Town Hveragerdi is within the so-called Hengill volcanic system and the Icelandic Graben, which is the only part of the Mid-Atlantic Ridge above the surface of the sea.  Further east is another volcanic area between Mt Hekla and the Westman Islands and the sub-glacial volcanic systems of the Vatnajokull icecap, which continues northwards to the north coast.  There the volcanic activity is based on a “hot spot”, whereas this activity is based on the tectonic movements of the earth’s crust within the Graben.  Natural thermal areas are created in fissure areas and based on permeable sub-terrain strata and kept active by tectonic movements and earthquakes, which can make them or break.

The thermal activity is divided into about 30 high and 300 low temperature areas.  The latter are situated within the volcanic zones and comprise much more energy than the former.  Where they are prominent on the surface, they depict hissing and steaming solfataras and boiling mud pots.  Scientifically the temperature at the depth of 1000 meters determines the categories; if it exceeds 200°C high temperature areas are declared; if it is below 150°C low temperature areas exist.  The low temperature areas mainly appear outside the volcanic zones, where they are relatively easily accessible for exploitation.  They depict boiling and warm hot springs, and sometimes spouting springs, and smell less of sulphuric acid.

The high temperature areas of the Hengill Zone are probably several hundreds of years old and their oldest parts are within and around the town Hveragerdi.  In olden times, thermal areas were considered obstacles and danger to travellers, although they always awoke the curiosity of people, especially the spouting activity.  One of the erupting hot springs was the “Little Geysir”, now extinct.  The first exploitation of the Hveragerdi thermal area is connected with the county dairy in 1930 (Bakkahver) and ten years later the first borehole was sunk to the depth of 54 m for the new greenhouse at Fagrihvammur, which marked the beginning of this industry in Hveragerdi.  This borehole does not exist any more.  The hot spring Bakkahver is still there under a pyramid shaped roof.  A fatal accident in the thermal area in 1906 led to the first street lightning in the country.  The blue colour of the water of Blahver (The Blue Spring) explains its name.  The inhabitants disposed of much of their garbage into one of the springs (Ruslahver; Garbage Spring) for years on end and regretted it during the earthquake period in 1947, when it belched.  The boiling mud pot Dynkur was a tiny steam vent in 1991.

The Hveragerdi Geothermal Heating Authority exploits the boreholes HS02 (311 m) and HS08 (254 m), sunk in 1950 and 1988.  Heat tolerant microscopic organisms exist in the hot springs and they are exploited for the production of enzymes.  Some of them are visible to the naked eye, Masigolcladus Laminosus and Chloroflexus.  Continuous research has revealed more species, such as Archaea bacteria, Cyanidium algae and others.  A Visitors Centre was built on the eastern side of the thermal area to grant information on the thermal activity, the microorganisms, geology, horticulture and greenhouse cultivation.