Iceland Crypto Mining Restrictions by National Power Company

For years, Iceland was the go-to place for crypto miners. Cheap, clean energy. Freezing air to cool giant server farms. No red tape. But things changed. By 2025, the country’s national power company, Landsvirkjun, stopped approving new crypto mining projects. Not because they hate Bitcoin. Not because they’re anti-tech. But because cryptocurrency mining was eating up more electricity than the entire population of Iceland.

How Iceland Became a Crypto Mining Hotspot

Iceland doesn’t have oil. It doesn’t have coal. It has volcanoes. And glaciers. And wind. That means nearly 100% of its electricity comes from renewable sources-mostly geothermal and hydropower. That’s rare. And for crypto miners, it was a dream.

In 2017, Bitcoin mining alone used 90% of all the power in Iceland’s data centers. By 2023, mining operations were consuming over 1.5 terawatt-hours per year. That’s more than the total electricity used by Icelandic households. And it kept growing. Companies like Hive Blockchain, Genesis Mining, and Bitfury set up massive facilities in Reykjanes and Keflavík. They didn’t just use power-they bought entire power plants.

The government didn’t stop them. At first, they welcomed it. After the 2008 financial crash, Iceland was desperate for new industries. Crypto mining brought billions in foreign investment. It created jobs. It kept the economy growing. For a while, it looked like a win-win.

The Energy Crisis Nobody Saw Coming

But then the numbers got scary.

In 2024, Iceland’s Prime Minister publicly said the country needed to slow down crypto mining. Not ban it. Not shut it down. But stop letting it grow. Why? Because the power grid was maxed out. Not just during winter. Not just during peak hours. All the time.

Landsvirkjun, the state-owned power company, started seeing red flags. They couldn’t guarantee enough electricity for hospitals, schools, or homes. Miners were signing long-term contracts for power that hadn’t even been generated yet. Some were reselling excess capacity to other miners. The system was becoming a Ponzi scheme of electricity.

One mining farm in the south of Iceland was using as much power as 15,000 homes. That’s more than half the population of Akureyri, the country’s second-largest town. And they weren’t even running at full capacity.

Landsvirkjun didn’t have the legal authority to shut down existing operations. But they could-and did-stop approving new ones. No new permits. No new power allocations. No exceptions.

What the Power Company Actually Did

Landsvirkjun didn’t post a public notice saying, “No more crypto mining.” They didn’t need to. They changed the rules quietly.

Here’s what happened:

• New mining projects must now prove they won’t exceed 5% of the local grid’s capacity. No one’s been able to meet that since 2023.
• Existing miners can’t expand. If they want to add more machines, they need to cut power elsewhere in their facility. That’s nearly impossible.
• Power contracts are now capped at 10 years. Before, they were 20-30 years. This gives the government leverage to renegotiate or terminate agreements.
• Miners must now report real-time energy usage to the National Energy Authority. If usage spikes unexpectedly, the power company can throttle supply.

These aren’t laws passed by Parliament. They’re utility policies. And they’re working.

Why This Matters Beyond Iceland

Iceland isn’t the only country worried about crypto mining’s energy use. China banned it in 2021. Kazakhstan cracked down in 2022. Kazakhstan’s power grid collapsed under mining demand. The U.S. has seen states like New York and Texas debate limits.

But Iceland is different. It’s one of the few places where miners came because they claimed to be “green.” They used renewable energy. They didn’t burn coal. So when even Iceland says “enough,” it sends a message: cryptocurrency mining isn’t sustainable, no matter how clean the power source.

The argument that “renewable energy is wasted if not used” doesn’t hold up anymore. Iceland’s renewable energy isn’t surplus. It’s carefully managed. Every watt powers a home, a school, or a hospital. Miners aren’t using spare capacity-they’re taking what’s meant for people.

What’s Happening to the Miners Already There?

The existing mining farms aren’t being kicked out. But they’re being squeezed.

Some are shutting down voluntarily. Why? Because they can’t expand. And without expansion, their profits drop. Mining rewards halve every four years. Electricity costs are rising. Cooling efficiency is falling as machines age.

Others are trying to pivot. Bitfury moved part of its operation to Georgia. Hive Blockchain started investing in blockchain infrastructure for public services-not mining. Genesis Mining shifted focus to cloud mining services hosted outside Iceland.

A few are still hanging on. But they’re not adding new rigs. They’re just maintaining what they have. Waiting. Hoping the rules change.

The Bigger Picture: From Mining to Blockchain

Iceland isn’t turning its back on crypto. It’s turning away from mining.

The central bank is exploring a digital krona-a central bank digital currency (CBDC). The government is funding startups building blockchain tools for land registries, fishing quotas, and public voting. These projects use blockchain without the insane energy cost.

Why? Because Iceland realized: you don’t need to burn power to build a better financial system. You just need smart code.

The country’s new goal isn’t to be the Bitcoin capital of the world. It’s to be the blockchain innovation hub of Europe.

What This Means for Miners Everywhere

If you’re thinking about starting a mining operation anywhere, ask yourself this:

• Is the local grid already near capacity?
• Are homes and hospitals getting priority over machines?
• Can you prove your energy use won’t disrupt essential services?

Iceland’s story isn’t about banning crypto. It’s about protecting infrastructure. And it’s a warning to every country that thought they could outsource their energy problems to miners.

The days of mining anywhere you want, anytime you want, are over. The grid has limits. And governments are starting to enforce them.

Is Crypto Mining Still Legal in Iceland?

Yes. But it’s not growing. And it won’t for the foreseeable future.

You can still trade Bitcoin. You can still hold crypto. You can even run a small mining rig in your garage-if you have enough spare power. But building a data center? That’s off the table.

The power company didn’t shut down mining. They just made it impossible to scale. And that’s the most effective restriction of all.

What’s Next for Iceland’s Crypto Scene?

The future isn’t about mining rigs. It’s about smart contracts. It’s about digital identity. It’s about using blockchain to make public services faster and more transparent.

Iceland’s next big move might be launching a national blockchain platform for public records. Or partnering with the EU on a cross-border digital currency system. These projects won’t use terawatt-hours. They’ll use kilowatts.

And that’s the real lesson here. Technology isn’t bad because it uses power. It’s bad when it uses power that people need more than machines.

Iceland didn’t reject crypto. It outgrew it.