Mining

Bitcoin Converts ‘Waste Product’ From Oil Industry into Financial Freedom, Says Miner

Emilio Janus | Mar 31, 2019 | 05:00

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Bitcoin mining is an industry that seeks out cheap energy sources that would often go to waste. And in some parts of North America, natural gas is becoming pretty much exactly that.

The Oil Industry Produces More Gas Than It Can Handle

Natural gas prices in North America have tanked. As an unavoidable by-product of the oil drilling industry, producers have more than they know what to do with. Transporting it for sale is often not economically viable, so many oil companies just burn (flare) or vent it into the atmosphere.

Thankfully, at least some places in America have limits on how many gas suppliers can pointlessly burn or release. This has lead to natural gas selling for less than nothing in some parts of Texas, as haulage firms are paid to take it away. The alternative is for producers to shut down wells, which is even more costly.

“Much of the time Bitcoin mining happens with super cheap electricity, in many cases utilizing energy that would have otherwise gone to waste,” commented eToro market analyst, Mati Greenspan.

Converting Gas To Electricity For Powering Mining Rigs

A better solution would be to find a productive way to use natural gas at the source. Which is why a shipping container full of mining rigs is sitting in a remote Canadian oil field. The project is the brainchild of oilman and bitcoin entrepreneur, Stephen Barbour.

The container has a generator attached to convert natural gas into electricity to power the rigs. The unit uses about 400 cubic meters per day, which allows the wells to operate 24/7. A production foreman for the oil company, Black Pearl Resources, explains:

It was the best option for us. We’re using it to bring ourselves below the government-regulated amount that we can vent on location and keep producing oil.

And Mr. Barbour is more than happy to be building himself a healthy stash of bitcoin. Moreover, he explains that Bitcoin is a liberating technology for humanity. It transforms energy that would otherwise be wasted “runs computers” to calculate small numbers providing “financial freedom for people all over the world.”

Sun shines.
Water absorbs heat.
Rejects into atmosphere.
Falls.
Drives turbine.
Moves electrons.
Runs computer.
Calculates small numbers.
Financial freedom for people all over the world.#bitcoin

— Steve Barbour ⛏ (@SGBarbour) March 20, 2019

Not a Solution For Everyone

Whilst solutions of this kind are spreading, they are not suitable for all situations. The capital outlay of buying and converting a shipping container can be up to $130,000, even before factoring in the price of mining rigs.

A company mining bitcoin in data-centers in South Dakota and Texas had to say no to energy partnerships with local natural gas producers due to the infrastructure costs involved. Another analyst estimated that using free natural gas, it would require an average bitcoin price over the next 15 years to be nearly $19,000 to make a profit.

The other problem is getting oil-industry people to understand cryptocurrency. Barbour introduced his container at an oil show to a non-plussed crowd.

Locally, pretty much nobody knows what bitcoin is.

Earlier this month, Bitcoinist reported that, in fact, alternative sources of energy such as solar can even provide even more competitive advantage for miners depending on their location, cutting operating costs by as much as 75 percent.

Meanwhile, a November 2018 report found that bitcoin miners often prefer cheaper alternatives to oil and gas, with as much as 80 percent running on renewables.

Is Bitcoin a useful technology for utilizing energy that would otherwise go to waste? Share your thoughts below!

Images via Shutterstock