On the tenth anniversary of the global financial crisis, Iceland marks its recovery. The country looks back at one of the most traumatic recessions experienced by any nation.
Not to suggest that other nations didn’t suffer. However, unlike Iceland, most had more than just their own banks to prop up sudden failing economies.
By 2008, Iceland’s three largest banks, Glitnir, Kaupthing, and Landsbankinn, had racked up almost 10 times the country’s gross domestic product in liabilities to default on $85 billion in accumulated debt.
Interest rates (in a last ditch effort to deal with high inflation) topped 15%, and there was no surplus nor means to bail out banks. Thus, the króna declined more than 35% against the euro and the Icelandic stock market plunged 85%.
Meanwhile, the United States went through its own worst recession since the Great Depression. The USA invested more than $2 trillion in quantitative easing that did little to spur its GDP or recovery. In contrast, Iceland battened down its hatches and tore off the proverbial band aid.
Forgoing attempts to bail out corrupt banks while lightening the burden of debt on its own citizens, Iceland froze the assets of foreign investors. Then, to renew pubic trust, 60 bankers and government officials were charged with crimes. The result was an immediate economic recovery. There were fewer side effects. This in turn allowed Iceland to focus on diversifying both its private and public sectors. At the same time, the country secured new international revenue streams through tourism.
A Solid Economic Base
Massive ad campaigns luring business and travelers put Iceland back on the map. It also sparked a “eureka” moment for crypto mining enthusiasts seeking solutions to mounting issues. Today, Iceland’s development of renewable energy, high tech, and tourism provide it with a solid economic base.
Due to its geographical location, Iceland offers nearly perfect mining conditions. Year-around low temperatures save on cooling, plentiful and cheap energy, and internet connections are state-of-the-art. It’s whys five of the world’s largest crypto mining farms, including HIVE Blockchain Technologies, Bitfury, and Genesis call it home.
However, mining requires an average 840GWh of energy per year – more than all the homes of all 300,000+ citizens combined. Iceland
In 2017, Genesis partnered with Foire Group to go public and launch HIVE Blockchain. The original idea behind HIVE was to revolutionize finance. Today, its focus is on blockchain technology. HIVE CEO Harry Pokrandt affectionately referred to the new decentralized world as “web 3.0”, and believes that blockchain technology will eventually become “the backbone of the decentralized world by building, operating and acquiring the critical infrastructure” that global businesses will need to power it.
The Backbone of the Decentralized World
Bitfury is also expanding its mining facilities to allow for deployment of blockchain technology. It raised $80 million last November from investors keen on growing their blockchain technology portfolios.
The financial collapse of 2008 is still fresh on the minds of those worried the industry could be another financial bubble. Regardless, Iceland’s leaders have discovered that this relatively new market has a unique ability to adapt. By looking past mining and exchanges and shifting towards blockchain technology, the same data centers have the potential to become technology incubators for Artificial Intelligence. This includes deep learning applications for self-driving cars and automatic translators.
The Fourth Revolution
“The fourth revolution is starting,” said Asgeir Margeirsson, CEO of the HS Orka power plant in a Bloomberg interview last Summer. “It would be terrible for us in Iceland not to follow that development.”
“Bitcoin probably won’t be here far into the future,” said Johann Snorri Sigurbergsson, business development manager at the HS Orka power plant, though he believes Iceland is in a prime position to become a diversified and nimble blockchain technology hub, ensuring growth, security, and prosperity far into the future.