Why has a chilly island in the North Atlantic become a crucial frontier in the occult high-stakes world of Cryptocurrency mining? An unremarkable looking cluster of sheds on the western cluster of the Nordic nation might just hold the answer. So join us today as we follow the money and take a peek inside Iceland's insane Bitcoin superman.
About a decade ago the first proper real-world Bitcoin transaction took place when one Laszlo Hagnex infamously purchased two hot and juicy Papa John's Pizzas for ten thousand Bitcoins. Those ten thousand coins were only worth at the time around forty dollars! Delicious as the pizzas no doubt were if he'd only kept hold of those Bitcoins they'd by now be worth somewhere north of 280 million dollars.
Created by a shadowy mysterious figure or perhaps group going by the name of Satoshi Nakamoto, Bitcoin is one of a number of cryptocurrencies that are created via computer processes which use raw mathematics and sheer computational horsepower to underwrite the value of transactions. As opposed to conventional monetary systems which are backed by central banks cryptocurrencies rely on the mathematical certitude of a decentralized ledger known as a Blockchain. Cryptocurrencies are ingeniously summoned into being by a process of so-called mining. Instead of shovels and pickaxes, modern-day Cryptocurrency miners simply require an internet-linked computer that can solve or hash big number problems which are then added to the Blockchain.
Back in the day crypto pioneers could run humble mining operations on home laptops extracting coins almost as a background process for instance while they slept. Fast forward to today, however and that sort of amateur setup simply doesn't cut it anymore. Vast server farm style operations have sprung up around the world to take advantage of what many have described as a modern day gold rush. One such operation is situated within a series of ordinary looking sheds by an abandoned World War II airstrip on a sprawling former US Air Force Base near Keflavik airport in the west of Iceland.
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Inside the 400 square meter sheds are shelves and shelves of whirring computers reportedly as loud when they're running in full flow as a jet engine taking off and they're always running working hard to crack the next code and acquire the next precious Cryptocurrency bounty ahead of competition all over the world its rivals are everywhere literally wherever there's an internet connection but most notably in places like Russia, China, Canada, Venezuela and the United States.
Every ten minutes roughly a prize of six and a quarter Bitcoins is released and someone somewhere will get lucky. The more computer power you have on your site, naturally the luckier you're likely to get. This Icelandic operation called Enigma and run by eight-year-old Cryptocurrency bigwigs genesis was established in 2014. The last time journalists paid a visit in 2018 there were tens of thousands of individual computers working flat out around the clock mining coins each of the many thousands of identical units boasted its own fan and the ceiling of the sheds were supported by six giant ceiling turbines that were 24X7 with the combined mechanical force of 260 washing machines. This constant cool airflow is essential to keep the computational hardware at optimal working temperatures that's because any burnout or interruption to the mining process literally costs money with individual coins trading at many hundreds of dollars. Potentially millions are at stake so for the technicians overseeing the Enigma facility, failure really isn't an option.
The electricity bills at enigma reportedly run to more than a million dollars a month and with each computing unit costing a few thousand dollars to buy and install there's tens of millions of pounds in assets humming away constantly. No wonder security is tight not least since a major spree of thefts. A couple of years back saw some two million dollars of crypto mining tech taken from their rightful owners in a series of raids around Iceland. It's worth looking at these computers in detail because they're actually a far cry from the standard PCs you use at home or work. Instead each unit consists of a main board and into each main board is plugged six GPUs or Graphics Processing Units. Crypto mining experts have found that these GPUs are far more efficient at the kind of lightning fast number crunching required to solve those all-important hashing problems take a market standard GPU like a Radeon brand HD5970. It can execute some 3200 32-bit instructions per clock that's 800 times more than the speed of a regular CPU or Central Processing Unit that executes only four 32-bit instructions per clock.
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Logistically getting hold of the many thousands of GPUs has proven tough particularly in a competitive marketplace. So companies like Genesis frequently order direct from the manufacturer even insisting on modifications to the boards in order to improve efficiency and manage costs at scale for their Enigma facility in Iceland. Genesis have also created a dedicated smart hardware monitoring software known as Genesis Hive, this is important if part of your giant mining system goes down you really don't want to be personally going around each of the tens of thousands of computers all of them with six GPUs with your soldering iron and screwdriver in hand to identify that one annoying dodgy wire. The Hive software also makes recommendations for firmware updates and keeps an eye on those all important temperatures advising when a region of the facility is drifting outside agreed tolerances.
Genesis set up their Enigma facility in Iceland partly because the temperatures are low rarely going above 57 degrees Fahrenheit, imagine trying to cool all that processing power in the middle of a desert. Indeed some Genesis competitors have argued it's possible in places like Texas where regulations are lacks and energy is cheap but nonetheless it's very hard to imagine the facilities running at anything like optimal efficiency using the technology we have to have today because all that processing is indeed a power hungry business and Iceland's cheap and abundant hydroelectric and to a lesser extent geothermal energy is an important factor in why the Enigma facility is situated here of all places.
The wholesale electricity cost is relatively cheap which is handy when you consider that according to some expert estimates the Enigma plant consumes more juice than all the homes in Iceland put together! In light of the long shadow, the industry casts over the Nordic nation it's perhaps fortunate that Iceland is also receptive to the crypto industry from a political standpoint since the country was nigh on bankrupted by financial services overreach during the 2008 credit crunch it's been seen as a welcoming place for innovative new tech industries just like Bitcoin however the power-hungry nature of the mining business isn't to everybody's
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Taste. Environmentalists in particular feel that Cryptocurrency mining's insatiable appetite for electricity will lead to more rivers being damned and more damage to Iceland's pristine wilderness.
So what does the future hold?
It's estimated that the last of Bitcoin's strictly limited run of 21 million coins will have been mined by around the year 2140 that inbuilt scarcity matters. By the way if the currency is to appreciate in value so Iceland with its cool climate, cheap power and largely receptive political
Scene looks likely to be a major player for some time. Yet meaning more pizza loving folks like Laszlo Harnecks could yet exploit the crypto mining boom and if they're lucky this time make an honest crust. That was all in today’s post, hope you guys liked it and if you did, do considering sharing this incredible piece of information with your tech savvy friends aswell.
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