Bitcoin mining in early years was mostly done by computer geeks on their computers. With bitcoins price increasing, this was soon replaced by mining on ASICs Application Specific Integrated Circuits. Individual mining became replaced by companies setting up mining farms. Warehouses full of specialized ASICs continued to mine bitcoins continuously
With mining becoming more competitive, the emphasis of mining companies turned to cutting costs. Running costs, primarily electricity, are a huge component of overall mining costs. So companies have relocated their mining farms to countries where electricity is readily available. Iceland, with its abundant and cheap electricity, generated from renewable sources of energy, provides an attractive location for mining farms.
Readfull article: http://dailysatoshi.com/2014/11/cutting-costs/