Iceland sits spanning the Mid-Atlantic Ridge tectonic plate boundary which separates the Eurasian and the North American plates. The ridge, an underwater mountain chain, extends about 16,000 km along the north-south axis of the Atlantic Ocean.celand formed by the coincidence of the spreading boundary of the North American and Eurasian plates and a hotspot or mantle plume – an upsurge of abnormally hot rock in the Earth´s mantle.