Značka: Oil and Gas

Bengal Energy to mine Bitcoin using ‘stranded wells’ in Aussie outback

Canadian oil and gas company Bengal Energy, is dipping its toes into Bitcoin (BTC) mining as a way of utilizing the untapped energy from its gas wells in the far reaches of the Australian outback. According to a report from The Australian, Bengal Energy is set to conduct a pilot program where roughly 70 Bitcoin mining rigs will be set up inside a portable building — known in the local mining industry as a “donga” — which will be assembled near a series of previously out-of-operation gas wells in the Cooper Basin. According to Bengal Energy’s chief operating officer, Kai Eberspaecher, the company acquired the gas wells from its local oil and gas extraction partners, Santos Energy and Bridgeport Energy. Eberspacher added that the recently acquired gas wells posed an interesting problem to the energy company because they are what is known as “stranded wells.” This means that while the company can technically produce power from the gas on site, the current distribution pipelines are too far away to reach. A pipeline that can service Bengal’s remote gas wells is currently under construction, however the delays in development have been further exacerbated by Covid-related supply chain issues.“We were basically looking at six months of having wells ready but without an outlet. We were dealing with stranded assets.”Portable Bitcoin mining rigs in dongas were hit upon as a solution to the problem. A trial donga will be outfitted with 66 mining rigs that can generate approximately 0.005 BTC per day which equates to roughly $235.If the trial is successful, Bengal Energy is reportedly seeking to multiply its Bitcoin mining output by a factor of 10 to 20 times, meaning that total income could reach anywhere from $2000 to $5000 per day. Related: ExxonMobil is using excess natural gas to power crypto miningBengal Energy adds its name to a growing list of mining companies including ConocoPhilips and Exxon Mobil, that are seeking to harness the full potential of typically wasted or stranded energy through portable Bitcoin mining operations. In response to the widely-published criticisms of Bitcoin mining on environmental grounds, fossil fuel companies have become increasingly concerned with finding new ways to limit the harmful byproducts of mining operations as well as harnessing any sustainable alternatives where possible. The Bitcoin Mining Council estimated a sustainable energy mix of 58.5% for the global industry in the fourth quarter of 2021. Miners in Norway are even using waste heat to dry out lumber.

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Exxon Mobil is using excess natural gas to power crypto mining: Report

United States-based energy producer Exxon Mobil has reportedly been running a pilot program aimed at using the energy from excess gas to power crypto mining rigs — and it may be expanding its operations to four other countries.In a Thursday report, Bloomberg said Exxon Mobil had inked a deal with Crusoe Energy to use excess gas from oil wells in North Dakota to run Bitcoin (BTC) miners. The project reportedly uses 18 million cubic feet of natural gas per month — roughly 0.4% of the oil giant’s reported operations in the state, producing 158 million cubic feet of natural gas each day.The company launched the pilot program in January 2021 and is now reportedly considering expanding to Nigeria, Argentina, Guyana, and Germany in addition to launching a similar project in Alaska. Cointelegraph reported in February that oil and gas giant ConocoPhillips was running a program selling excess gas to third-party BTC miners for fuel.Transporting natural gas requires pipelines which cannot always safely accommodate the amount produced. Companies are often forced to burn off any excess gas or vent it into the air, ultimately harming the environment and the firms’ profit margins. “It is creating use of what would be otherwise wasted,” said Danielle Fugere, president of environmental shareholder advocacy group As You Sow, referring to the energy being diverted to Bitcoin miners.According to a report from Argus Media, Crusoe Energy operated 60 data centers for crypto mining across four U.S. states as of September 2021 powered by “gas from the oil wells that would otherwise be flared on site.” Instead of burning off the gas, diverting it to crypto mining reportedly reduces carbon dioxide-equivalent emissions “by as much as 63%.”3/ @CoinSharesCo estimates that 69 TWh of wasted power in the U.S. is lost annually to flaringThrough #Bitcoin mining data centers, like those provided by @CrusoeEnergy & @upstreamdatainc, wasted flared energy can be repurposed but it can also reduce CO2 emissions. pic.twitter.com/2XjeFynrI7— Messari (@MessariCrypto) March 6, 2022Related: Stranded no more? Bitcoin miners could help solve Big Oil’s gas problemThough the Bakken shale basin in North Dakota is a major source of natural gas for the United States, Texas is also home to many oil and gas companies in addition to crypto mining firms seeing the potential for energy production in the state. In contrast, New York lawmakers have proposed suspending proof-of-work mining powered by fossil fuels in response to critics citing environmental concerns.

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Stranded no more? Bitcoin miners could help solve Big Oil's gas problem

The energy usage and environmental impact of Bitcoin (BTC) mining have been frowned upon and been under the scanner by various international financial institutions. The International Monetary Fund (IMF) mentions how Bitcoin mining consumes “vast amounts of computing power and electricity.”Bitcoin mining is an energy-consuming process, as it is a proof-of-work (PoW) blockchain network that involves providing cryptographic proof to the network that a quantified amount of a specific computational effort has been used. The information used to verify this is stored in a block to be accepted into the network by other participants. Elon Musk, one of the richest men in the world and the co-founder and CEO of Tesla, in February 2021 announced that the car manufacturing company will accept Bitcoin as payment for its products and services. But, in May of that same year, Tesla discontinued its support for the acceptance of Bitcoin payments, citing the company’s concerns about the “rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal.” This also led Musk to hail Dogecoin (DOGE) as a better means of payment than Bitcoin due to the high environmental cost of BTC transactions.Energy usage trend over past few months is insane https://t.co/E6o9s87trw pic.twitter.com/bmv9wotwKe— Elon Musk (@elonmusk) May 13, 2021However, a new solution seems to be emerging that has the potential to address the narrative that has permeated the mainstream conscience. Associated natural gas is a byproduct of oil drilling, the volume of which is often outweighed by the costs of getting it to a refiner, leaving it “stranded” at the well. Thus, it is often just burned off at the oil derrick, earning it the moniker “flare gas.”On Feb. 17, CNBC reported that the oil giant ConocoPhillips is running a pilot program in Baken, North Dakota. Instead of burning associated gas, the company is selling it as fuel to third-party Bitcoin miners.The idea of using associated gas to mine Bitcoin is not new. Back in 2019, Brent Whitehead and Matt Lohstroh started the company Giga Energy Solutions, which mines Bitcoin with electricity generated from such gas. The firm delivers a shipping container that is full of Bitcoin mining equipment to an oil well and then diverts the stranded natural gas into generators that convert the gas to electricity, using it to mine Bitcoin.Crusoe Energy is another company that uses the energy from flare gas to mine Bitcoin. The firm has grown to become one of the biggest players in the space and has also received investment from one of the oldest cryptocurrency exchanges in the world, Coinbase and Winklevoss Capital, a company founded by the Winklevoss twins, the founders of crypto exchange Gemini.A report from Crusoe Energy Systems claimed that using this gas to mine Bitcoin reduces CO2-equivalent emissions by about 63% compared to the continued flaring of the gas.Cointelegraph spoke with Ethan Vera, chief financial officer and chief operations officer at Viridi Funds, a company that offers crypto investments to Bitcoin miners, about the impact of ConocoPhilips involvement in the innovation. Ver said, “While ConocoPhillips is one of the major energy companies that have publicly announced their entry into Bitcoin mining, there are many other energy companies that have already started the process of setting up mini-test sites. If the economics of Bitcoin mining increase and total mining revenue on a USD basis grows, many of the large energy producers will look to enter the space in a bigger way.”Energy impact of Bitcoin mining could be overratedAs per the University of Cambridge’s Cambridge Bitcoin Electricity Consumption Index metrics, the estimated power demand for the Bitcoin network is 15.57 GW (GigaWatts) which annualizes at 136.48 TerraWatt hours (TWh). The look at historical data of power demand for the network reveals that this demand is continuously increasing through the years as the network grows.Despite this increase in demand for power, the environmental impact could be overrated. A report from CoinShares released in January this year attempted to gauge the carbon emissions caused by Bitcoin mining. Contrary to popular belief, the report’s findings suggest that Bitcoin mining only accounts for 0.08% of the world’s carbon dioxide, or CO2, production. The report found that the network emitted 42 megatons (Mt) (1Mt = 1 million tons) of CO2 in 2021 out of the world’s total emissions of 49,360 Mts of CO2.Sam Tabar, chief security officer of Bit Digital, a publicly-traded Bitcoin mining company, told Cointelegraph:“The environmental impact of Bitcoin mining is massively exaggerated by traditional financial authorities (IMF, etc.) because they know they can divide a new counterculture movement by using fake environmental arguments. They are trying to gaslight us against each other. They gaslight the world with fake green arguments, and I understand why: They don’t want to lose influence over the levers of power of a system that only works for the elite.”Related: Are we misguided about Bitcoin mining’s environmental impacts? Slush Pool CMO Kristian Csepcsar explains.In this regard, Vera mentioned that gauging the environmental impact of Bitcoin is a highly nuanced topic and is one that can’t simply be explained by the energy consumed metric. He said that “In many cases, Bitcoin mining incentivizes the development of renewable energy which will have profound impacts on long-term energy infrastructure and environmental impact.”Oil giants could lead the change to make Bitcoin greenConsidering that using stranded natural gas to mine Bitcoin could reduce the net carbon emissions of mining, as well as reduce emissions from flare gas, other major oil companies could soon jump on the opportunity, especially as governments and regulators have been cracking down on gas flaring.In November 2020, Colorado regulators gave the initial okay to ban gas flaring in order to curb methane pollution. Regulators in the state of New Mexico imposed a rule in March 2021 that requires oil operators to gradually eliminate gas flaring. The rule dictates that 98% of the nature-stranded gas should be captured by April 2022 instead of flaring.However, such decisions are highly difficult to pass in a country where both sides of the government are heavily dependent on lobbying from big oil companies. In October 2021, Bloomberg reported that President Biden’s crackdown on methane emitters is set to stop short of imposing a ban on flaring.An outright ban on gas flaring would be good news for the Bitcoin mining industry as that oil producers would have either of two options. First, to reduce the production output of oil which wouldn’t be economically viable. Or, second, utilize excess stranded natural gas on-site, which is where Bitcoin miners could step in to create synergies with big oil companies like ExxonMobil, British Petroleum (BP), Chevron or Valero Energy.Vera stated that “With high oil prices, the majority of these producers are turning to utilize the stranded gas on-site such as Bitcoin mining, instead of burning it up. We expect the trend to continue in the future as more governments regulate the ability for oil companies to flare excess gas.”The World Bank also has its own initiative to help reduce gas flaring around the world. The Global Gas Flaring Reduction Partnership (GGFR) is a multi-donor trust fund that comprises governments, oil companies and multinational companies that are committed to reducing gas flaring. Bitcoin mining pools and companies could enter collaborations with this trust fund to further this initiative.However, oil companies could have a two-faced approach to the issue at hand, thus, raising questions on their intentions. For example, in 2020, BP urged regulators in Texas to ban the routine flaring of natural gas. But, in January 2021, the Texas Railroad Commission passed 121 of the company’s requests for flaring.With regulators and governments around the world cracking down on gas flaring, the Bitcoin mining industry has an opportunity to reduce the CO2 emissions and methane pollution in the atmosphere. Vera concluded on this synergy, stating that “Bitcoin miners are a natural partner to all energy producers including renewable and oil and gas. Bitcoin mining improves the ability for these companies to manage and utilize their resources in the most profitable way.”

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