The warm waters are rich in minerals like silica and sulfur and bathing in the Blue Lagoon is reputed to help some people suffering from skin diseases such as psoriasis. The water temperature in the bathing and swimming area of the lagoon averages 37–39 °C (99–102 °F). The Blue Lagoon also operates a research and development facility to help find cures for other skin ailments using the mineral-rich water.
In 1976, a pool formed at the site from the waste water of the geothermal power plant that had just been built there. In 1981, people started bathing in it after its supposed healing powers were popularized. In 1992, the Blue Lagoon company was established, and the bathing facility was opened for the public.
In recent years, several cosmetics companies have begun marketing skin care products using mud purportedly extracted from the Blue Lagoon, their effectiveness still subject to debate.
The lagoon is a man-made lagoon which is fed by the water output of the nearby geothermal power plant Svartsengi and is renewed every two days. Superheated water is vented from the ground near a lava flow and used to run turbines that generate electricity. After going through the turbines, the steam and hot water passes through a heat exchanger to provide heat for a municipal water heating system. Then the water is fed into the lagoon for recreational and medicinal users to bathe in.
The rich mineral content is provided by the underground geological layers and pushed up to the surface by the hot water (at about 1.2 MPa (170 psi) pressure and 240 °C (464 °F) temperature) used by the plant. Because of its mineral concentration, water cannot be recycled and must be disposed of in the nearby landscape, a permeable lava field that varies in thickness from 50 cm (20 in) to 1 m (3.3 ft). The silicate minerals is the primary cause of that water’s milky blue shade. After the minerals have formed a deposit, the water reinfiltrates the ground, but the deposit renders it impermeable over time, hence the necessity for the plant to continuously dig new ponds in the nearby lava field.
A small experimental facility is still visible near the plant, where the engineers made decantation tests to evaluate the speed of mineral deposition, which is clearly a limiting factor both to the plant’s rentability and sustainability. Hence, geothermal energy exploitation at this location is not without environmental impact.
The Blue Lagoon was used as the pit stop for the first leg of The Amazing Race 6. The Blue Lagoon was used for the thermal spa scenes in the filming of Hostel: Part II. It was also shown in the Incubus documentary Look Alive, when the band visited Iceland, in the fifth cycle of Britain’s Next Top Model which used as photo shoot location as well as Keeping up with the Kardashians.