That’s likely due to the high cost of living in Iceland. You can live cheap-ish anywhere, but it takes a bit of local knowledge to do that, and I suspect the cheaper housing options in Iceland are not what most digital nomads seek. One data point, in spring of 2021, I saw 1kg of cherries (imported from the Netherlands) in the store for the equivalent of 25 USD.
A Domino’s pizza there is $30 for a medium.
Sounds like a mid-size american city.
I live in a large city and I can get a large Dominos pizza delivered at full menu price for about $20. If I pick it up from the store it's like $8.
I happen to have my stack of receipts from my Iceland trip in front of me (was cleaning out some stuff), and my "bearnaise burger & fries" from the "N1" gas station was 1770 ISK or about $17.50 CAD, $13USD. Let's see what else I have here.. Tenderloin steak from Strikið in Akureyri was 5990 ISK or $59CAD, $44USD, Creme Brulee was 1990 ISK so $20 CAD or $14.50 USD. (btw Strikið was absolutely delicious, 100% recommended).. Indeed Iceland is pretty expensive, though not too bad IMO. I'm surprised how ultra-high the requirement is to be granted this VISA, though.
It’s European too, you can pretty easily hit $90k in fully remote contract jobs
Most Europeans can already live in Iceland without needing a visa.