"I just instantly stopped the lawn mower, walked straight to my dad, and I was like, 'I gotta find flare gas right now,'" said Whitehead. In it, Lohstroh suggested they buy a mobile bitcoin mining container from Upstream Data and hitch it to a gas well themselves. The summer before his junior year in college, Whitehead was mowing his parents' lawn in the southeast Texas town of Buna (population circa 2,000 people) when he got a text from Lohstroh, then a classmate and friend. "It's sort of a match made in heaven actually." Ignoring the haters "The thing about oil and gas is that it is a very distributed and reliable power source, and because of that, a distributed sales point and reliable power draw like a bitcoin mine is quite a good fit," said Barbour. Meanwhile, bitcoin miners get what they want most: cheap electricity.
"They were leaving a lot of hydrocarbons on the table, but now, they're no longer limited by geography to sell energy." "This is the best gift the oil and gas industry could've gotten," said Ortolf.
It now works with 140 bitcoin mines across North America. "The concept of bringing hydrocarbons to market without a counterparty was laughable."įast forward four years, and business at Upstream is booming. "In 2018, I got laughed out of the room when I talked about mining bitcoin on flared gas," said Ortolf.
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"So unless it's economically sustainable, producers won't internally combust the gas."īitcoin makes it economically sustainable for oil and gas companies to combust their methane, rather than externally combust it with a flare, rendering stranded gas a thing of the past.īut Ortolf has taken years to convince people that parking a trailer full of ASICs on an oil and gas field is a smart and financially sound idea.
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"But nobody will run it through a generator unless they can make money, because generators cost money to acquire and maintain," he said. When the methane is run into an engine or generator, 100% of the methane is combusted and none of it leaks or vents into the air, according to Ortolf. This is when on-site bitcoin mining can prove to be especially impactful. "Even with a flare, some of the methane is being vented without being combusted," he said. One method is to vent it, which releases methane directly into the air – a poor choice for the environment, as its greenhouse effects are shown to be much stronger than carbon dioxide. A more environmentally friendly option is to flare it, which means actually lighting the gas on fire.īut flares are only 75 to 90% efficient, explained Adam Ortolf, who heads up business development in the U.S. And if a driller can't immediately find a way to sell the stash of natural gas, most dispose of it on site. More often than not, if a gas well isn't already stationed near a pipeline, it won't be big enough to warrant the time and expense of building an entirely new line. "It's a new way to not only lower emissions but to monetize gas."Įnter the oil and gas business, which often features sites in remote parts of Texas, far from major population centers. I knew how wasteful it was," Whitehead told CNBC on the sidelines of the North American Prospect Expo summit in Houston, a flagship event for the industry. "Growing up, I always saw flares, just being in the oil and gas industry. The process reduces CO2-equivalent emissions by about 63% compared to continued flaring, according to research from Denver-based Crusoe Energy Systems. Giga places a shipping container full of thousands of bitcoin miners on an oil well, then diverts the natural gas into generators, which convert the gas into electricity that is then used to power the miners. To these two 23-year-old Aggie alums, it was a big problem with an obvious solution. That is why you will typically see flames rising from oil fields.īeyond the environmental implications of flare gas, drillers are also, in effect, burning cash. But if it's 20 miles from a pipeline, drillers often burn it off, or flare it. Whereas oil can easily be trucked out to a remote destination, gas delivery requires a pipeline. If a drilling site is right next door to a pipeline, they chuck the gas in and take whatever cash the buyer on the other end is willing to pay that day. For years, oil and gas companies have struggled with the problem of what to do when they accidentally hit a natural gas formation while drilling for oil.
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