As Bitcoin’s value skyrockets and concerns grow over the energy-consuming process it takes to obtain it, cryptocurrency entrepreneurs in the United States believe they have found a solution in burnt natural gas.
Profitable creation or mining of Bitcoin (priced in India) and other cryptocurrencies requires masses of computers dedicated to solving deliberately complicated equations – a business that globally consumes more electricity than entire nations. , but for which these start-ups say the flaming gas jets placed next to the oil wells are perfect sources of energy.
“I think the market is huge,” said Sergii Gerasymovych, CEO of EZ Blockchain, which has six different data centers powered by natural gas in the U.S. states of Utah and New Mexico, as well as in Canada.
Across the country, companies like EZ Blockchain are setting up shipping containers where racks of hundreds of computers mine the cryptocurrency, fueled by natural gas from oil wells that would otherwise be burnt to the ground. ‘outdoors.
Interest in their work has grown over the past year. Bitcoin and other cryptocurrencies like Ethereum (price in India) and Dogecoin (price in India) have seen meteoric price spikes since the COVID-19 pandemic rocked the global economy and large corporations started. to embrace technology.
But a backlash has formed against the energy consumption of digital assets, fueled by concerns that it relies on carbon-emitting energy sources that contribute to climate change.
This week, Tesla boss Elon Musk criticized Bitcoin’s energy consumption, particularly energy produced from coal, and said he would no longer accept cryptocurrency as payment for his. electric cars.
While nascent industry entrepreneurs say using natural gas that is otherwise wasted represents a solution to these problems, its ability to reduce emissions remains to be seen, said Tony Scott, chief analytics officer at oil and gas research firm BTU Analytics.
“In the grand scheme of things and compared to other loads, yes it’s small,” Scott said. “They create economic value (but) they don’t necessarily significantly change emission profiles.”
A large number of processors around the world are dedicated to the task of mining Bitcoin. The business uses 149.6 TWh per year, according to the Cambridge Bitcoin Energy Consumption Index (CBECI). This is a little less than all the electricity consumed by Egypt.
As the most popular cryptocurrency, Bitcoin is undoubtedly valuable, trading at around $ 50,000 (around Rs 36.6 lakhs) in mid-May against under $ 10,000 (around Rs 7 lakhs) there. a year ago, prompting miners to find the cheapest source of power to increase their margins.
Enter the flared natural gas.
Oil producers burn natural gas if they can’t find a way to process it, which, with low prices and complicated pipelines to build, can be the case around the world.
“Miners tend to be based in areas where there is usually excess energy. What is new … is this whole concept of gas flaring,” said Jason Deane, Bitcoin analyst at Quantum. Economics.
Flaring burns many greenhouse gases in natural gas, but the International Energy Agency said the roughly 150 billion cubic meters of natural gas burned globally in 2019 emitted roughly the same amount. of carbon dioxide than Italy.
Using flaring gas to power application-specific ICs that mine Bitcoin doesn’t completely end emissions, but is more efficient than flaring and uses energy that would otherwise be wasted.
“We’re going in, they’re doing zero for their gas, we say, hey, we’re going to come in (and) take the gas away from you, give you a little something,” said Matt Lohstroh, co-founder of Giga Energy Solutions.
“We will be able to reduce the emissions you put out, burn them, create economic value on our side.”
The advantage of natural gas lies in the cost of electricity. CBECI estimates that the average global energy cost for mining Bitcoin is around 0.05 USD (around Rs 4) per KWh. Lohstroh said natural gas electricity can bring the cost per kWh to less than $ 0.018 (around Rs.2).
Interest has grown in diverting flared gas to cryptocurrency mining, and not just because digital assets are gaining in value.
“The issuance of new flare licenses is more scrutinized and I think these producers are realizing that,” said Britt Swann, who is leading holding company Ecoark’s expansion into cryptocurrency mining.
“They’re ready to play ball and find a way to use that gas without necessarily wanting any value for it.”
Where businesses differ is on what to do with Bitcoin and other digital assets once they get them.
Ecoark intends to convert it to dollars, but Lohstroh plans to hold the Bitcoin he mined, which he says will one day support a new global financial system.
“No need to sell the world’s most valuable asset that is undervalued,” he said.