Iceland Travel Guide
Iceland is the place to be to for nature lovers everywhere! and I will tell you exactly why you must travel to Iceland. This gorgeous island sits near the top of the globe and is home to natural landscapes you can’t find anywhere else. Going through a tour of Iceland is like stepping onto another planet. You’ll find geysers, ice-covered volcanoes, glaciers, waterfalls, mountains, rolling hills of green, and lakes you won’t forget.
To top it off, Iceland has an extremely small population, making it a peaceful getaway. While other places in the world may be favorites for those seeking a bustling nightlife or urban experience, Iceland offers a calm, scenic experience that will have you feeling refreshed and awestruck when you leave.
Until recently, Iceland was relatively unknown and visited only by the most extreme adventures, much like modern-day Greenland. However, things are turning around. These days, the tourism industry in Iceland is booming! Every year, Reykjavík (the small capital of Iceland) somehow accommodates tourists in numbers over 6x more than the number of locals who reside there. It’s not surprising that once the world became aware of the beauty of Iceland, its popularity spread like wildfire.
There is so much beauty and there are so many adventures in Iceland that you can easily make memories that will last a lifetime and cross off most of your bucket list in a single trip. You can camp under the dazzling Northern Lights, watch the midnight sun, and even boat across stunning icebergs. You can dive into crystal clear waters between two continental plates or go ice caving in the most awestriking caves. The possibilities are endless; almost every mountain can be climbed for an epic hike, and every glacier awaits you for a rewarding trek.
The natural wonders of Iceland are still being discovered today! As if the stunning waterfalls, snow-capped volcanoes, geysers, and black sand beaches weren’t enough – there’s even more to find. Iceland is a natural phenomenon that will make you realize just how lucky you are to be alive and to witness the beauty in our world.
If the natural wonders of Iceland aren’t enough to make you fall in love with this country – the locals will certainly do the trick. Warm, friendly, and welcoming, Icelanders will make you feel right at home. This country has a gritty, resilient reputation because Icelanders know how to make a comeback! They have endured much – the major banking crash and recession in 2008, leading to the stock market plummeting by more than 90% and leaving almost every company bankrupt, followed by a catastrophic volcanic explosion in 2011. Iceland has made a strong comeback since both events and has registered an impressive growth of 5.5% GDP this year, with the help of tourism and successful government policies. The people here are strong, kind, and resilient.
This sudden influx of tourism and the high prices here do make Iceland a difficult country to backpack through.
Language
Icelandic is the official language of Iceland. It is an Indo-European language, belonging to the sub-group of North Germanic languages. It is closely related to Norwegian and Faroese. Most locals also speak English, so the language barrier should be minimal.
Religion
80% of all Icelanders are members of the Lutheran State Church. Interestingly enough, 5% of the population still practice Asatru, a traditional Norse and pagan religion. Asatru is also the fastest-growing religion in Iceland. To read for about Asatru click here.
Safety
Iceland is one of the safest countries in the world, boasting of an incredibly low crime rate. However, there are a lot of natural hazards to be aware of, and the weather can change in a split second. The winter months are extreme in some parts of Iceland, so full precautions and safety measures need to be taken before venturing out to those areas.
Money
The local currency is called Krona or ISK. At the time of writing, one USD was worth 125.40. You can exchange money at most hotels; however, banks will give you the best rate. Some restaurants and tour companies might accept dollars, euros, or pounds. Be aware that Iceland only has a handful of big towns and if you are going to the small villages you need to carry enough cash because you will not find ATM’s or banks in those towns. Credit and debit cards are accepted by almost all restaurants and companies.
Food
Fishing contributes to about 12% of Iceland’s GDP. It’s no surprise that Icelandic cuisine largely consists of a variety of fish dishes. Icelanders also love their meat, and they have some unique dishes (to say the least). Only in Iceland can you find sour ram testicles, sheep head, and fermented shark. In some restaurants, you can even find puffin and whale meat. Vegetarians might think twice before visiting Iceland. While Reykjavík has become a metropolis due to the tourism boom, and as such feature’s cuisines from all over the world, many of the villages will not have many vegetarian options.
Kjötsupa
This is a traditional lamb soup, made from some of the heartier pieces of the lamb and Icelandic herbs and veggies. This is usually enjoyed during the colder months of the year.
Svi∂
This is a more traditional Icelandic food. It is essentially sheep’s head. Rumour has it that smoked sheep cheeks are simply delightful.
Plokkfiskur
A lovely fish stew including boiled cod/haddock with potatoes. Almost every family has its own variation.
Har∂fiskur
This dried fish jerky is a delicacy in Iceland! It’s pretty tasty and is typically served with butter.
Hárkarl
Fermented shark is a popular item in Iceland. Usually, this comes from Greenland shark or other sleeper sharks. It’s eaten year-round. Fair warning: many tourists don’t particularly enjoy it, but you should definitely try it! You just might love it.
Skyr
This yummy yoghurt is high in protein and relatively affordable. Many times, it is mixed with fruit and is an iconic staple in the Icelandic diet.
SIM Card
Despite Iceland’s topography and a lack of settlement in most areas within Iceland, you should be able to stay connected with relatively good speeds and quality, especially in the major towns and by the seashore. There are three main service providers: Vodafone, Siminn and Nova. SIM cards can be purchased at the airport, kiosks, gas stations, supermarkets, and officially licensed stores. Vodafone and Nova offer better prices and you can expect to pay ISK 1490 and ISK 2490 for 1GB and 5GB SIM cards, respectively speaking, through both providers. Nova offers 10GB data for ISK 3490, but Vodafone does not.
When to Go
Choosing when to go to Iceland can be difficult.
Here are some of the advantages of going in the summer months (April through October):
- Longer days and nicer weather. Keep in mind, the average temperature even in the summer months is 10c. The weather in Iceland is unpredictable and it can easily snow in the summertime.
- Open roads, easy travel to North Iceland. In the winter months, everything is dependent on the weather. In the winter, many of the roads would likely be shut down, and you would not be able to visit many attractions.
- Exotic wildlife. The summer is the best opportunity to see exotic birds like the puffin and see whales. You cannot see the exotic birds in the winter.
Here are some of the advantages of going in the winter months (October through April):
- Northern lights! This is a huge plus to visiting in the winter months. The opportunity to see the northern lights is priceless. You can see them from September through April.
- Fewer tourists. This is a huge advantage, especially because in the summer there are so many tourists. This means cheaper prices for hotels and tours!
- Astounding beauty. Iceland is even more beautiful in the winter months. Only in the winter can you see the gorgeous frozen waterfalls and stunning ice caves!
ITINERARY
REYKJAVÍK
To start off your trip to Iceland, you’ve got to visit the most Northerly capital in the world. Though remarkably small, Reykjavík is a cosmopolitan city and the influx of tourism is helping it to grow incredibly fast. Reykjavík packs quite a punch with contemporary art, top-class restaurants, colorful buildings, and a vibrant nightlife featuring funky clubs and unique music.
Most of the Icelandic population lives in Reykjavík and therefore it is the best place to explore the culture and get to know Icelanders.
Reykjavík is close to a number of top attractions such as the blue lagoon, making it the perfect place to explore Iceland. There are many travel companies in the city, hosting a plethora of activities. In the winter months, it is possible to see the northern light within the city. The proximity to the Atlantic Ocean also gives you the opportunity to go whale and dolphin watching!
Where to Stay
There are a number of hostels available, though it should be mentioned that due to the massive number of tourists, these hostels are rather expensive and not always worth the money you pay. However, they are still cheaper than some other options. You should book in advance because the hostels sell out quickly.
Hlemmur Square
This hostel/hotel is clean, spacious, and strategically located near nice restaurants and bars. As with most hostels in Reykjavík, the price is steep. However, this seems to be the best option close to the center, because many other hostels in the area are even more pricy. One night in a 10-bed dorm costs $21 here, whereas a 4-bed dorm costs $31. A double room costs $100.
Laekur Hostel
This is another decent option, although it’s quite far from the center of town. The hostel makes it up with comfortable, well-furnished rooms and a great atmosphere. A night in an 8-bed dorm costs $29, whereas a 4-bed dorm costs $36.
Top Things to See in Reykjavík
Hallgrímskirkja. This is the iconic church of Iceland and the most prominent building in Reykjavík. It is often rated as one of the most unique and beautiful churches in the world. You can get a good view of the city from the top for 1000 ISK.
Harpa. Harpa is truly dazzling, being the most modern building in Iceland. Made in 2011, Harpa is a concert hall and conference center that hosts many orchestras and festivals. Harpa has a café, restaurant, and a shop. You can even see a 15-minute, 360-degree movie about the natural wonders of Iceland.
National Museum of Iceland. This is the best place to learn about more than 1000 years of Icelandic history. The museum has many artefacts dating from the 9th century to the present day and has well-written information. The entrance fee is 2000 ISK. The Settlement Museum is also quite nice and talks about the first Viking settlement in the city. Another museum that you could visit is the Saga Museum, which depicts all the hardships faced by the city since settlement, like earthquakes and volcanic eruptions.
Visit Videy Island. Only a short boat ride away, Videy Island is a great outing from Reykjavík. The island has some nice hiking trails and some unique birds can be found here.
Downtown. The heartbeat of the city, here you will find everything from unique shops selling volcanic rock pottery to restaurants serving all kinds of cuisines. Be sure to check out the beautiful street art while walking. Also, visit 66 Degrees North if you are planning to go on an adventure in Iceland.
Places to See Around Reykjavík
Blue Lagoon
Located just 30 miles outside the city, relaxing at the lagoon is a nice way to end the trip. The lagoon is about 39c year-round and the water contains rich nutrients like silica that help your skin. The lagoon has a restaurant, spa, massage facilities, and rooms as well. Located only 15 mins away from the airport, many people choose to go here before leaving Iceland.
Interesting facts about the Blue Lagoon…
- It was named as one of the top 25 wonders of the world as well as one of the top 10 spas! You must book your spot in advanced. Along with your booking, you can also book for transfers that will pick you up from your hotel/location and can drop you back or to the airport if you are heading there.
- Despite its popularity, I found the Blue Lagoon to be overrated and expensive. The lagoon is manmade and not natural, contrary to what many people think. There are many geothermal pools and natural springs around Iceland and some of them are 1/10th the price. The only positive about the lagoon was the electric blue color of the water which was surrounded by black lava field and grey moss – certainly a beautiful sight!
- Entry to the lagoon costs 35 euros and a larger package including a face mask, one free drink, a towel, and a robe costs 65 euros.
- For packages and other information, you can visit the website here. [JG2]
Whale Watching
I have gone whale watching a few times around the world, but I have to say that none of those experiences come close to this. I was lucky enough to see all of the species, including mink whales, white-beaked Dolphins, harbor porpoises and the incredible humpback whales. The tour lasts about 3 hours and for the majority of the tour, I saw whales or dolphins. Words cannot describe the experience of seeing them so close to you, especially the humpback whales. The tour starts from the downtown harbor in Reykjavík and most tours cost about 11000 ISK. I recommend going with Elding.
Golden Circle (Central Iceland)
A perfect day trip to visit some of Iceland’s most stunning sites. The Golden Circle is a 300km journey that starts and ends at Reykjavík. The top sights of the golden circle are the following:
- Þingvellir National Park
- Fissures. The Eurasian and North American plates are slowly splitting apart, causing deep fissures in the ground. These fissures and the separated mass of land are a sight to behold.
- Parliament. Home to Iceland’s first democratic parliament, which was made in AD 970, making it one of the first parliaments in the world.
- Silfra. Silfra is a fissure that opened up after an earthquake in 1789 and has one of the most beautiful snorkelling and diving experiences. Silfra has glacial waters coming from the second-largest glacier in Iceland. These waters are considered to be some of the clearest. Even though there are no fish, diving in Silfra is breath-taking simply because of the clarity. How cool is it to dive between two shifting continental plates?! One of the best companies providing this experience is Dive Silfra. The rate is very steep and will set you back 35000 ISK for diving and 22000 for snorkelling. You can check here[JG3] for other information.
- Gulfoss Waterfall. Another impressive location in the golden circle is the Gulfoss Waterfall. This stunning waterfall cascades down 20m into a deep gorge with amazing power. In the winter it is possible to see the entire waterfall freezing.
- Geysir Geothermal Area. Home to hot springs, mud pots, fumaroles, and two incredible geysers. Unfortunately, one of the geysers is now dormant. The second one is still active and erupts every 10 minutes, sometimes reaching an impressive height of 100ft.
- Kerid Crater. Kerid crater is located close to the city and it’s a worthy stop. The dark green colour of the lake and the surrounding red mud gives the crater a beautiful look.
How to See the Golden Circle
There are only two ways to see the Golden Circle. Either you drive yourself or take a tour since public transport will not go to all the sites. Driving is by far the better option. All the entrances are free and hence driving is much cheaper than taking a tour. Additionally, at some of the places, you may want to spend more time or even take detours and visit some of the other sites, which is not possible with a tour.
The price of the complete tour starts at $55 and can go up to $100. I recommend going with Iceland on the Web. You can click here[JG4] for more information.
SOUTH ICELAND
Stunning waterfalls, lava fields, snow-covered volcanic peaks, glaciers, icebergs and black sand beaches…these are all the things that can be found on a road trip to South Iceland. Nature is truly at its full swing and shows a dazzling display of its abilities. One of the most blessed regions, South Iceland is certainly out of this world in terms of beauty. Any trip to Iceland is incomplete without exploring South Iceland.
Places to See in South Iceland
Seljalandsfoss Waterfall
The stunning waterfall makes for the most iconic Iceland photos. The beauty of the waterfall is that you can take pictures from all angles, and you can even go behind the waterfall. This makes it a photographer’s favorite waterfall. The volcanic glacier Eyjafjallajökull that famously erupted in 2010 feeds the waterfall.
Skogafoss Waterfall
Another stunning waterfall, which is one of the highest in Iceland. The fast gushing water often creates a misty background behind many rainbows that lead to stunning images and an amazing view overall. A big advantage is that you can go as close to the waterfall as you like. There is a staircase beside the waterfall that gives you the chance to view it from the top.
Plane Wreck
If I could choose a plane wreck to be located anywhere in the world, this would be one of my top choices. The plane wreck occurred due to a lack of fuel and luckily everyone survived. The black volcanic land, the Atlantic Ocean in the background and the incredible vastness of nature surrounding it makes it one of the most beautiful wrecks.
Vik, Black Sand Beach and Ice Cave
Vik is a colourful fishing village right in the middle of some spectacular nature. Despite the population being less than 500, it is one of the largest towns in South Iceland. Vik is a great place to stop for lunch, but it is highly recommended to stay here at least one night because of all the activities around it.
- Myrdalsjökull Glacier. You can actually walk on this glacier, located right outside of town. There is a section of the glacier called Kalta which is an active volcano that hasn’t erupted for over 100 years. You are not only walking on a glacier but also an active volcano!
- Ice Caves. If you thought walking over the glacier is amazing, how about visiting an ice cave below the volcano? You can take a guided tour that takes you to this incredible ice cave. It is one of the top experiences in Iceland!
- Reynisfjara. The epic black sand beach of Iceland, which is only a short walk from the town. Beware of the rough ocean! It is recommended to stay out of the water because of the strong tides.
Jökulsárlón
Jökulsárlón has rightfully been named as the crown jewel of Iceland! The distant snowed capped mountains, the Atlantic Ocean, and the beautifully intricate icebergs make it a sight hard to fathom. You can take a boat ride to see the amazing icebergs. Also, just a 5 minutes’ walk away is a place called Diamond Beach where icebergs wash up on the black volcanic sand. Jökulsárlón is my personal favorite and a place you cannot afford to miss.
Vatnajökull
The largest glacier, not only in Iceland but also in all of Europe. The glacier encompasses 10% of Iceland, covering canyons, mountains and even volcanoes (some of which are active). In the winter months, many tourists go to some of Vatnajokull’s stunning ice caves.
Skaftafell
Popular for its varied hiking and the stark contrast of white glaciers, black volcanic land, green pastures, and water. Skaftafell is truly incredible!
LANDMANNALAUGAR
Langmannalaugar is located in the beautiful mountains of the Fjallabak Nature Reserve. It is a favorite for many tourists, and full of geothermal attractions! One of the most popular options for many tourists is to hike the trails here.
Top Attractions and Hike
- Start of the Laugavegur Trail leading to Þórsmörk. This trail can be done in 4, 6 or 8-day trips with tents or in Highlands Cabins.
- Hike Mt. Brennisteinsalda. This is a smaller hike, which will take you about 2-3 hours. Enjoy the beautiful view of colourful terrain, lava fields, and lakes.
- Traverse Mt. Bláhnjúkur. You can hike several of five different glaciers on a clear day. This hike will take about 3-4 hours.
You can learn more about hiking opportunities here.
Best Tours From Reykjavík to See Landmalungar
Here are some of the most affordable tours to take you from Reykjavik to Landmannalaugar. For summer tours, we recommend Landmannalaugar by bus from Reykjavik, Hella, and Leirubakki. Some other good options include Landmannalaugar by Jeep and Super Jeep tours of Thórsmörk.
Winter tours offer a different side of the region, with the glaciers and glacial rivers of Thórsmörk Valley on full display. Depending on Landmannalaugar’s weather, you might be able to take a small detour to the beautiful waterfall of the striking Stakkholtsgja Canyon.
You can find some more exciting tours here. If you’re looking specifically for hiking tours, check out some great options here.
WESTERN FJORDS
The Western Fjords are a beautiful piece of Iceland’s amazing landscape. You can find a beautiful black sand beach, as well as an amazing pink sand beach. The Western Fjords are home to the waterfall Dynjadi and has an amazing puffin population. There is much to see here, and it is generally uncrowded by tourists.
Top Things to See in Western Fjords
- Rauðasandur. This beach is beloved as the pink sand beach of Iceland, sporting red and golden sand. This sets the beach apart from many of the other coasts in Iceland, where you can find black sand beaches.
- Hornstrandir Nature Reserve. This beautiful nature reserve is deserted but still lived in by some traditional farmers and fisherman. You can see some absolutely gorgeous plants landscape here! There are frequently seals on the beach and plenty of birds for an unforgettable bird watching experience.
- Látrabjarg. Látrabjarg is well known for its excellent bird watching cliffs. There are literally millions of birds who make their home here. You can find Skuas, Artic Terns, Guillemots, Eider Ducks, and Razorbills, alongside the beloved Atlantic Puffins.
- Dynjandi. Dynjandi is a collection of powerful waterfalls in the region. You will never forget the experience if you have the chance to witness the immense power of this force of nature! The name of this waterfall means “Thunderous,” and it surely deserves this title.
How to Get to the Western Fjords from Reykjavík
Flight
The quickest way to get to the Westfjords is by flying. Air Iceland has flights to Ísafjörðu twice every day. The flight can cost around 9.000 to 12.000 ISK one way.
Another option is to fly Eagle Air which runs two flights per week from Reykjavik to Gjögur and six flights per week to Bíldudalur.
Bus
You can easily take a bus from Reyjavik to Holmavik. This route is available daily. From Holmavik, you can take a bus to Isafjordur; this route is only available in the summer.
For bus timetable and tickets check out this link.
EASTERN FJORDS
The experience in the Eastern Fjords is different from that in the Western. There is some incredible wildlife here, including wild reindeer, and beautiful scenery. It is a tranquil, beautiful place, and it cannot be overlooked!
Top Things to See in Eastern Fjords
- Egilsstaðir. This is the most lived in portion in the area. Here you can find good food, bars, places to stay, and a small airport. There are lots of things to do here, and you can even check out the East Iceland Heritage Museum for a bit of culture.
- Hengifoss waterfall and Hallormsstaðu. Surrounding the lake Lagarfljót are two works of beauty – the Hengifoss waterfall and the Hallormsst∂ur forest. You can take a short 35-40 minute hike to see the waterfall in person, and roam through the stunning forest for hours at a time. Legend has it there’s also a monster living in the lake.
- Sey∂isfjör∂ur. Sey∂isfjör∂ur is a town full of creativity and life. Despite hosting a small population, there is a lot going on here! If you make it during the summer, you’re sure to find an exciting festival or art exhibit happening in town. There are also some nice places to eat, and a few good places to grab souvenirs.
- Borgarfjordur Eystri. This quaint town is a place for fishermen and shepherds. It’s small but worth a visit. There are plenty of little cliffs to hike, and has a reputation for being an excellent bird watching location.
How to Get to the Eastern Fjords from Reykjavík
Flight
Air Iceland runs three flights daily from Reykjavik to Egilsstadir. The flight can cost anywhere from 9.000 ISK to 15.000 ISK one way.
Bus
You can take a bus to Akureryri from Reyjavik which runs few times every day. From there you can take another bus to Egilsstadir.
Route 56: Akureyri – Egilsstaðir and Egilsstaðir – Akureyri. During the summer the bus leaves daily and 3-5 times a week in the winter. See the bus schedule here.
NORTH ICELAND
This is the place to go for whale watching, volcano spotting, and landscape photography. You can’t afford to go to Iceland and not check out some of the amazing geological wonders of this section of the country. The rock formations, craters, and bodies of water are unforgettable.
Top Things to See in Northern Iceland
- Akureyri. Akureyri is considered the capital of Northern Iceland. It’s a great place to make home base during your Northern Iceland tour, and offers plenty to do. There are hot spring tours, islands to explore, horseback riding to do, whales to see, and beautiful botanical gardens. You won’t run out of experiences here in Akureyri!
- Diamond Circle. The Diamond Circle is a wonderful tour circuit full of unforgettable sights and beautiful landscapes. There are 5 beautiful must-see landmarks within the circle: the Go∂afoss waterfall, Lake Myvatn, Dettifoss waterfall, Ásbyrgi canyon, and Húsavík (the whale watching capital of Iceland).
- Go∂afoss Waterfall. This waterfall is absolutely gorgeous and has rich history. The name literally means “The Waterfall of the Gods,” after Ljóvetningago∂i converted to Christianity and threw Norse god idols into the waterfall. It is beyond beautiful!
- Húsavik. Húsavík is known as the Whale Capital of Iceland. If you are interested in marine wildlife, this is the place for you. You can swim in geothermal springs, check out one of the local museums, and of course go whale watching.
- Grímsey Islands. There are less than 100 people living on this island, most of which are fisherman. You can only get here by ferry or small plane, and it is rather unvisited by tourists. Like everything in Iceland, it is beautiful, and will be a calm outing for your trip.
How to Get to Northern Iceland
Flight
There are 4 flights daily from Reykjavik to Akureyri. The cost one way can range from 9.000 ISK to 15.000 ISK.
Bus
There are regular buses leaving from Reykjavik to Akureyri. During the summer months (June to September), Sternatravel also offers hop-on-hop-off tours around the ring road.
For prices and timetable check this link.
Transportation
Driving
The ideal means of travel in Iceland is to drive yourself. Most of the natural sights are free of charge, and if you drive, you can spend as much time there as you would like. The tours can feel a bit hurried, especially the one in South Iceland, as the distances are long, and you do not get to spend enough time in some of the places. Also, it’s impossible to see all the sights of South Iceland in one day. Tours mean you might miss out on some incredible places, but if you drive, you can spend your time when and where you want.
Bus
For a country as expensive as Iceland, the buses are surprisingly cheap. You can get to major cities from Reykjavík by taking the bus. The northern capital, Akureyri, is 6 hours away and there are a few buses running there every day (weather dependent). You can check here[JG5] for more information on Sternatravel.
In the summer months, there is also a bus that runs 4 times a week and includes stops on some of the waterfalls and the geysers on the way to Akureyri. The tickets only cost 4000 ISK!
Plane
Air Iceland runs flights from the capital to Akureyri, Egilsstaðir, Thorshofn, Vopnafjörður and Isafjordur. All the major towns are connected by Air Iceland. However, for a tourist, it only makes sense to take an airplane if you’re short on time and want to explore all the regions of Iceland or if the roads are inaccessible due to snow.
The tickets are costly and often a one-way trip costs more than 100 euros. A downside of flying through Iceland is that you miss many of the wonders of Iceland and some of the best road trips. You can check for more information and prices here[JG6] . Click here [JG7] for information about flights to Greenland.
Tours
The quick and easy way of seeing Iceland is via tours. It isn’t the best option, but if you’re short on time and cannot rent a car, you can see much more via the tours than with a bus or an airplane.
The price of the complete tour of the Golden Circle starts at $55 and can go up to $100. I recommend going with Iceland on the Web. The tour generally lasts for 6-8 hours. You can click here [JG8] for more information.
For South Iceland, the tour costs about $80-$120 with the boat ride in Jokularson. The tour lasts for 12-14 hours.
Cycling
Cycling is slowly becoming popular with tourists, and you cannot blame them. Riding in such incredible nature is not something you want to miss. The roads are vast and since the population density is so low, the roads are quite empty, making it perfect for cycling. The only issue is that it is difficult to deal with mechanical issues since there are few large towns.
You can rent a mountain bike from Reykjavík for around $40 per day.
Hitchhiking
Many people hitchhike around Iceland. Since this is so popular and Icelanders are friendly, this is a cheap option to see some of the sights and interact with locals. However, much of the hitchhiking is limited to the ring road and the highlands. It isn’t possible to hitchhike the Westfjords.
I cycled and hitchhiked around South Iceland and you can read about my experience here[JG9] .