I think the name derives from Erik the Red's efforts to attract colonists:
The early Norse settlers named the island as Greenland. In the Icelandic sagas, the Norwegian-born Icelander Erik the Red was said to be exiled from Iceland for manslaughter. Along with his extended family and his thralls (i.e. slaves or serfs), he set out in ships to explore an icy land known to lie to the northwest. After finding a habitable area and settling there, he named it Grœnland (translated as "Greenland"), supposedly in the hope that the pleasant name would attract settlers. The Saga of Erik the Red states: "In the summer, Erik left to settle in the country he had found, which he called Greenland, as he said people would be attracted there if it had a favorable name."[
Link: https://en.wikipedia.org/wiki/Greenland