User blog comment:FairyRaven/Fairy Tail Chapter 351: Eternal Fire, Review and Commentary/@comment-1359322-20130912111026/@comment-7418318-20130912112948

Considering the next chapter's title, I must be something sentient at least, though I doubt it'll be a Human.

I guess it being Atlas Flame is still a possibility.

Or maybe it's actually the guardian of the entrance to the underworld and that it also guarded the village was just a side-effect and that's why someone froze it, to close off the underworld, with the nearby village being frozen as well being just collateral damage.