The land of fire and ice accounts for 3% of the world's mining volume - a colossal figure when you consider that only 340 people live in Iceland. For comparison: in the European Union, 000% of all cryptocurrency is mined, in Georgia - 5%, in the USA and Canada - 6%, in China - 16%.
Icelanders believe in elves. “You would know how many cases there were when the equipment broke down during construction and all the electronics burned exactly where the Hidden People live, according to the legends,” says XF-year-old German Philippe Zalter, Genesis Chief Operating Officer, in a conversation with Forbes. Mining - a provider of cloud services for the extraction of cryptocurrencies with data centers in several countries. Iceland is home to one of the largest cryptocurrency farms in the world, Enigma, owned by Genesis Mining, and Salter is responsible for maintenance and mining operations.
Elves and Scammers
Giant Alcoa in 2004 had to pay a round sum to pay for special expertise and to prove that the elves of Iceland did not choose the place of the future aluminum plant. Writer and journalist Michael Lewis in his bestseller "Boomerang" suggested that this incident indicates more about the system of statutory bribes in the construction industry, than about the peculiarities of the world view of Icelanders. Anyway, the belief in elves of a small northern people who have lived in isolation for several centuries is far less surprising than the Enigma farm built in 2015 near the town of Keflavik. Thanks to her and other numerous data centers for mining, Iceland was first talked about not as a country with cosmic landscapes that gave the world music to Björk and Sigur Ros, but as one of the key players in the cryptocurrency industry.
In February, 2018 th representative of the Icelandic energy company HS Orka Johann Snorri Sigurbergsson, in an interview with BBC, complained that the rapid growth of mining in Iceland and the commissioning of new farms could lead to disruptions in electricity supply. He predicted that already in 2018, mining capacity would consume more electricity than the entire population of Iceland (households spend an average of 700 GWh per year, and data centers and cooling systems can reach 840 GWh per year). “I’m constantly called and potential investors or companies come to me who want to build data centers in Iceland,” Johann complained.
A significant proportion of mining in Iceland falls on the Enigma crypto farm. According to the edition of the Huffington Post, in terms of the volume of production of the ethereum Enigma, ranks first in the world. Iceland's popularity among miners is primarily due to the low cost of electricity - an average of $ 0,043 per kWh, which is several times less than the average level in the European Union. “The country itself is a power generator: thanks to the volcanic nature of the island, it is literally under your feet. For example, we use geothermal energy, but there are still tidal and wind installations, hydroelectric power plants, - notes Philip Zalter. “With prices for products and services, like in Switzerland, electricity is pretty cheap here.” Favorable climatic conditions for mining have played their role: the average annual temperature in Iceland is about 7 ° C, which allows saving on cooling systems, as well as liberal legislation - the mining of cryptocurrencies on the island is still not regulated.
Zalter agrees to show Forbes Icelandic cryptocurrency lands, but immediately stipulates that the mining farm has a special security mode: “I would not want to shine the exact address of our farm. You will have to navigate on the map. " He sent a link to the Google Maps service, in which Enigma is marked with a red dot.
Salter has cause for concern. At the end of 2017 and the beginning of 2018, attackers in four raids kidnapped 600 superpower mining computers for cryptocurrency from data centers in Reykjanesbire and Borgarnes. The Enigma farm, as assured in Genesis Mining, was not reached by the robbers. The amount of damage was tentatively estimated at $ 2 million. The world press called the incident "a big Bitcoin heist." Icelandic police detained a total of 11 suspects, two of them remained under arrest. In April, 2018, one of the suspects, Sindri Thor Stefansson, escaped from a window through Sogn prison, located about 100 km from the international airport, and flew to Sweden. Ironically, the same flight was flown by the Prime Minister of Iceland, Catherine Jacobsdouttir, which ensured Sindri’s attention to the world media. Later, the hapless fugitive was arrested in Amsterdam.
Magic mill
“It’s definitely better for you to walk from the airport, it will be easier and faster,” said the administrator of the Heida's Home mini-hotel in the center of Reykjavík, studying the map with the Enigma crypto farm marked on it. It is about a walk about 7 km on volcanic soil under the slanting cold rain and roaring wind - the weather in the Icelandic off-season does not have to hiking.
Numerous straight streets crossing the capital of Iceland are built up mainly with low concrete houses lined with metal or wooden siding. Some buildings are painted in bright colors, which somewhat smooths out the oppressive effect of the leaden sky. Almost every house has a bar, restaurant or shop. The city stands out for the utopian community of the Hallgrimskirkja church, similar to a huge spaceship, and the glittering crystal of the Harpa concert hall on the bay. The coastal zone is a large construction site - glass high-rises of hotel complexes and expensive apartments are growing and multiplying here.
“Everyone knows that our country makes money on tourism, services and fishing, but all the most interesting and important things have always been hidden from human eyes. You have to work really hard to see this and understand Iceland,” laughs Daniel Mikaelson, a frequenter of numerous conferences on blockchain and cryptocurrencies taking place in the Icelandic capital. He himself entered the cryptocurrency industry as a private miner, setting up an impromptu crypto farm in his own garage near Reykjavik. When home Mining did not justify itself, Daniel invested the funds earned on the growth of bitcoin in the tokens of the British project Moonlite, a mining data center in Iceland. This crypto farm should start operating in 2018, its initial capacity will be at the level of 15 MWh.
Daniel believes that mining cryptocurrency mentally suited Icelanders: “We have a fairy tale about the magic mill Grotti - a retold passage from Edda. It really says everything there. ” The song from Iceland’s medieval poetic epos of the Elder Edda tells of magical millstones, which cast down everything that their owner could wish for, including gold, peace, happiness and longevity. Everything was fine, until in the final they had not crushed the enemy army, which had seized the kingdom of the greedy king Frodi, to whom the magic mill "namainila" untold riches.
Fifteen minutes of whirling in a taxi around the airport in Keflavik in a drizzling rain did not bring the Forbes correspondent closer to Enigma farm. “I can’t drive through here. There is an old NATO military airfield further and there is no road, ”an elderly Icelandic taxi driver apologizes in broken English. The journalist and photographer, a Russian girl, who lives in Iceland on a student visa, had to go out at the nearest gas station. I did not hear anything about the farm and the store clerk at the gas station, so I had to contact Philip Zalter via Skype and he agreed to send data center employees for the team from Forbes. After about 20 minutes, a car with two young people, Alexander and Elias, drove straight to the gas station along a dirt road. Soon, among the fields covered with dirty green moss, a crypto farm appeared - four white hangars with a silvery roof, fenced in with a mesh fence with barbed wire.
The filling of the hangars is rather monotonous - these are multi-level racks, tightly lined with roaring computers. At the entrance to each room with the equipment a flask with multi-colored ear plugs is prudently suspended. “In this hangar we extract bitcoin, in the next - ethereum. There are also mining facilities for Dash, Litecoin, Monero and Zcash, ”lists Elias. He flatly refused to answer questions about the amount of digital assets produced per day, and the amount of energy that the farm consumes.
A little further away there is a hangar with outbuildings and a small workshop - here the video cards are laid out in even rows on the table.
This is the estate of Alexander Freyr Thorisson and Elias Snier Einarson, who work for Enigma as technicians - they should promptly troubleshoot data center problems. These guys are just 20 years old. “I have been fond of computers since childhood. Now it is just interesting for me to mess with technology, test and replace video cards. Uninterrupted mining depends on my work, ”says Alexander. He plans to study IT technology at the University of Reykjavik. His colleague Elias is much less talkative, he dropped out of high school for the sake of working at Enigma: "It is much more interesting here, and I see this work as more useful for my future."
After the tour, Icelanders drove a Forbes correspondent to the same gas station. The taxi driver, who came to the challenge, agreed to drive around the farm around the perimeter, and the industrial landscapes of the former NATO airfield inevitably fell into the camera lens. Coupled with the Russian language, this made the driver pretty nervous, and when the trip ended at Keflavik airport, there was clearly a relief on his face.
Glorious era
“Mining cryptocurrency practically does not require personnel and serious capital investments, and also it almost does not generate tax revenues to the budget of Iceland. Its value for the country is still zero, ”says Smari McCarthy, a member of the Icelandic Alting Parliament from the Pirate Party. He is developing a draft regulatory act that will determine the rules of the game in this market and ensure the flow of taxes to the state budget. In the meantime, according to the Foreign Currency Act of 2013, Icelanders are not allowed to perform cross-border operations with Bitcoins, but inside the country one can own cryptocurrencies, and also mine them.
“There are a lot of white spots in the currency legislation of our country, and everyone willingly uses them. We need clear regulation. Icelanders are fishermen by nature, hunters for good luck. They need clear rules of the game in order not to mess things up, ”says Daniel Michaelsen. Once the profit hunt has already turned into a financial catastrophe - in 2008, the country's banking system collapsed, turning Iceland into a bankrupt state. Icelandic banks Glitnir, Landsbanki and Kaupthing attracted money from European pension funds at high rates and flooded the population with cheap loans. Icelandic people speculated on borrowed funds on the local stock exchange, having dispersed prices by almost 1000%. “For several years, the well-being of a simple Icelander has grown three times. Back in 2006, people did not know where to put the money. When in every household there was a car per person, a massive purchase of real estate in Europe, art objects, rare cars began, ”Daniel recalls. Everything ended pitifully: the volume of toxic assets that accumulated three Icelandic banks, almost 10 times the country's GDP. Against the background of the global financial crisis, the collapse of the credit bubble brought down the Icelandic economy and the rate of the national currency.
If there is a clear regulation, mining may well become a serious source of income for Iceland. “Mining remains a profitable business - a typical Antminer S9 device now brings up to $ 8 per day, consuming about 30 kWh per day. Energy costs are $ 1,3, that is, there is a minimum of $ 6,7. Even taking into account the expenses for salaries, the Internet, the depreciation of farm devices is still a plus, ”says Anatoly Knyazev, co-founder of the Exante investment company. And besides, mining in Iceland can be viewed as electricity export, which was previously impossible, said Pavel Ryazanov, director of the transactional business at Alfa Bank, because it is mainly foreign companies that buy it.