Andrew Zolli

During periods of relative calm, objective observation of the world is hard enough; foresight, even harder. During times of great change, clarity can be impossible.

Yet occasionally an encounter will reveal, sometimes just for a moment, the usually invisible systems and activities that comprise the global order – the “emergent now” that pulses just out of view. And it’s usually stranger than we would have otherwise imagined.

I had just such a moment recently in Iceland, where I had a chance to sit down with several of the country’s leading clean-tech and data center experts.

Iceland famously generates vast amounts of ultra-green electricity – about seventeen terawatt hours’ worth every year. Twenty five percent of this capacity is geothermal in origin, and the rest comes from hydrothermal, making Iceland’s one of the cleanest economies in the world. This abundance has attracted energy-intensive industries (including highly controversial aluminum smelters) as well as clean-tech startups like Carbon Recycling, a company that fuses waste CO2 and hydrogen to produce “synthetic methanol”, which is exported to the Netherlands and blended with gasoline. Electricity is so cheap in Iceland (about a third of the cost in the U.S) plans are even being developed to export it to Europe via undersea cable.

Perhaps the buzziest of the industries that have been borne of Iceland’s energy independence is the green datacenter sector. The business pitch, made by local players like Verne Global, and Advania, is simple: in Iceland, data centers are cheaper to run from an electrical perspective and cheaper to cool from a geographical perspective – a double win.

Iceland’s remoteness makes it an inappropriate choice for certain datacenter applications like high-frequency Wall Street trading, where milliseconds matter and the computers have to be as close to the action as possible. But for slower applications, where cost and computing matter more than connectivity, Iceland is ideal.

One such “perfect” application is Bitcoin mining, and the country’s datacenters have attracted a lot of it. A year ago, the NYTimes’ Nathaniel Popper profiled Emmanuel Abiodun, a British entrepreneur who has established a multimillion-dollar bitcoin-mining operation called CloudHashing within a major Icelandic datacenter; Cloudhashing leases its specializing mining equipment to others.

This is presumably a tougher sell now that Bitcoins are worth closer to $200 apiece rather than the almost $1200 they commanded in late 2013. Even so, the lower cost of electricity in Iceland makes it possible to run these machines more efficiently, and presumably, make Bitcoin mining profitable at lower costs than elsewhere.

As I was preparing for my own walking tour of one of these ultra-secure facilities (the head of security pleasantly marched me through no less than nine physical security systems) one local tech-sector leader told me that most of the customers for these Bitcoin mining contracts are Chinese, and that, at its peak, demand was so high that an astounding eight percent of all Bitcoin mining worldwide was thought to be happening in Iceland.

Let’s take a moment to visualize and appreciate the resulting set of connected facts:

On an island in the North Atlantic, leagues below the surface, subterranean veins of liquid rock well upward through primordial vents, whereupon they make contact with equally ancient aquifers, producing steam that is artfully siphoned off and passed through turbines, which, when spun up, produce bountiful, carbon-free electricity.

This great stream of benign electrons – a true social good if ever there was one – is then passed onward, by means of cables, to some of the most esoteric, purpose-built computers ever assembled. These machines patiently wade through a truly psyche-shattering number of useless calculations, each one a discarded digital lottery ticket. Ever-more rarely, one of them strikes algorithmic gold. In an instant, the winning computation is transmuted into units of cryptocurrency, and on the other side of the planet, a Chinese hedge fund collects a small reward.

This is how the world works now: the geophysical system connects to the computational system, which links to the financial system, which shapes the geopolitical system, and round and round we go. Speculators from an ascendant, and nominally Communist 21^st-century world power quietly leverage the entrepreneurial efforts of a citizen from a former 19^th-century world power, to harness a market opportunity made possible by the unique ecological properties of an independent small state. These dependencies-at-a-distance make for strange bedfellows, for sure, but their larger consequences are not as neatly categorized: in times of relative stability, such interdependence likely improves resilience and reduces risk; in periods of complicated change, such connections likely amplify fragility and disruption.