Bitcoin is catching the attention of energy executives, including Frisco, which is mining a booming cryptocurrency using surplus gas at drilling sites.
Silver Energy oil and gas drilling company is among dozens of companies using mobile devices for cryptocurrency mining, which require large amounts of energy to perform the complex data center operations required to create new units of cryptocurrency through mining.
Silver Energy President Joel Gordon said his firm bought a $ 350,000 rig in the fall from a Chicago-based firm called EZ Blockchain, which is building units that can be transported by semi-trailer to remote locations in places like West Texas, North Dakota. or Alberta, Canada.
Silver Energy and EZ Blockchain officials said mobile rigs are helping to tackle pollution from natural gas flaring, which accounts for about 1% of the world’s carbon emissions from humans.
In turn, this energy is used in the increasingly competitive world of Bitcoin mining, which requires an enormous amount of energy to validate blockchain transactions that form the backbone of the cryptocurrency market.
After spending most of the last year trading between $ 9,000 and $ 10,000, bitcoin prices have skyrocketed since December. The cryptocurrency traded at over $ 54,000 per bitcoin on Tuesday after peaking at $ 63,745 in late April.
Bitcoin miners are rewarded with new bitcoins every time they solve a new algorithm that is added to the transaction chain for existing bitcoins. But with each mathematical problem solved, the algorithms become more complex and require more computing power. This is where mobile rigs and natural gas drilling sites come in handy.
“Flare gas is very impractical to capture. [and] very expensive, so gas flaring is a big problem, ”said Joel Gordon, who grew up in Canada and now runs Silver Energy. “And for bitcoin miners, expense # 1 is energy. We can cut off electricity from free gas. “
Chicago-based EZ Blockchain is building mobile data centers specifically for oil and natural gas producers. Founder Sergei Gerasimovich said that he has supplied about a dozen mobile Bitcoin mining devices to energy producers in North America, and the demand for them is growing.
The popularity of rigs skyrocketed in 2020, when oil and natural gas prices plummeted due to the economic slowdown due to the COVID-19 pandemic. At the same time, investors have renewed interest in Bitcoin and other cryptocurrencies.
Gerasimovich said companies are also becoming increasingly concerned about environmental regulations and potential fines, both financial and social, for emissions of pollutants such as carbon dioxide.
“It’s not just bitcoin, we’re optimistic about stuck natural gas,” Gerasimovich said. “There is so much energy shortage in the world.”
Silver Energy has placed a Bitcoin mining block at a natural gas rig outside Brooks, Albert, Canada.
According to Gerasimovich, such facilities can supply electricity 30-50% less than connecting to a traditional power grid. This gives companies like EZ Blockchain and Silver Energy a huge advantage in the energy-intensive cryptocurrency mining industry. To operate, the devices only need a simple satellite communication channel and a lot of electricity.
Silver Energy’s Bitcoin mining division uses heat from the combustion of natural gas to power a generator that generates about 3 megawatts of electricity, all of which is used to power a data center that will fit in the body of a semi-trailer. Ever since Silver Energy started mining bitcoin, demand has grown and now the EZ Blockchain usually deals with units that produce much more electricity.
Silver Energy would like to buy more devices, but due to high demand, prices for mobile devices have skyrocketed.
“This is a really short-term opportunity,” Gordon said. “Given the amount of electricity that Bitcoin mining uses, it really needs renewable energy to be successful.”
Gerasimovich sees it differently: the burnt natural gas opens the way to cheaper electricity for mining bitcoins.
“This has been our entire philosophy behind mobile data centers,” he said. “Bitcoin doesn’t need a lot of bandwidth, it only needs electricity.”