Grímsey is the northernmost inhabited Icelandic territory; the rapidly disappearing islet of Kolbeinsey lies some 60 km farther north, but is uninhabitable. The closest land is the island of Flatey, Skjálfandi, 39.4 kilometres (24.5 mi) to the south.
The Arctic Circle currently runs through the island, a feature of interest to many visitors, while the entirety of mainland Iceland lies south of the Arctic Circle. Due to long-term oscillations in the Earth's axis, the Arctic Circle currently shifts northward by about 14.5 metres per year, though varying substantially from year to year due to the complexity of the movement. The true position of the Arctic Circle in the early 21st century is already close to the northern tip of the island, and by about the middle of the 21st century, it will no longer cross Grimsey at all. Originally a fixed monument to the Arctic Circle was placed at a conventional location. In 2017 a new monument, comprising an eight-tonne stone sphere, was placed close to the true location of the circle, in response to its continual movement.
There are steep cliffs everywhere except on the southern shoreline. Grímsey has an area of 5.3 square kilometres (2.0 sq mi), and a maximum elevation of 105 metres (344 ft).
Despite the northerly latitude, the climate is generally mild, because of the North Atlantic Current, which brings warm water from the Gulf of Mexico. A maximum temperature of 26 °C (79 °F) has been recorded, which equals that of the much more southerly capital Reykjavík.
Though treeless, the island's vegetation cover is rich, consisting of marshland, grass, and moss, and the island is home to many birds, especially auks.
The principal industrial activity is commercial fishing. Agriculture and collecting seabirds' eggs are also common. Grímsey is a popular tourist destination for visitors who wish to experience the Arctic Circle. The island is served by regular ferry and aircraft passenger services from the mainland.
The church on Grímsey was built from driftwood in 1867 and renovated in 1956. It is within the parish of Akureyri. The island also features a community center and a school from kindergarten to Grade 8. Beyond this age, students travel to Akureyri for further education. The church was formerly a parsonage, and is situated at a place marked as Miðgarður on most maps of the island; however, the single settlement is officially known as Sandvík.
The island has acquired a long-standing reputation for being a bastion of chess-playing. On learning this, the American scholar and keen chess player Willard Fiske took a protective interest in Grímsey in the 1870s, sending supplies, supporting the economy and leaving money in his will, though he never once visited.
The island is served by Grímsey Airport. A ferry connects the island three days a week with the mainland.
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