“There is enough burned off Nat Gas in North Dakota alone to power 33% of Bitcoin’s entire network. Bitcoin mining can be done off-grid, solving a 160 yr old environmental problem“– Paul Ebeling
On US Crude Oil patches stretching along the Rockies and Great Plains, trailers hitched to trucks back up toward well pads to capture burn off Nat Gas and convert it into electricity on the spot
The trailers – carrying pipes, generators and computers are called “mining rigs.” But their owners are not there to drill for Crude Oil. They are using burn off Nat Gas unwanted by oil companies to power their search for another treasure: cryptocurrencies like Bitcoin.
Cryptocurrencies are virtual coins exchanged without middlemen, such as central banks, to purchase goods and services. Extracting the currency from cyberspace, however, requires vast amounts of often-expensive electricity. Supercomputers must run constantly in a race against other “miners” to solve complex math problems in order to unlock digital vaults holding the currency.
Placed in mobile trailers, these supercomputers run as hot as 160F (71C), and in the cold of western North Dakota, people can stay warm just by sitting near them.
The miners send these rigs out to oil fields because it is 1 of the cheapest ways to obtain the energy they need.
Crude Oil and Nat Gas come from the same wells, but at these sites there are no pipelines to get the Nat Gas to market. That forces them to burn it off in a process called flaring or to vent it into the atmosphere directly as methane that is 25X more harmful than C02.
Oil & Gas companies do not like to flare their gas, as that is burning money that’s burning away. Crypto miners connected to EZ Blockchain, a Chicago-based energy and technology company, are cutting out flaring at some of its 600 oil wells across the Rocky Mountains now.
The new oil-cryptocurrency alliances in North America move mining for virtual coins away from Asia, home to more than 60% of such operations, which largely rely on coal-powered electricity. Coal combustion produces roughly 2X as much C02 as Nat Gas.
Some cryptocurrency mining companies say the mobility of their Nat Gas fueled operations is key, giving them flexibility to draw the fuel from different sites as it becomes available.
A variety of business models have been born.
In some cases, cryptocurrency miners pay the oil firms for their Nat Gas wholly or in part using the coins they mine. In the case of Kirkwood, EZ Blockchain uses burn off Nat Gas to make Bitcoin, giving it all to Kirkwood. EZ Blockchain makes money by supplying equipment and mining services for a fee.
Denver-based Crusoe Energy Systems Inc is 1 of North America’s largest Bitcoin mining companies using otherwise stranded Nat Gas. It expects to 2X its current staff of 55 this yr, said Cully Cavness, co-founder and a former Oil & Gas engineer.
US government regulations and incentives are in the offing that could benefit oil and cryptocurrency companies.
North Dakota and Wyoming this year passed laws that give tax breaks to oil producers that provide Nat Gas to cryptocurrency and other data miners that would otherwise have been flared.
Have a healthy week, Keep the Faith!