Going out on a limb, the word "volcanoes" may be part of why, I know I was particularly perturbed when I found out my bank's failover data centre was about 20km away from their main one in a city built on an active monogenetic volcanic field.

Also, not sure how important latency is, but Iceland is rather far from mainland Europe.

This makes as much sense as asking why won't Asia building Data Centers in Mongolia.

If this was supposed to be EU, this also makes no sense. EU is not a country.

You van ask why individual member states won't build AI datacenters. You might have 27 different answers.

While their de jure status and allegiance may be intertwined with powers that govern them from afar, I would speculate that an island locale like Iceland enjoys a lot of de facto autonomy and they can do as they please, being so physically inaccessible.

The distance and political concerns may also be a disadvantage to tenants in their data centers. I can imagine that the inhabitants of Iceland would be reluctant to sell out like this. At the very least, what's going on in the Strait of Hormuz reminds us all that data centers are strategic quasi-military targets, and must be defended and protected by sophisticated military shields, because disabling or destroying them would be decidedly advantageous in wartime.

It's important to keep in mind that "data centers" are largely the aggregation and consolidation of "machine rooms" that used to take space in every corporate campus and every headquarters building (combined with network interchange points); there is a ton of commercial property that's sort of gutted now, as machine rooms migrated to the cloud: not only WFH/remote jobs are affecting the vacancies, but the machines and robots are moving in to live with "roommates" of their own kind nowadays!

"Iceland doesn’t have that much excess power generation. Already our power companies have to occasionally limit power delivery to heavy users.

Increasing power generation that much requires tough choices: we’d have to ruin the environment some way. We just don’t have that many locations left for hydroelectric or geothermal power plants. Most locations that remain are popular tourist sites – destroying them would be bad for the economy – important ecosystems, or would require improvements to the grid that nobody seems to be willing to pay for. Even if we shut down some of the aluminium smelters, reusing that power elsewhere would be problematic. The Kárahnjúkar power plant is in the middle of nowhere and was purpose-built to serve the aluminium industry. When it generates excess power – which happens – that power is usually wasted because the grid can’t shift it from the region where most of the smelting takes place to the regions that have most of the population.

However, data centres in Iceland are both located near populated areas and are almost exclusively used for “AI” or crypto. You can’t buy regular hosting in these centres for love or money. If you buy hosting in Iceland, odds are that the rack is in a building in Reykjavík somewhere, not in a data centre

And those data centres use more power than Icelandic households combined.

Instead of putting limits to “AI” and cryptocoin mining, the official plan is currently to destroy big parts of places like Þjórsárdalur valley, one of the most green and vibrant ecosystems in Iceland."

Iceland is not an EU member, and is remote. What happens if Trump decides Iceland should be a US state?