Bitcoin Mining to Help Reduce Wastage and Costs Associated with Oil Companies
In a recent post shared by Bitcoin.com, arguments have been made in relation to how crypto mining activities can help oil companies reduce both their costs and excess oil, where the latter typically goes to waste.
According to the claims made, flare gas is deemed a liability for oil companies and for this reason, shale oil wells are being established all over North America. In particular, if a well is near oil companies, then it is believed that producers can pipe it to end consumers, notes the news outlet.
Another solution to this is either flaring or venting it into the atmosphere, but there is a limit to such activities, and anything that is done beyond a certain threshold will lead to increased costs. This is where crypto mining could get oil companies out of a rather sticky situation.
More specifically, setting up bitcoin mining equipment at oil production sites will reduce wastage of excess oil, while creating revenue-generating opportunities for oil companies. Furthermore, the mining rewards garnered are reasoned as having more value than the prices charged to get rid of this excess. Most importantly, this ensures that the environment is not exposed to harmful greenhouse gases such as methane gas.
Firms Currently Working on Services that Convert Gas into Electricity
Bitcoin.com has since provided examples of firms providing such services. First, we have Upstream Data. It turns out that the firm carries an array of mining datacenters of different configurations that oil companies can either rent or buy. The average cost of an all-in-one Ohmm Combo with up to 125kW costs roughly USD$21,400.
The CEO of Upstream Data, Stephan Barbour has since seen his business rise, noting that this validates the fact that crypto mining can resolve this current issue.
In particular, he said:
“I believe the future of bitcoin mining is in the oil and gas industry due to the enormity of the energy produced and wasted.”
Another company involved in this business sector that has been provided as an example is called EZ Blockchain.
Here’s what the Founder of EZ, Sergii Gerasymovych shared to the news outlet:
“Our primary area of operation and target market is the Bakken region in North Dakota, which has very rich gas being flared, with over 1,500 BTU/ft3. Raw gas is dirty, it consists of methane, butane, hexane, pentane, ethane and other gases. NGL companies are required by law to clean it before it can be burned, and producers spend money on that.”
EZ Blockchain has designed a flare mitigation system, which can be implanted on oil wells and used for mining digital coins. They also carry something called EZ Smartbox, which converts gas into electricity to be used in processing data as well as in mining cryptocurrencies.
At the moment, EZ Blockchain is working alongside an oil producer in Bakken, with plans to establish a partnership with another.
Gerasymovych believes that,
“There is enough wasted gas in North Dakota alone to power a third of Bitcoin’s whole network. Bitcoin mining can be done completely off-grid, solving an environmental problem.”
US-based Crusoe Energy Systems is currently in the works of entering said market and so far, the startup has raised $5.1 million altogether in a seed fund raising led by Bain Capital Ventures and Founders Fund Pathfinder reports Bitcoin.com.
Possible Obstacles Preventing Oil Companies from Considering Crypto Mining
Given the potential benefits that arise from allowing crypto miners to use excess gas, there still remains some obstacles. Gerasymovych does expect an increase in mining equipment installation moving forward, but this will be done over the course of time.
He reasons that the gas industry is quite conservative and that small to midsize businesses will not consider the likes of crypto mining immediately. Another possible concern that may arise for oil products is the cost associated with installing said equipment. This is especially a problem because the flaring gas concern requires “very big mining operations to be built”.
Other possible concerns that may come up in terms of the datacenters include maintenance, rigs, pipes and strong internet connection among others.