Iceland: The Switzerland of Bits (and Coins)

Iceland sky and pylonsWe've recently seen a flurry of articles discussing Iceland’s potential to be the world’s new data privacy haven - to be to Data the way Switzerland is to Information. Let’s take a concise look at the factors leading Iceland to be the Switzerland of Bits.

During a speech in 2008, digital activist John Perry Barlow said “My dream for this country is that it could become like the Switzerland of Bits”. Shortly after that, the economy suffered a devastating financial collapse caused by malpractice of the three largest banks, and collusion of government officials. 

Business and government had long controlled the media, and a lack of transparency had allowed the financial malfeasance to go on to such ruinous effect. Then, in 2009 WikiLeaks exposed information about insider trading at one of the banks. As Iceland’s TV news station prepared to report on the story, the bank successfully filed an injunction preventing the story from airing.

The resulting public outrage galvanized support for the IMMI resolution that would position Iceland as a haven for investigative journalism and freedom of expression, by creating a framework of laws to ensure it. The Icelandic Modern Media Initiative proposal, approved unanimously by parliament, passed in 2010.

There is a misconception that the IMMI is itself a piece of final legislation. In fact the IMMI proposed a resolution to change legislation in Iceland to become the world’s strongest, most progressive laws protecting media, free speech and privacy. The resolution calls for the development of a unified framework of laws addressing 13 categories, and based on best practices from around the world.

There are 13 Elements of the law - the categories outlined in the resolution. They include Source Protection for people promised confidentiality by journalists, Whistleblower Protection, Limitations to Prior Restraint (the ability of an entity to prevent publication of certain information), Protection of Intermediaries (ISPs and telecoms), a cutting edge Freedom of Information Act, and others.

Iceland is still in the process of examining each Element individually. Best practices are determined, and then a bill is drafted and the authors work to get it approved by parliament. Progress is slow, and passage of the bills is in no way guaranteed. Around 60% of what has been proposed has been implemented into law.

While the legislative side of data haven status is creeping slowly forward, the many geographical advantages Iceland offers are undisputed. Power is Green, reliable and cheap. Temperatures are cool and consistent. Massive hydroelectric and geothermal capabilities are key to Iceland’s suitability for data farming and super computing. 

Renewable: Corporations are under increasing pressure to source renewable power. Moving to Iceland's huge data centers, powered by hydroelectric and geothermal sources, gets it done.

Reliable: Aluminum is big business in Iceland, and aluminum smelting consumes massive amounts of electricity in an uninterupted supply. To lure the smelting plants, Iceland developed a high capacity, high reliability power grid. This superb infrastructure is already in place and there is capability to nearly double output by 2030.

Reasonable: Electricity is cheap, and long term contracts are available, ensuring  guaranteed pricing for terms of up to 20 years.

Verne Global, a company that develops data centers, has been running a huge facility in an old NATO airbase since early 2012. They recently raised $98 million of equity funding in a Series D round which will be used to continue building out the facility. They have a diverse and in some cases secretive client list, but one industry in particular is moving operations to the Verne Global facility – BitCoin Mining.

bitcoin symbolAt first mining was carried out by individual, private miners using personal computers. These days mining is carried out by corporations using special computers whose only function is data mining. These super fast machines run 24/7, and although they are far less power intensive than older machines, they still consume vast amounts of electricity, and generate lots of heat. The production of specialized bitcoin mining equipment has developed into a whole new industry.

As profit margins grow slimmer, the price of electricity and cooling are all important - the cost of electricity can easily outweigh the reward. Iceland's cheap electricity and always cold outside air can slash power and cooling costs.

And so the Switzerland of Bits status is moving slowly forward, while the BitCoin miners are cranking in Iceland's ideal environment of cheap, reliable,renewable power.