If you're into vintage decor, gastrobars, stunning views, and live Icelandic music then Kex Hostel is your jam! There's even an in house barbershop. Situated in a former biscuit factory, Kex is one of the 'coolest' and 'most hip' hostel I've stayed in. While it isn't cheap, nothing is in Iceland, and you're getting a unique hostel experience in a great location with all your entertainment needs in house.
When I was there last Feburary, I caught a wind+ice storm, and my western fjords tour was cancelled. Thankfully there was a dope Icelandic Beer Festival happening in the large basement of the hostel. People from all over the world flew in for this event, and tickets have been sold out months earlier, but thankfully they set aside a few tickets for hostel guests so I was lucky to be able to experience it. I had beer slushy, beer ice cream, beer biscuits, and some of the best tasting craft beer from around the country and the world!
The hostel can organize many trips, and partner with many local tour operators. I found the staff to be friendly, and the beds to be comfortable. I also loved the location of the hostel, a walkable distance from most if not all attractions and points of interest in Reykjavik (it's a small town). My only complaint was the price, for both the hostel and the food/tours offered here, but honestly it isn't that much more expensive then alternatives nearby, it's just a really expensive country.
If you're planning on coming to Iceland and want a unique and authentic hostel experience, come to Kex! If you're a 'hipster', drop what you're doing and fly to Reykjavik now because you will be in heaven!