Exxon Mobil, the biggest oil producer in the United States, is contemplating extending its Bitcoin mining pilot program in North Dakota in order to minimize the amount of natural gas it burns off or flares into the sky, according to a story published Thursday by Bloomberg.
Exxon is contemplating comparable pilot projects at Nigeria’s Qua Iboe Terminal, Argentina’s Vaca Muerta shale formation, Guyana, and Germany, among other locations.
The news site said that people with knowledge of the situation informed them that the oil giant had reached an arrangement with Crusoe Energy Systems to divert gas that would otherwise be squandered from an oil well pad to mobile Bitcoin mining operations. According to the report the experimental project began operations in January 2021 in North Dakota’s Bakken and was enlarged in July; it currently uses up to 18 million cubic feet of natural gas each month that Exxon could not otherwise monetize.
Flare Gas Bitcoin Mining Benefits the Environment
Shale oil creates so much extra gas that it must either be released into the atmosphere or burnt off to prevent it from contaminating the environment. In its first two decades in the atmosphere, natural gas is mostly composed of methane, viewed by many as a potent global warming agent that is more than 80 times more strong than carbon dioxide in terms of global warming potential. In order to reduce methane emissions, North Dakota, Colorado, and Wyoming are among the first states to use Bitcoin mining.
As reported by the North Dakota Department of Environmental Quality, Crusoe Energy, a venture-backed by Bain Capital, the Winklevoss brothers, and Tesla Inc.’s first institutional investor, Valor Equity Partners, has 20 portable engines permitted in North Dakota, with 11 of them having already been put into operation. According to state documents and a Crusoe statement from last spring, the start-up has comparable deals in place with Equinor ASA and Devon Energy Corp., among other companies.
Due to the lack of nearby pipelines, Bitcoin mining allows oil producers to sell gas that they have discovered while drilling for oil, increasing profits for those companies while also benefiting the environment. Such energy sources are commonly wasted due to a lack of nearby pipelines, which makes Bitcoin mining a valuable contribution to the environment.
CRUSOE CORPORATION, located in Denver, assists those businesses in capturing otherwise lost extra gas from their energy output, turning it into electricity, and converting it into electricity to power data centers and Bitcoin mining operations. When compared to conventional flaring, the company predicts that Bitcoin mining may cut carbon dioxide-equivalent emissions by more than 60%, according to the corporation.
Game Theory in the Oil and Gas Industry
ConocoPhillips, the oil and gas company, established comparable facilities in the Bakken region of North Dakota last month in order to sell surplus natural gas to a Bitcoin mining farm managed by a third party, as well.
The incentive structure built into the Bitcoin protocol paired with increasing demand and necessity for oil and natural gas, it’s a match made in energy heaven.
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