(Bloomberg) -- A lack of power in Iceland has caused the island's main utility, Landsvirkjun, to reduce supplies to some industrial customers, such as aluminum smelters, data centers and fish meal factories, as well as turn away new Bitcoin miners.
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Low hydro reservoir levels, a malfunction at a power station and a delay in obtaining power from an external producer led to the reduction, effective immediately, the company said on Tuesday.
Iceland's biggest electricity consumers are its giant smelters built decades ago to benefit from cheap power. Aluminum is one of the most energy-intensive industrial metals to produce, and traders have been bracing for supply cuts as the regional energy crunch deepens. Prices reached a 13-year high in October as Chinese producers faced a supply crunch, and the renewed surge in power prices is creating fresh risks to supply in Europe. Aluminum prices rose 1.1% to $2,616.50 a ton on Tuesday.
A more recent entrant are cryptocurrency miners, lured in by the cheap electricity needed for mining new coins after demand and prices have skyrocketed. Despite recent volatility, in dollar terms Bitcoin is up more than 80% year to date, and hit an all-time high of almost $69,000 in November. Hive Blockchain Technologies Ltd. from Canada, Hong Kong-listed Genesis Mining Ltd. and Bitfury Holding BV are among companies that have set up shop in the country. All power-supply requests from new clients mining electronic coins are now rejected, Landsvirkjun said.
Landsvirkjun said limitations of the distribution system mean it's unable to serve load points in the southwest from the country's biggest power station, Karahnjukavirkjun, located in the eastern part of the country. Century Aluminum Co.'s Grundartangi and Rio Tinto Plc's smelter are both in the western area that's suffering shortages, while Alcoa Corp.'s Fjardaal plant sits in the East Fjords with ample power.
(Adds detail on aluminum smelters, crypto)
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