Bitcoin mining by new miners has been temporarily banned in Iceland, as part of a comprehensive strategy to efficiently utilize its limited electrical energy due to a nationwide power shortage.
Iceland currently suffers massive power shortage that has seen it reduce power supply to certain industries and heavy consumers. This policy has been extended to the Bitcoin mining industry, as the country has rejected all requests for Bitcoin mining, by new Bitcoin miners. These series of actions are undertaken to effectively manage its power crisis.
The power outage can be attributed to a number of uncontrollable factors which include; low water level in its water reservoirs for its hydro powered stations, malfunctioning power stations and inability to secure power from third party suppliers.
The mining ban doesn’t extend to already existing and registered Bitcoin miners, for both individuals and organizations.
Iceland, due to its cheap and abundant hydro resources, is a hub for small, medium and large scale Bitcoin mining setups. It is home to more than one cryptocurrency mining Giants.
Bitcoin mining has increasingly gathered attention over the years, it is a relatively profitable venture although it is energy intensive. A successful addition of a block to the blockchain network rewards a miner with 6.25 bitcoin tokens.
Background Information
When the phrase ‘Bitcoin mining’ is heard, what comes to mind is the traditional meaning of mining, most people therefore interpret Bitcoin mining in a traditional ‘sense’. Bitcoin mining can be misunderstood as an act of generating (mining) Bitcoin tokens with the aid of select hardware and relevant programes. This notion isn’t entirely wrong, according to Bitcoin’s online website , the process involves a complicated set of steps that leverages unique algorithms to solve complex problems. This in turn helps improve the aggregate network security.
Bitcoin minners use acquired hardwares to evaluate their unique hash, the hash is random set of 64 string characters that is meant to be solved. Reward for their services is the issuance of newly created Bitcoin tokens and collation of the transaction fees for transactions they confirm.
The business of mining Bitcoin is not as lucrative as it may seem, considering the current worth of a Bitcoin token. Bitcoin currently is the world’s most valued cryptocurrency with a market cap of $931.1 billion according to Coinmarketcap. As of press time Bitcoin trades at $49,330.35
The efficiency of mining Bitcoins depend mainly on the hash rate of the mining system. The hash rate is the rate at which Bitcoin minners complete a set of calcultation and add a block to the blockchain network. The higher the hash rating of a device the better it is at making computations for mining.
Mining during a price surge is very profitable, as the high number of transactions transacted in real time increase the probability of solving a ‘hash’ and adding a block to the network.
Bitcoin mining isn’t receptive in all parts of the world, this is due to growing concerns about its effect on the environment, which arises as a result of the ernormous amounts of energy the industry utilizes.
