Trailers hitched to trucks back up toward well pads on the US oil patches stretching along the Rockies and Great Plains, capturing natural gas and converting it to electricity on the spot. “Mining rigs” are trailers that transport pipes, generators, and computers. Their managers, on the other hand, are not looking for oil. They’re searching for another treasure: cryptocurrencies like Bitcoin, using stray natural gas that oil companies don’t want.
Cryptocurrencies are digital coins that can be used to buy and sell goods and services without the use of a middleman such as a central bank. However, extracting the currency from cyberspace necessitates a large amount of energy, which is also costly. In order to open digital vaults containing the money, supercomputers must continually compete against other “miners” to solve complex math problems. These supercomputers, which are housed in mobile trailers, can reach temperatures of 160 degrees Fahrenheit (71 degrees Celsius), and cryptocurrency miners say that just sitting near them keeps people warm in the cold of western North Dakota.
The miners are gradually sending these rigs to oil fields because it is one of the most cost-effective ways to get the resources they need. Oil and natural gas are produced in the same wells, but drillers are looking for crude oil at these locations because there are no pipelines to transport the gas to market. This forces them to either burn it off in a method known as flaring, which emits carbon dioxide, or vent it. “The perfect spot for us is lost, low-volume gas that doesn’t warrant a pipeline,” said Steve Degenfelder, land manager for Wyoming-based producer Kirkwood Oil and Gas LLC, which has partnered with Bitcoin miners.
Investors and government officials are pressuring oil producers to reduce emissions that contribute to global warming. They occasionally give the gas away for free to cryptocurrency users. Degenfelder, which works with miners linked to EZ Blockchain, a Chicago-based energy and technology firm, to cut flaring at some of its 600 oil wells across the Rocky Mountains, said, “Oil and gas companies don’t want to flare their gas – that’s money that’s burning away.”
Uncertainty is high
Some environmentalists and investors argue that cryptocurrencies aren’t a long-term solution to unwelcome natural gas emissions, citing the currency’s uncertain future as well as the fact that Bitcoin and other cryptocurrency firms emit their own emissions. The global Bitcoin industry’s total CO2 emissions have risen to 60 million tonnes, the equivalent of around 9 million cars’ exhaust. According to a Bank of America study released in March, this is up from 20 million tonnes just two years ago. Bitcoin’s value plummeted after billionaire Elon Musk tweeted that his electric car company Tesla Inc would no longer accept the virtual coins as payment, citing concerns about “rapidly growing use of fossil fuels for Bitcoin mining and transactions.” Over the course of two weeks, the currency plummeted in value before beginning to recover on Thursday.
There are better uses for stranded coal, such as powering hospitals and schools, according to Andrew Logan, senior director of oil and gas at Ceres, a Boston-based clean-energy investor company. However, he noted that this would necessitate the construction of pipelines to transport the commodity away from the oil fields. “I believe we need even more long-term and stable solutions to get the gas to market and use it for whatever its highest aim is,” he said.
Proponents claim that the latest oil-cryptocurrency alliances in North America would shift virtual coin mining away from Asia, which is home to more than 60% of such operations and is primarily fuelled by coal. The combustion of coal generates about. “It helps reduce pollution at the manufacturing level, but it also helps to reduce emissions globally by reducing mining in areas of the world where coal is possibly the power source,” said Mark Le Dain, vice president of strategy at Validere Technologies Inc, an oil and gas software company that monitors energy molecules and their use. However, environmentalists and some investors point out that toxic emissions are not eliminated; they are simply moved from one sector to another. “It’s not that you’re getting rid of the emissions; it’s just that you’re converting them into some other stuff,” Logan explained.
Imaginations captured
Despite the difficulties of cryptocurrency markets, miners are still attracted to Bitcoin. According to Refinitiv Eikon numbers, a single Bitcoin was worth more than $40,000 on Thursday, despite the recent price collapse – nearly 90 times its value five years ago. Some cryptocurrency mining firms claim that the versatility of their natural gas-fueled operations is critical, allowing them to draw natural gas from various locations as it becomes accessible.
“The idea that you might plug these (computers) in and then take them somewhere else just piqued my interest,” said Haley Thomson, a former energy trader and the president of a new cryptocurrency mining company. A plethora of business models have sprung up as a result of this. Cryptocurrency miners have been known to pay oil companies entirely or partially with the coins they mine. In Kirkwood’s case, EZ Blockchain creates Bitcoin from stranded natural gas and distributes it entirely to Kirkwood. EZ Blockchain makes money by charging a premium for mining equipment and services.
There are less than number of large Bitcoin mining companies in North America that use stranded natural gas, according to industry analysts and researchers who research energy use. In the United States and Canada, several cryptocurrency miners operate small operations, some of which are powered by a single well. However, several of the world’s most powerful oil firms have agreed to participate. Equinor ASA of Norway and Enerplus Corp of Canada are two companies that have used this form of mining to minimise flaring in North Dakota, according to company spokespeople.
Located in Denver, Crusoe Energy Systems Inc, a Bitcoin mining company that uses otherwise stranded coal, is one of the largest on the continent. This year, Cully Cavness expects the company’s existing workforce of 55 to double. In oil shale basins, Crusoe has about 40 mobile containers. After raising $128 million in funding from investors such as Chicago-based Valor Equity Partners LP and Lowercarbon Capital last month, it expects to increase that number to 100.
Kraken Oil & Gas Partners LLC, one of Crusoe’s partners, produces 10,000 barrels of oil every day, making it the state’s largest oil producer. Cavness said, “We’ll need a lot more people.” Meanwhile, new government regulations and incentives can help oil and cryptocurrency companies. In April, the US Senate voted to undo former President Donald Trump’s weakening of methane pollution regulations. According to academic experts, this might encourage people to use Bitcoin mining to reduce flaring.
Emissions are also being targeted by Texas and New Mexico lawmakers. North Dakota and Wyoming also passed laws this year that offer tax incentives to oil producers that provide gas to cryptocurrency and other data miners that would have been flared otherwise. North Dakota state Senator Dale Patten, who drafted the bill, said, “I think it’s going to be a big chunk at what we look at for the future.”
