Why fossil fuel companies see green in Bitcoin mining projects

A more appealing alternative is to put that gas to work on-site near the oil well so theres no need to develop a new pipeline to make use of the gas.
Thankfully for Exxon and companies like it, Bitcoin mining rigs can be set up pretty much anywhere theres a low-cost, abundant power source– like, say, an oil field where Exxon has so much additional gas its simply burning it up willy-nilly.
Exxon is working with a business called Crusoe, according to CNBC, whose sole function is to help fossil fuel business deal with their waste gas by utilizing it for cryptomining or other computing jobs. That excess gas would displace pollution that would have otherwise come from deliberately drilling for gas in other places. If another company burns the gas from Exxons oil fields for Bitcoin mining, who do the associated greenhouse gas emissions get appointed to– the Bitcoin miners or Exxon?

The story of how fossil fuel business turned to the dirtiest cryptocurrency out there as a method to green up their books begins with a persistent gas problem. Whenever any company drills for oil, it typically presses some methane gas out of the ground, too.
Oil business will frequently reinject a few of that gas into the ground– not out of the goodness of their hearts however to keep up the pressure that drives oil up out of wells.
There isnt constantly sufficient room to put the excess gas back in the ground. Burning the methane, called “flaring” in industry-speak, launches CO2. Not launching gas in the very first location would be best– however launching CO2 is partially much better than letting more powerful methane float up into the environment.
The disadvantage to this– apart from contributing to an environment crisis thats killing individuals and making whole neighborhoods unlivable– is that burning methane is sort of like rolling up a heap of money and smoking it. You see, methanes marketing label is “gas.” More than $1 billion in natural gas fails every year in the US through flaring
More than $1 billion in gas fails every year in the US through flaring.
All that gas could be put to utilize as electricity, but that would need constructing out infrastructure. And it appears that nonrenewable fuel source business might be happy to take those losses rather than invest the (remarkably budget friendly amount of) money and time to develop pipelines to get that gas to market. A more appealing choice is to put that gas to work on-site near the oil well so theres no requirement to develop a new pipeline to utilize the gas.
This is where Bitcoin reenters the chat. The Bitcoin network utilizes about as much electrical power in a year as the country of Malaysia. Miners resolve ever more intricate puzzles to mint new Bitcoin, which requires unique hardware and a great deal of electrical energy. Thankfully for Exxon and companies like it, Bitcoin mining rigs can be set up quite much anywhere theres a low-cost, abundant source of power– like, say, an oil field where Exxon has a lot extra gas its simply burning it up willy-nilly.
Heres where we finally get to Exxons prospective climate argument for mining Bitcoin. Exxon is dealing with a business called Crusoe, according to CNBC, whose sole purpose is to assist fossil fuel companies deal with their waste gas by utilizing it for cryptomining or other computing jobs. Its “on a mission to line up the future of computation with the future of the environment,” it says on its site.
Crusoe states thats because its system is much more reliable at burning off all methane. Flares, it figures, only combust 93 percent of the methane its expected to burn.
Crusoe did not react to interview demands from The Verge. Exxon media relations consultant Sarah Nordin declined to “comment on reports and speculation concerning the task” in an email to us.
” Probably one of the worst case circumstances for an infrastructure project”
Exxons choice to use the waste gas for Bitcoin rather than discovering some other more practical usage “is actually most likely one of the worst case situations for a facilities project,” states Paasha Mahdavi, an assistant teacher of government at the University of California, Santa Barbara.
If Exxon was getting its waste gas to the grid where it might serve an arguably more important function like heating and lighting houses, it may be various. That excess gas would displace contamination that would have otherwise come from deliberately drilling for gas somewhere else. But thats not actually the case when Exxon mines Bitcoin with waste gas.
” Better to be doing something of use with [the gas], rather than just flaring it to nobodys advantage,” states Jon Goldstein, a senior director at the Environmental Defense Fund. “But at the very same time, it looks like [cryptomining is] not actually an usage thats going to do much excellent for society at big. Its going to benefit investors in cryptocurrency.”
Other specialists are more doubtful that this is really a response to the issue of waste gas. “This is generally a method to monetize flaring. Its not a way to stop flaring,” Mahdavi says.
Mahdavi also warns that Exxon might possibly make itself appear like its reducing pollution on paper when its truly just moving those emissions from its own books straight onto another persons. Whenever Exxon flares waste gas, thats part of the companys carbon footprint. If another company burns the gas from Exxons oil fields for Bitcoin mining, who do the associated greenhouse gas emissions get appointed to– the Bitcoin miners or Exxon? The responses are still dirty, Mahdavi states.
Theres one last catch with Exxons cryptomining, and its a big one. Allowing fossil fuel companies to profit off waste gas, unsurprisingly, offers them great reason to keep on drilling, Mahdavi and ecological economist Raphael Calel write in a 2020 paper.
” Theres now possibly a reward to increase your drilling since youre getting a greater return,” Calel says. “All youre going to get is a reward for overproduction so that you get this extra benefit downstream.”

Of all the corporate environment buzz floating around this spring, ExxonMobils secret project to cut down its contamination by mining Bitcoin has to rank up there as one of the strangest.
Exxon introduced a pilot project in 2021 to mine Bitcoin in North Dakotas Bakken oil fields, according to reporting by CNBC in March. The United Statess most significant oil and gas company is also thinking about doing the exact same in Alaska and parts of Nigeria, Argentina, Guyana, and Germany, Bloomberg reported.

Other Questions People Ask

Why do fossil fuel companies see green in Bitcoin mining projects?

Fossil fuel companies, like Exxon, see Bitcoin mining as a way to utilize excess natural gas that would otherwise be flared, which contributes to greenhouse gas emissions. By partnering with companies like Crusoe, they can convert waste gas into energy for Bitcoin mining, effectively monetizing what was previously a loss. This approach not only helps reduce flaring but also allows these companies to present a more environmentally friendly image while continuing their operations.

How does Bitcoin mining help fossil fuel companies manage waste gas?

Bitcoin mining provides fossil fuel companies with a practical solution for managing excess natural gas by using it as an energy source for mining operations. Instead of flaring the gas, which releases CO2 into the atmosphere, companies can set up mining rigs on-site to convert this waste into cryptocurrency. This not only reduces emissions but also allows these companies to profit from what would otherwise be a wasted resource.

What are the environmental implications of fossil fuel companies mining Bitcoin?

The environmental implications of fossil fuel companies mining Bitcoin are complex. While using waste gas for mining can reduce flaring and associated emissions, it may also create a false sense of progress in addressing climate issues. Critics argue that this practice could incentivize further drilling and extraction of fossil fuels, ultimately undermining efforts to transition to cleaner energy sources.

Why is the partnership between Exxon and Crusoe significant for Bitcoin mining?

The partnership between Exxon and Crusoe is significant because it represents a shift in how fossil fuel companies are addressing waste gas issues. By leveraging Bitcoin mining as a solution, they can utilize excess gas more efficiently while potentially improving their public image. However, this collaboration raises questions about the long-term sustainability of such practices and their actual impact on reducing greenhouse gas emissions.

What challenges do fossil fuel companies face when integrating Bitcoin mining projects?

Fossil fuel companies face several challenges when integrating Bitcoin mining projects, including regulatory scrutiny and the potential for public backlash against their environmental practices. Additionally, while using waste gas for mining can be profitable, it may not address the root causes of emissions associated with fossil fuel extraction. Companies must balance their financial interests with the growing demand for sustainable practices in an increasingly eco-conscious market.