ICELAND IS BECOMING EUROPE’S COMPUTER. TECH COMPANIES ARE BUILDING DATA CENTRES THERE AT SCALE
Aktualizováno: před 5 dny
At first glance, it is just an unremarkable building near the town of Blönduós in northern Iceland. Behind its walls, however, thousands of computers are processing data from the other side of the world. And their numbers are now growing rapidly. Borealis Data Center is expanding its facility in Blönduós and in June signed a long-term agreement with Iceland’s state-owned energy company Landsvirkjun for an additional 12 megawatts of firm power.
Why are companies building huge data centres in Iceland?
The answer lies in a combination of something Iceland has in abundance and something data centres desperately need: clean electricity and cold temperatures.
Servers need electricity above all
A data centre is essentially a huge concentration of computing power. Servers run around the clock and consume electricity not only for computing itself, but also for cooling, networking and other systems.
And electricity is one of Iceland’s biggest advantages.
The country generates electricity almost entirely from renewable sources, primarily hydropower and geothermal power. Iceland therefore does not need to burn coal or natural gas to run its servers.
For data centres, this is crucial. The same server can have a significantly different carbon footprint depending on where it operates.
Iceland also offers something that is almost as important to data centres as energy itself.
Cold.
Iceland gets cooling almost for free
Computers have one major problem. The harder they work, the more heat they produce.
A large data centre therefore has to remove enormous amounts of heat. Cooling, meanwhile, consumes additional energy.
Iceland’s climate helps. It is cold and, above all, relatively stable.
Borealis and other operators can therefore use so-called free cooling for a significant part of the year, using outdoor air instead of energy-intensive compressor-based cooling systems.
According to Eyjólfur Magnús Kristinsson, CEO of atNorth, cooling alone can account for up to 40 percent of the total electricity costs of a typical data centre. Iceland’s climate is therefore a major competitive advantage.
There are other ways to reduce consumption, too. Icelandic startup AI Green Bytes, for example, works with immersion cooling, in which computer components are submerged in a special non-conductive liquid. According to the company, this method can reduce energy consumption related to cooling by up to 90 percent.
Data centres already consume 3.5 percent of Iceland’s electricity
And this is where the first problem appears.
Iceland may have a huge share of renewable electricity, but the amount available is not unlimited.
According to Landsvirkjun, data centres in Iceland currently consume around 70 MW, accounting for approximately 3.5 percent of the country’s total electricity consumption.
That is no longer a negligible amount.
And consumption could continue to rise as conventional data services evolve into something much more energy-intensive: artificial intelligence.
From Bitcoin to AI
Iceland’s data centres have undergone an interesting transformation.
Just a few years ago, they were often discussed mainly in connection with cryptocurrency mining. Today, their focus is changing rapidly. Bitcoin servers are gradually being replaced by much more powerful machines designed for artificial intelligence and so-called high-performance computing.
Bergþóra Halldórsdóttir of Borealis Data Center explained in an interview with The Reykjavík Grapevine:
“The industry is now providing higher-value services to AI clients, compared to some years ago when the industry was serving more blockchain.”
According to her, the shift is also creating more highly skilled jobs and having a positive impact on the Icelandic economy.
And artificial intelligence could accelerate the entire trend.
Iceland wants to become part of the global AI infrastructure
This year, Borealis secured an additional 12 MW of firm power from Landsvirkjun to expand its facility in Blönduós. The new infrastructure is designed, among other things, for the latest generation of liquid-cooled NVIDIA servers.
Borealis CEO Björn Brynjúlfsson says:
“Demand for infrastructure supporting artificial intelligence and high-performance computing is growing rapidly. Iceland has the potential to play a significant role in the global AI supply chain.”
According to him, the expansion in Blönduós could create highly skilled jobs and strengthen the diversity of Iceland’s exports.
Hörður Arnarson, CEO of Landsvirkjun, sees it similarly:
“A strong data centre sector is important for Iceland’s competitiveness, and its significance will only become more evident as artificial intelligence continues to advance.”
According to him, the growth of data centres fits into Iceland’s broader efforts to support the digital transformation of its economy.
But green electricity is not unlimited
This is where the Icelandic story becomes more interesting.
It is easy to say: Iceland has renewable electricity, so data centres are environmentally friendly.
But it is not quite that simple.
Renewable electricity does not mean unlimited electricity. Every new large consumer takes up part of Iceland’s available power capacity. If demand continues to grow, new power plants, transmission lines and other infrastructure may be needed.
And access to electricity could ultimately become a limit on further expansion.
Bergþóra Halldórsdóttir told The Reykjavík Grapevine quite openly:
“We need to increase available power to attract the big tech giants which are looking to deploy to larger and larger sites.”
According to her, Borealis is pushing Icelandic energy companies and the transmission system operator to develop that potential further.
This is an important detail.
Data centres are no longer just customers of Iceland’s energy sector. They are becoming one of the reasons why Iceland will have to consider further expansion of its energy infrastructure.
And what do environmentalists think?
From the outside, it might seem that environmentalists would have to oppose data centres.
The situation is more complicated.
Iceland’s electricity is exceptionally clean in terms of emissions. If a data centre primarily uses Icelandic hydropower and geothermal energy, its emissions from electricity consumption have a major advantage over an equivalent facility in a country where electricity is generated from coal or natural gas.
The problem therefore is not simply “data centres damage the environment.”
The much more complicated question is:
Is operating servers for foreign companies really the best use of Iceland’s clean electricity?
That question has also emerged in the critical debate in Icelandic media.
The Reykjavík Grapevine, for example, has highlighted the rapidly growing electricity consumption of data centres and raised the question of what Iceland actually gets in return.
One critical voice quoted by the magazine points out that Iceland is a small country with a small domestic data ecosystem:
“These machines are dependent on big data, and Iceland doesn’t have big data, Iceland is a small data nation.”
In other words: Iceland provides the electricity, cooling and infrastructure, while the data and the resulting business may belong to someone else entirely.
That may be an even more interesting question than electricity consumption itself.
Is it greener to run the computing on Iceland?
From a purely energy perspective, the answer can be surprisingly simple: often, yes.
If we need to run enormous numbers of servers, it makes sense to put them somewhere with stable renewable electricity and where cooling does not require huge amounts of additional energy.
Iceland has an unusually favourable combination of factors.
Hydropower provides stable generation, geothermal energy complements the energy mix, and the cold climate helps with cooling. Add fibre-optic cables connecting Iceland with Europe and North America.
The result is an environment in which part of the world’s computing infrastructure can operate with a very low carbon footprint from electricity consumption.
That still does not mean that every additional megawatt is automatically beneficial.
Iceland does not export electricity. It exports computing power
Iceland has no direct electricity connection to continental Europe. It therefore cannot simply send surplus electricity through an undersea cable to Britain or Germany.
But it can send data.
Iceland is connected to Europe and North America by several submarine fibre-optic cables.
This creates a remarkable model:
Iceland → water and geothermal energy → electricity → servers → computing → data → the world.
Iceland does not really export electricity.
It exports computing power.
Data centres in Iceland: Who benefits most?
That is a question Iceland will have to address in the coming years.
On one side are new investments, jobs, the technology sector and greater diversification of the economy.
On the other is limited energy infrastructure and the question of whether additional megawatts would be better used for data centres, industry, transport electrification, heating or other domestic needs.
The servers themselves are not environmentally impact-free, either. Manufacturing them requires enormous amounts of materials, semiconductors and energy. And with every new generation of AI accelerators, computing power increases along with the demands placed on infrastructure.
Iceland therefore has one major advantage:
It can operate data centres more cleanly than many other countries.
But it is also facing a fundamental question:
How much of its clean energy does Iceland want to turn into computing power for the rest of the world?
Blönduós as a test of the future
Blönduós is an almost symbolic place.
The small town in northern Iceland has only a few hundred inhabitants. On its outskirts stands an unremarkable building where something is happening that, at first glance, seems worlds away from the Icelandic landscape: computing is being carried out here for the digital world.
This is where Iceland’s advantages come together – hydropower, a cold climate, available electricity, relatively easy cooling and fibre-optic connections to the outside world.
Borealis is now expanding its facility and has secured an additional 12 MW of firm power from Landsvirkjun. Iceland’s data centres as a whole already consume around 70 MW, or approximately 3.5 percent of the country’s electricity consumption.
And as artificial intelligence develops, that figure could continue to rise.
Iceland is therefore on the threshold of an unusual transformation.
A country that has long built its economy around fishing, cheap renewable energy and energy-intensive industry could also become one of Europe’s centres of computing power.
And perhaps the most interesting question is not whether Icelandic data centres are environmentally friendly.
It is something else:
How much of its clean energy does Iceland want to turn into computing power for the world – and what will it get in return?
Sources:
Landsvirkjun
Borealis Data Center
The Reykjavík Grapevine
Data Center Dynamics
Open Compute Project
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