US Oil Producers Turn to Crypto Mining to Reduce Flaring
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At first glance, cryptocurrency and oil and gas production don’t seem to have a lot in common. But one company is bringing them together in a bid to reduce the oil and gas industry’s carbon emissions from flaring.
Crusoe Energy uses gas that would have otherwise been wasted to power computers that carry out heavy processing work such as Bitcoin mining. Crusoe claims that this practice “reduces CO2-equivalent emissions by 63% compared to continued flaring.”
Bloomberg reported today that ExxonMobil has been working with Crusoe Energy on a pilot project in Dakota’s Bakken plains to sell excess gas to third-party Bitcoin mining operators.
CNBC reported last month that ConocoPhillips was piloting a similar approach in the same region.
Oil and gas producers are under increased pressure to reduce the practice of flaring, where excess gas - released during the extraction of oil - is burned off.
The World Bank estimates that approximately 142 billion cubic meters of gas was flared in 2020 which resulted in over 400 million tons of C02 equivalent emissions. The bank has called on oil producers to eliminate the practice by 2030.
Bitcoin mining, on the other hand, has also come under increasing fire from environmentalists for the vast quantities of energy it uses. The practice, where ‘miners’ are rewarded with currency for solving complex computational problems, is essential to authenticating Bitcoin transactions and trust in the currency.
The Center for Global Development says that the currency has “limited to no social value,” supports illicit activities, and is a questionable use of energy when so many people in the world lack access to reliable electricity.
“The Bitcoin network’s spiraling energy needs are truly staggering when compared to other potential uses. Based on the lower 75 TWH per year estimate, each new bitcoin currently uses roughly 228,000 kilowatt hours (KWH) to produce. In other words, the production of just one bitcoin consumes as much energy as 18 Americans or more than 1,500 Nigerians per year,” write policy fellows Todd Moss and Michael Pisa.
Crusoe Energy closed a $128 million round of investment last year from leading technology and climate investors that included Valor Equity Partners, Bain Capital, and former Tesla co-founder JB Straubel. At that time, the company said it had 40 flare-powered data centers in four states and the investment would be used to expand operations to over 100 data centers.
Devon Energy Corp, Kraken Oil & Gas, Enerplus, and Equinor ASA are among other companies reported to be working with Crusoe.
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