Feb 01, 2024 05:17
For the first time ever, a study regarding 'cryptocurrency mining' and 'the environment' was released, and instead of scolding miners for their high electricity usage, they're being praised for being part of the solution.
If this isn't surreal enough already - the study comes from a source that typically argues the benefits of the traditional fiat banking system - the World Bank (WB).
So, Why The Sudden Praise from Environmentalist and Traditional Banking?
This creative partnership brings together two sectors often criticized for their environmental impacts - oil industry and Bitcoin mining.
This is a truly rare situation where each party has the solution the other one needs to both reduce emissions, and increase profits while doing it.
Here's How It Works...
When drilling for oil, companies typically hit pockets of natural gas before reaching the deeper oil deposits. Since oil is far more profitable, the companies release the natural gas into the air, often simply lighting it on fire in a practice called 'flaring' and continue drilling. The escaped gas, mainly methane, acts as a potent greenhouse gas.
By partnering with Bitcoin miners, oil companies can monetize these gas pockets rather than wasting them. In this arrangement miners create mobile mining rigs equipped with equipment that allows them to capture and use the natural gas to generate electricity for their rigs. When drilling is finished at one location, they tow everything to the next drilling site. The miners pay a highly discounted rate for the gas, which provides a new revenue stream for oil companies while reducing emissions.
Back in 2021 we broke the story of 'Secret Meetings between Texas Oil and Bitcoin Mining Companies" where these partnerships were forming.
Now there are several mining companies successfully using this method to power their business, which means they've also unplugged from their previous electricity source - the powered grid, which still runs on coal in most cases - further decreasing their carbon footprint of the mining industry as well.
Natural gas burns cleaner than other energy sources, producing about half the emissions of coal. So using it for Bitcoin mining is a win-win - oil companies reduce pollution and earn additional income, while miners cut costs and reliance on dirtier power.
The World Bank's study titled 'Financing Solutions to Reduce Natural Gas Flaring and Methane Emissions' examined Bitcoin mining company Crusoe Energy, based in Colorado - they currently are working with oil giant Exxon at their drilling sites to power their Bitcoin mining business, and in a recent interview stated they're looking to the middle east next.
A Perfect Partnership...
I can't think of any other example where two industries are rewarded with higher profits almost immediately for taking steps to improve their impact on the environment. Companies often struggle to 'go green' as doing so involves large upfront expenses that can take decades to break-even on.
Oil companies face increasing pressure from both the public and government to stop the practice of allowing natural gas to escape into the atmosphere while drilling, but most haven't taken steps to stop it. Mainly because it was an additional expense without enough upside to cover the costs - so most would never have addressed the issue until required by law. Thanks to innovation from the Bitcoin mining industry, solving this problem now pays.
Some US states where oil drilling takes place are considering passing laws requiring oil companies to capture most of the natural gas that currently escapes into the atmosphere. If this happens, oil companies involved in mining cryptocurrency will become standard.
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Author: Ross Davis
Silicon Valley Newsroom
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