In this particular case, Iceland is concerned about their domestic DC market supply flooding local demand if the BTC mining dries up.
There are still good reasons to host in Iceland — geothermal power, no or less need to run expensive AC units, maybe low enough latency to European sites — but 90% of their current consumption is BTC miners.
Yes and no :-). Ignoring other factors, a DC's services are on average less valuable the higher the latency. That restricts Iceland's primary market to Europe (and maybe east-coast North America).
