Bitcoin Miners Are Fighting Over Flared Gas

[ad_1]

Partnerships between oil producers and crypto miners are becoming more common in the US as bitcoin companies scramble for flared gas. While bitcoin and other digital currency producers have struck several deals with local US oil companies to reuse their waste gases for mining, only recently have the oil majors started paying attention. With huge carbon reduction potential through mutually beneficial partnerships, this could be a win-win for cryptocurrencies and Big Oil.

In the last two years, the interest in reusing waste gases for use in crypto mining has increased significantly. Oil companies are feeling increasing pressure from governments, international agencies and environmental activists to reduce the amount of greenhouse gas emissions they release into the atmosphere from their operations. Until now, potential solutions for carbon reduction have been expensive. Oil and gas companies have billions invested in carbon capture and storage (CCS) technologies, as well as in the search for Lower Carbon Oil Opportunities. But then crypto companies came along and offered a possible alternative.

Gas flaring is a byproduct of fractured shale production that is thought to produce about 1 percent of the world’s carbon emissions. This gas is burned because little is gained by reusing it. Meanwhile, the energy required to mine cryptocurrencies is extremely high. In 2020, bitcoin is required more energy than all of Switzerland for mining. So when cryptocurrency companies approached oil companies to mine oil sites and reuse the gas, several companies jumped at the chance.

An increase in the number of oil crypto associations It has been seen in both the US and Russia, the world’s largest oil torch. Even politicians in the US are getting on board, with Texas Senator Ted Cruz encourage partnerships as a means of securing energy infrastructure against harsh weather conditions that can lead to deadly power outages. Setting up such sites would allow power to be diverted to the grid as needed, which is particularly useful in times of natural disasters.

Now it looks like Big Oil wants a piece of the action like Conoco Phillips has started selling waste gas to bitcoin miners in North Dakota. He announced this month that he is currently running a pilot project, selling flaring gas to a third-party bitcoin processor for reuse. Similar projects have seen about a 63% reduction in COtwo emissions compared to burning.

In 2020, Conoco Phillips announced its net zero operational goal of greenhouse gas emissions for 2050, setting ambitious targets for 2030. As part of this goal, it endorsed the World Bank’s Zero Routine Flaring by 2030 initiative. Through its Lower 48 methane reduction project, Conoco has already implemented a combustion control strategy to make its burning more efficient. And the introduction of new partnerships with crypto miners could take this a step further, helping the company significantly reduce its carbon emissions from waste gases.

Related: OPEC falls further behind in oil production quotas

And we can already see those reaping the fruits of these innovative partnerships. In 2019, when oil and crypto partnerships were virtually non-existent, two students in Texas established Giga Energy Solutions. They put a shipping container with thousands of bitcoin miners at an oil production site, diverting the natural gas into generators to convert it into electricity, which in turn powers the miners.

Co-founder of the Brent Whitehead company Explain, “Growing up, I always saw flares, just being in the oil and gas industry. I knew how wasteful it was… It’s a new way not only to reduce emissions, but also to monetize gas.”

Giga is now expanding rapidly, having signed deals with more than 20 oil and gas companies and expecting more to follow. In fact, in 2020, Giga achieved revenue of $4 million, with earnings expected to be around $20 million by the end of 2022.

Similarly, Hunter Lowe, 27, established Crusoe Energy with the same intention, detecting a gap in the market and seeing a way to reduce carbon emissions at the same time. Lowe set up a bitcoin mine at an oil site in North Dakota, which quickly benefited from last year’s cryptocurrency boom. Buoyed by reduced carbon emissions, companies including Valor Equity Partners, Bain Capital and the Agnelli family’s Exor invested $128 million in Crusoe last year, allowing it to expand its flare-capture technology and increase the size of 40 to 100 units.

Just three years ago, many crypto innovators laughed out of the room for suggesting to oil and gas companies that they would help them reduce their carbon emissions and save money by reusing waste gas for crypto mining. Digital currencies were simply too volatile to take this suggestion any further. Three years later, several projects in the US and other countries are already underway, reducing carbon emissions and increasing cryptocurrency profits. Having seen the success of these projects, oil major Conoco Phillips is now running a pilot project that could pave the way for carbon capture through mutually beneficial partnerships.

By Felicity Bradstock for Oilprice.com

More top reads from Oilprice.com:

.

[ad_2]