With demand for compute power rising worldwide due to artificial intelligence, Iceland is becoming an even more attractive location for data centers. In an interview on Bítið á Bylgjunni, Bergþóra Halldórsdóttir, General Counsel & Head of Policy at Borealis Data Center recently spoke about why Iceland is especially well placed to become a major player in the booming digital infrastructure industry.

Listen to the original interview in Icelandic: Bylgjan - Gagnaver gætu orðið ein stærsta stoð at­vinnu­lífsins á Ís­landi

What exactly is a data center?

A data center is a facility that houses computer equipment and digital infrastructure. According to Bergþóra, people use data centers constantly throughout the day — often without realizing it. 

Everything from smartphones and navigation systems to cloud services and artificial intelligence depends on data centers operating behind the scenes. 

She explained that data centers store and process information, and they are also where AI models are trained and operated. 

Why is the data center industry growing so quickly? 

The industry was already growing steadily before the rise of AI, but artificial intelligence has dramatically accelerated demand. 

AI requires enormous computing power for both training and usage, creating unprecedented pressure for new data center capacity worldwide. 

Bergþóra described the sector as one of the fastest-growing industries globally and emphasized that this demand is not temporary. 

Why is Iceland considered a good location for data centers? 

Iceland offers several natural advantages: 

• Renewable energy from hydro and geothermal power  

• Cool climate ideal for natural cooling with stable temperatures year-round and windy weather conditions

• Modern society and highly educated workforce 

• One of the safest countries on earth with strong societal structures

Bergþóra highlighted that Iceland’s climate significantly reduces cooling costs compared to many other countries. 

At Borealis’ Campus in Blönduós, for example, annual temperature fluctuations are relatively small, creating highly efficient operating conditions for data centers. 

How does Iceland compare internationally? 

According to Bergþóra, one challenge has been limited new energy production in recent years. Another has been Iceland’s geographic distance from major markets. However, she said a new subsea data cable introduced three years ago significantly improved Iceland’s connectivity and the Nordics as a region have seen significant rise in interest as projects seek power and operational feasibility and not population density. 

Iceland is slightly behind other Nordic countries in terms of long-term planning and infrastructure development to meet the increased demand. She also pointed out that countries such as Norway have already implementing national strategies for attracting data center investments and they have been confirming larger projects then Iceland has been able to accommodate. 

Could data centers become a major pillar of Iceland’s economy? 

Bergþóra believes they could become an important export sector. 

She described the industry as highly productive with strong profit margins and substantial export potential. 

The key question, she said, is whether Iceland can expand infrastructure and energy production quickly enough to capture opportunities currently going to neighboring Nordic countries. 

If Iceland can scale effectively fast enough, the country could establish itself as a one of the major regional hub for digital infrastructure and AI services. 

What kinds of jobs do data centers create? 

The industry creates a wide range of technical and professional roles, including:

• Data center technicians

• Security and operations specialists

• Infrastructure engineers

• IT and cloud services professionals

• Management and specialist positions

Bergþóra also noted that international customers are increasingly hiring local teams in Iceland, helping expand the domestic tech ecosystem. 

In addition, Icelandic data center companies are growing internationally, including operations across the Nordic region. 

Are data centers environmentally sustainable? 

Bergþóra argued that Icelandic data centers are among the most environmentally friendly in the world because they run primarily on renewable energy and benefit from naturally efficient cooling conditions which contributes both to lower investment and operational cost. 

She emphasized that locating facilities close to renewable energy sources minimizes transmission infrastructure costs and environmental impact. 

Borealis’ operations in Blönduós, for example, are positioned directly near hydroelectric infrastructure where there are planned projects for increased production of renewable energy, both hydro and wind. 

How do data centers actually generate revenue? 

Data centers provide hosting and infrastructure services to international companies. 

Instead of shipping physical products overseas, Iceland can export digital services instantly through high-speed data connections. 

As Bergþóra explained, companies can install computing equipment in Iceland and deliver services globally around the clock through fiber-optic networks. 

This model reduces transportation costs while leveraging Iceland’s renewable energy  

Talk to Borealis

If you’re exploring sustainable, scalable infrastructure for AI, cloud, or high-performance computing, Borealis Data Center is ready to help. Get in touch with our team to learn how Iceland’s renewable energy, cool climate, and strategic location can support your next deployment.