Its a bit of both, but its primarily due to the high insulation.

There are 2 gradients: The surface gradient is what I mentioned about and its quite steep(only a few meters to drop tens of degrees). After that, you reach approximately the average annual surface temperature, but do continue to get small drops due to the geothermal gradient. The geothermal gradient is relatively shallow - you need to go down a thousand meters to see tens of degrees drop.