Discover how Iceland's unique geography and renewable energy resources are propelling its crypto industry forward. Gulli Gislason of Viska Digital Assets shares insights on the opportunities and challenges in Iceland's crypto landscape.
Iceland is increasingly becoming a hotspot for the crypto industry, thanks to its abundant renewable energy resources and unique geographic advantages. Gulli Gislason, the chief investment officer at Viska Digital Assets, recently discussed the strides being made in Iceland's crypto landscape and the untapped potential that lies ahead.
The conversation began with a reflection on Iceland's financial history, notably the 2008 banking crisis that hit the nation harder than most. The crisis led the Icelandic government to impose capital controls, restricting the movement of the Icelandic króna. This significant event piqued public interest in cryptocurrencies as an alternative asset class and spotlighted blockchain technology.
Gislason recalled, “The 2008 crisis really opened people’s eyes to cryptocurrencies and blockchain. It was a pivotal moment that led to a greater appreciation of these technologies in Iceland.”
In 2014, Iceland's intrigue with crypto deepened when Baldur Friggjar Óðinsson, the pseudonymous Icelandic Satoshi Nakamoto, airdropped Auroracoin to all 330,000 people listed in the national ID database. Although Auroracoin didn't achieve widespread adoption, it did foster early crypto engagement among Icelanders.
“It never became a big currency,” Gislason noted, “but it was a significant moment. People could claim their tokens, and some even converted them to Bitcoin.”
Despite these early steps, Gislason believes Iceland still has a way to go in terms of widespread adoption and education about cryptocurrencies. Viska Digital Assets, active in the crypto market for two years, is striving to enhance the local investor base's familiarity and sophistication with crypto as an asset class.
“We’re a bit behind compared to neighboring countries, but we’re making strides to put Iceland on the crypto map,” Gislason said.
One area where Iceland excels is in renewable energy. Over a quarter of the country's power is generated by geothermal energy, thanks to its location at the convergence of the Eurasian and North American tectonic plates. Additionally, significant hydropower and wind power resources mean that 99.98% of Iceland’s total power supply comes from renewables.
“Iceland is rich in renewable energy,” Gislason emphasized, highlighting how this makes it an ideal location for Bitcoin mining. Bitcoin miners in Iceland are flexible buyers of power, utilizing otherwise wasted energy due to the lack of underwater cables connecting Iceland to Europe, the UK, or the US. This unique energy market creates a closed electricity system.
Viska Digital Assets is well-acquainted with Iceland's mining industry. Three of its founders are also involved with Greenblocks, a Bitcoin mining firm in a joint venture with US-based BitDigital. However, Gislason acknowledged the challenges faced by the industry, including increased electricity demand due to subsidies for electric vehicles and regulatory constraints on new power plant development. These factors have led to periods of energy shortages.
“This has created a false narrative in Iceland, framing Bitcoin miners as a net negative for the energy industry when they have, in fact, been buyers of otherwise unused energy,” Gislason argued.
Looking ahead, Gislason is optimistic. He believes the government is beginning to recognize the need for more energy development, which could support the growing demand from both traditional and crypto industries.
“We’re realizing that we’ve built too few power plants,” he said, suggesting that increased energy infrastructure could mitigate current challenges.
When discussing Viska Digital Assets, Gislason outlined the hedge fund's investment criteria, emphasizing liquidity and market sectors of interest. The team’s technical and financial expertise allows them to navigate the market effectively, focusing on long-term stability and risk management. This approach helped them avoid exposure to risks associated with FTX and Silvergate Bank.
“I believe we are at the most exciting stage of the adoption s-curve,” Gislason concluded. “With major players like BlackRock getting involved and positive discourse around crypto assets, this is likely the most thrilling time we’ve seen in the industry.”
As Iceland continues to harness its renewable energy resources and overcome regulatory challenges, the future looks promising for its crypto industry. Viska Digital Assets is at the forefront of this transformation, leveraging the nation’s unique advantages to drive growth and innovation in the crypto market.
(ROBERT D. KNIGHT, COINTELEGRAPH, 2024)