Do Oil and Gas Producers Have An ‘Incredible Symbiotic Relationship’ With Bitcoin Mining?
Bitcoin’s biggest criticism is of its mining operation because of the high amount of electricity that its consumes without utilizing that energy for anything other than solving cryptographic puzzles. The bitcoin network has an estimated annual electricity consumption of 73.374 TWh. The skeptics have often pointed out that electricity consumption is significantly high which does not result in any direct output.
This debate over high electricity consumption also led to many discussions about whether Bitcoin should opt for a more environment-friendly mining consensus instead of the present Proof of Work. However, the Bitcoin community has discarded their ideas as they believe this is one of the most secure mining algorithms that ensures healthy competition among miners while keeping the network secure.
Amid all the outcries centered around Bitcoin’s electricity consumption, podcaster Marty Bent has revealed an interesting way that he's been using to fuel his bitcoin mining machines and it could be the future of Bitcoin mining. Bent wrote a blog post on April 15th where he revealed that he has been mining Bitcoin for the past year with the Great American Mining (GAM) company, and has been using the excess gas formed during the mining of crude oil.
GAM made headlines when it established a small mining farm on a shipping container in an oil field in December of last year. This small step was a big leap towards encouraging Oil and Gas producers to step into the Bitcoin mining game and become a significant force in the Bitcoin mining industry.
Oil and Gas Companies Can Become Biggest Bitcoin Miners
Availability of cheap fuel is one of the key factors in Bitcoin mining and this is one of the key reasons China is one of the biggest contributors to the Bitcoin mining pool with over 60% hash input in the network. The Shenzhen province has vast amounts of surplus clean hydroelectricity available at dirt cheap prices making it a mining hub. Similarly, many other parts of the world have attracted miners based on how cheap electricity is, given Bitcoin mining rigs consume a ton of electricity.
Most of the oil and gas mining fields release this byproduct gas which they consider as waste, however, GAM uses it as a fuel for Bitcoin mining operation which makes it a win-win situation for both of the parties. The Oil and Gas fields can sell this gas to bitcoin mining farms like GAM, which would then create an extra stream of income, while Bitcoin mining farms can have access to the fuel at a cheaper price without wasting electricity. Bent explained,
“You're seeing a trend now, where even centralized locations are adopting. Instead of building like a large warehouse and doing all the infrastructure, they're actually using the container model as the way to build on-site…. a year or so ago, that wasn't the case at all. And now you're seeing very, very large places, you know, stack 40, 50, 60 containers… it's just cheaper to do it that way.”
Bent also believes that there is no need to build the super infrastructure in the form of warehouses for mining farms as stacked shipping containers could be used for the same task. He explained that if these shipping containers are designed correctly, “containers filled with Bitcoin miners would offer superior productivity and up to 5x more profitable than sending the gas through a pipeline to sell.
Are Shipping Containers Fueled by the Gas By-products Catching up with the Mining Trend?
While the idea might seem innovative and new, the industry experts seemed to have taken a notice quite early of this trend. Bent believes that this concept is gaining traction, and one of the most popular crypto names, the Winklevoss Twins have already invested in a mining company called Crusoe Energy Systems which works on the same principle of utilizing the gas by-product as a source of energy for Bitcoin mining. The trend is also quite popular in Canada and where several Canadian firms are utilizing the Oil and Gas industries by-product waste as a fuel.
Bent believes the use of the by-product from the Oil and Gas industry will not only help in reducing the use of commercial energy supply, but it would also make the Bitcoin mining industry more distributed and diverse geographically. He also believes that the use of these by-products can actually push America to the top in the Bitcoin mining game which is currently heavily dominated by China. He said,
“We are still very early in this game and on our personal journey at GAM, but we are confident that we will see this vision come to fruition over the course of the next five years. We could definitely fail (unless the government starts bailing out bitcoin miners), but we're sure as hell going to try.”