Flared natural gas boon to bitcoin miners’ energy quest
As the value of bitcoin soars and concerns rise about the energy-intensive process needed to obtain it, cryptocurrency entrepreneurs in the United States believe they have found a solution in flared natural gas.
Profitably creating, or mining, bitcoin and other cryptocurrencies requires masses of computers dedicated to solving deliberately complicated equations – an endeavor that globally consumes more electricity than entire nations, but for which these start-ups say the jets of flaming gas placed next to oil wells are perfect power sources.
Across the country, companies like EZ Blockchain are setting up shipping containers where racks containing hundreds of computers mine cryptocurrency, fueled by natural gas from oil wells that otherwise would be burned in the open.
But a backlash has formed against the digital assets’ energy usage, fueled by concerns it relies on carbon-emitting power sources that contribute to climate change.
While entrepreneurs in the fledgling industry say using natural gas that is otherwise wasted represents a solution to these concerns, its ability to actually cut emissions remains to be seen, said Tony Scott, managing director of analysis at oil and gas research firm BTU Analytics.
Huge numbers of processors worldwide are dedicated to the task of mining bitcoin. The activity uses 149.6 terawatt-hours per year, according to the Cambridge Bitcoin Energy Consumption Index (CBECI). That is slightly less than all the electricity consumed by Egypt.
Enter flared natural gas.
Oil producers flare natural gas if they can’t find a way to process it, which, with prices low and pipelines complicated to build, can be the case worldwide.
“Miners tend to be based around areas where there tends to be surplus power. What is new... is this whole concept of taking gas flaring,” said Jason Deane, bitcoin analyst at Quantum Economics.
Using flared gas to power the applicationspecific integrated circuits that mine bitcoin does not end emissions entirely, but is more efficient than flaring it and puts energy that is otherwise wasted to use.
Natural gas’s edge is in the cost of power. CBECI estimates the average global power cost for bitcoin mining is about US$0.05 per kilowatt hour.
Interest has grown in diverting flared gas to cryptocurrency mining, and not just because the digital assets are growing in value.
“There’s more scrutiny on issuing new flare permits and I think these producers are realizing that,” said Britt Swann, who is leading holding company Ecoark’s expansion into cryptocurrency mining.
“They are willing to play ball and figure out a way to use that gas without necessarily wanting any value for it.” – AFP