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Fueling the Future: Bitcoin Miners and Oil Giants Forge a New Path
15 Mar 2024
Bitcoin miners are pioneering an energy revolution, transforming the energy landscape by harnessing excess gas for mining, and driving a sustainable future for all.
Oil companies like Exxon Mobil Corp and ConocoPhillips see cryptocurrency as part of the solution to the regulatory crisis facing the industry because of climate concerns. By using Bitcoin mining to offload some of their carbon emission footprint, companies such as these can reduce taxation and limit penalties from state and federal governments, bringing in extra revenue in the process.
Transferring Energy
Partnerships between energy companies and Bitcoin miners have proven successful for both parties. In 2021, Exxon launched a pilot project that is geared toward mining Bitcoin in North Dakota’s Bakken oil fields. The largest oil and gas company in the United States is considering doing the same in Alaska and parts of Nigeria, Argentina, Guyana and Germany.
Tecpetrol, headquartered in Buenos Aires, is also converting excess gas into energy for cryptocurrency mining. Tecpetrol announced in September the launch of its first gas-powered crypto mining facility north of Vaca Muerta in Argentine Patagonia.
What was the reason behind these moves?
Along with oil, drilling an oil well also results in the extraction of natural gas. Consequently, drilling companies are faced with the challenge of preventing this methane gas from escaping into the atmosphere. Oftentimes, gas flaring – the burning of the gas associated with oil extraction – is the way companies manage this. Flaring has endured since the start of oil production and is said to create more CO2 emissions than cars. Oil companies using this practice are wasting a valuable natural resource that others, such as Bitcoin miners, can put to good use.
Rather than flaring the gas, energy companies have started transferring it toward power generators for the Bitcoin mining network. Bitcoin mining rigs need little more than an affordable, abundant power source, meaning they can easily be set up near remote oil fields. Redirecting the unused gas to adjacent mining centers helps optimize gas utilization and reduces waste. Not only is this better for the environment, but it will also help oil and gas companies avoid flaring fines, which, under the Clean Air Act, can cost companies up to $37,500 per violation. Rather than wasting gas, energy companies can reduce fines, curb emissions, and create an additional revenue stream.
Thus, Bitcoin mining can serve as a demand response mechanism during periods of excess energy production. Instead of allowing excess electricity to go to waste, miners convert that would-be wasted energy into economic value.
This has proven to be an effective mechanism in states like Colorado that are rich in pipelines but have banned flaring. Under state rules, operators that cannot connect to a gas pipeline or find another use for the gas must shut down their wells. In Colorado, cryptocurrency mining operators have stepped in to form partnerships with pipeline operators at least six times, according to the Colorado Oil and Gas Conservation Commission.
Blazing Trails
When it comes to sustainable energy solutions, Bitcoin mining is emerging as a trailblazer, revolutionizing the way industries generate and consume power. This is creating a highly productive synergy that could transform the energy landscape.
Studies show that Bitcoin mining stabilizes power grids while leveraging underutilized renewable energy sources. A recent report by KPMG found that Bitcoin can reduce CO2 emissions by converting unused gas into electricity. Another recent paper, published by the Institute of Risk Management, found that Bitcoin mining could reduce global emissions by up to 8% by 2030 – simply by converting wasted CO2 emissions into less harmful ones.
Several oil and gas companies have already jumped on board. Beyond Exxon Mobil, ConocoPhillips, and Tecpetrol, Marathon Oil and EOG Resources are also among the energy companies turning to Bitcoin mining to curb emissions.
Teaming up with Bitcoin miners — like Texas Pacific Land recently did after signing a deal with two mining companies — represents an effective strategy for oil & gas companies to turn wasted gas into profit.
This new green alliance further develops and diversifies the Bitcoin mining industry, calling for new and flexible mining solutions. Bitcoin miners that demonstrate their ability to innovate can contribute to the creation of a sustainable and interconnected energy framework.
Product lines like EL3CTRUM by Chain Reaction are embracing these sustainable options. Thanks to its diverse form factors and modular design, EL3CTRUM allows energy companies to tailor a solution that best meets their specific needs. This adaptability, combined with the ability to optimize power and performance, positions EL3CTRUM as a prominent solution in providing the industry with enhanced computing capabilities while prioritizing energy efficiency.