Blue ice occurs when snow falls on a glacier, is compressed, and becomes part of a glacier that winds its way toward a body of water (river, lake, ocean, etc.). During its travels, all of the air bubbles that are trapped in the ice are squeezed out, and the size of the ice crystals increases, making it clear.
In some areas, earthquakes have raised the blue ice above the ground and created formations much like large frozen waves.
The blue color is often wrongly attributed to Rayleigh scattering. Rather, the ice is blue for the same reason water is blue: it is a result of an overtone of a OH molecular stretch in the water which absorbs light at the red end of the visible spectrum.