern Sweden and Finland. In the more densely populated south of Norway and in Denmark, land is scarce and consequently more expensive.
Furthermore, the electricity markets of Northern and Central Europe are becoming increasingly integrated. A network of submarine cables already connects Scandinavia to the Netherlands, Poland, and the UK. The NordLink cable now connects Norway to Germany, with more projects in the planning stages. For Scandinavians, this integration has a downside: it is expected to drive up local electricity prices.
The energy analyst forecasts that electricity prices could rise by about 50% over the next decade, reaching €40 to €50 per megawatt-hour on the spot market.
Can Bitcoin Drive Renewable Energy Development?
Despite rising costs, Salter remains confident that Sweden will continue to be attractive for Bitcoin mining. Nevertheless, the extent to which the Nordic countries can truly "green" Bitcoin and other cryptocurrencies seems limited. According to data from the University of Cambridge, these five nations combined account for only about 1% of the global Bitcoin hash rate.
Salter offers a different perspective on the industry's role. "I believe our industry is actually driving the growth of renewable energy," he argues. "This is true not just in Scandinavia, but even more so in developing countries."
This argument is supported by the fact that wind and solar power plants are now among the cheapest forms of new electricity generation to build, and many developing countries possess ideal conditions for them. However, the reality is more complex. Bitcoin mining increases overall electricity demand. Until new renewable capacity comes online to meet this demand, the industry often ends up consuming more power from fossil fuel sources on the existing grid.
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Frequently Asked Questions
What makes Northern Europe attractive for Bitcoin mining?
Northern Europe offers a unique combination of political stability, reliable infrastructure, and an abundance of renewable energy sources like geothermal, hydroelectric, and wind power. This results in cheap, green electricity, which is the primary cost for mining operations.
Why has Iceland's share of global Bitcoin mining decreased?
Iceland's energy production capacity has reached a saturation point. With limited ability to generate more power and growing competition from other regions, its relative share of the global mining market has declined significantly from its peak.
How does Bitcoin mining potentially help renewable energy development?
Proponents argue that mining can provide a constant, flexible demand for electricity, which can help finance the construction of new renewable energy projects, especially in remote areas with surplus power that would otherwise be wasted.
What is the main challenge for green Bitcoin mining?
The key challenge is additionality. For mining to be truly green, it must be powered by new renewable energy capacity that it helps fund, rather than simply using existing green power and potentially increasing reliance on fossil fuels to meet the new total demand.
Are countries like Sweden and Norway worried about electricity prices rising due to mining?
Yes, energy analysts forecast that increased demand from data centers (including miners) and new export cables connecting to Europe will likely lead to higher electricity prices for consumers and businesses in the Nordic region over the next decade.
What is 'green steel' and how does it compete with Bitcoin mining?
Green steel is produced using renewable electricity and green hydrogen instead of coal. It's an emerging heavy industry in Northern Sweden that requires massive amounts of clean power, directly competing with Bitcoin mining for access to the region's renewable energy resources.