‘Absurd’ video of bitcoin mine hooked to an oil well sparks outrage – but it’s
he co-founder of a bitcoin mining company that runs on “waste” by-product from Texas oil wells says that the oil and gas industry is eyeing cryptocurrency operations as a way to burnish green credentials with the public and investors.
Bitcoin ‘mining’ requires high-powered supercomputers which compete against other machines to solve complex mathematical puzzles. Several major studies have found that the process devours enourmous amounts of energy.
Matt Lohstroh’s video of his company’s digital currency operation at an oil well in east Texas went viral last month. The clip shows a gas pipe running from the well site to a generator hooked up to a shipping container with large exterior cooling fans. Inside the container are multiple rack of ‘mining’ rigs connected with hundreds of red wires.
Giga Energy Solutions, which he started with a college friend Brent Whitehead in 2019, is not itself extracting fossil fuels to power bitcoin mining but instead using flare natural gas, a by-product from oil extraction which is usually burned off. The process leaves a lower carbon footprint than coal, which largely powers Bitcoin mining that is concentrated in China, distantly followed by the US, Russia, Kazakhstan, Malaysia and Iran.
The price of natural gas, one of the fossil fuels driving the climate crisis, has plummeted in recent years. “Economically it’s a waste product,” Mr Lohstroh told The Independent. “Our company goes to an [oil] producer that’s already flaring – and they’ll continue to do this whether we’re there or not – and we say, we’ll take that gas off your hands. It’s zero effort on their part and we’re able to reduce carbon emissions by getting 90 per cent combustion rate in our engines.”
The East Texas mining rig, which began operating in January, has yet to gather data on emission reductions. Mr Lohstroh says that generally his company is “having a net benefit on emissions”.
“My energy is non-renewable but would otherwise be wasted,” he said.
Giga Energy pays almost nothing for the natural gas. The company has more rigs in multiple locations across East Texas, the second-largest oil field in the US outside Alaska.
In states like Texas, where energy regulations are laxer, natural gas by-product can be vented, intentionally releasing gases, predominately potent methane, into the atmosphere. The other option is to set gas on fire in flare stacks to convert methane to carbon dioxide, slightly less dangerous when it comes to heating the planet in the short-term.
But even that strategy is not going to last as a growing number of oil companies commit to the World Bank’s Zero Routine Flaring by 2030 initiative. As the fossil fuel industry looks to improve its green credentials, having natural gas siphoned off at source, at practically no cost to them, appears to be a lucky break.
Mr Lohstroh said the oil company, which he…