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How Bitcoin Mining is Reshaping the Oil & Gas Industry

Ever trekked across the rugged mountains of Texas or driven through the remotely based roads in North Dakota? If yes, you probably have seen giant vertical pipes over oil fields omitting flames — this phenomenon is called gas flaring. 

But how is all this connected with bitcoin mining? Let’s find out.

Bitcoin mining is a process by which new bitcoins are generated. This process is energy-intensive and requires powerful computers to solve complex mathematical problems.

By using gas from our oil wells to power the generators that run our bitcoin mining operation, miners are able to make money while helping the environment.

What is Gas Flaring?

Oil companies flare gas when they extract oil from the ground. This practice has persisted through time because of various reasons like market constraints, lack of adequate regulation, and political will. 

When gas is flared, it ends up as waste that can be detrimental to the environment. If this resource was used for productive purposes, such as generating power or conservation, then we would all benefit from its usage in some way.

Even though there are environmentally harmful consequences associated with it such as climate change, no considerable steps by global powers have been taken to prevent gas flaring. Flaring persists to this day because it is a relatively safe, though wasteful and polluting method of disposing of the associated gas that comes from oil production. 

How Gas Flaring Can Take A Major Toll On The Environment

Flaring includes thousands of different gases. In 2020 alone, oil and gas production companies worldwide flared nearly 142 billion cubic meters of gas. This amount of gas can power entire sub-Saharan Africa. 

With every cubic meter of flared gas, CO2 emissions equivalent to 2.5 kg are emitted. This means, a cubic meter of gas results in 400 million tons of CO2 equivalent emissions. 

On top of it, flaring does not burn all the associated gas sent to a flare, but it does emit significant amounts of methane. These emissions contribute greatly towards global warming and particularly in shorter time frames. According to the Intergovernmental Panel on Climate Change, methane can be up to 80 times more powerful than CO2 on a 20-year basis. 

What are the Top Uses of Natural Gas?

The United States processed and used roughly 31 trillion cubic feet (TcF) of natural gas in 2019. This accounted for 32% of the total primary energy consumption across America, making it an important source of power.

The use of gas-powered energy varies from sector to sector. Let’s take a look at it:

  • Residential purposes cause around 16% of gas-powered energy

  • The industrial sector consumed around 33% of energy

  • Nearly 36% of natural gas was used to create electricity

The Bitcoin Mining Explained

Bitcoin mining is a complicated process that produces and circulates new bitcoins. It works as part of the network that maintains blockchain records by confirming transactions to thousands upon millions each day with highly sophisticated hardware like CPUs or GPUs.

Also known as cryptocurrency mining, bitcoin mining is expensive and rewarding. Investors across the world are being attracted to mining for its ability to deliver great rewards. 

When people think of miners, they usually picture themselves in the mines with pickaxes and shovels. However, for Bitcoin, it's more like owning a sophisticated computer system- which can be both easy or difficult to understand depending on how much knowledge you have about technology. 

Miners compete against each other by verifying transactions until one person does this job successfully enough times that he/she receives rewards paid out in bitcoin--a sort of big deal since there are only 21 million total Bitcoins available worldwide.

Miners race to solve mathematical equations in order to process Bitcoin transactions. The speed at which they are able to accomplish this feat is called a hash rate, and it's measured by the number of calculations per second that your computer can perform. If your computer solves the mathematical problem first, you have the right to process the newest Bitcoin transaction blocks.

Each block of transactions in Bitcoin is verified by miners before they can be added to the blockchain. Miners create and maintain this trusted history. This makes hacking or distorting data nearly impossible.

Is Bitcoin Mining a Perfect Solution for Flaring?

The Bitcoin mining industry has helped U.S.-based natural gas producers cut and even eliminate flaring by utilizing their unsellable product, with no new infrastructure needed. 

This is a big win for both industries as they work towards reducing pollution in our air through regulations like the ones that have just gone into effect or will soon do so again next year. 

Let us break down this process to understand the connection between flaring and Bitcoin mining closely.

Lately, innovators in the Bitcoin mining and energy sectors got along extremely well. In just over 2 years, these industries have fused together like two sides of an elegant coin - with both moving quickly towards new opportunities as they go along.

Cryptocurrency is decentralized, meaning that each virtual coin exchanged happens without the help of a central bank. Extracting these coins from cyberspace can be complicated and requires extensive knowledge. The decentralized nature of cryptocurrency means that computers all over the world are constantly solving complex equations to ensure validity. As more coins enter into circulation, the process gets complicated more and more.

Solving such equations is a race against the clock, with one winner who unlocks an entire new vault full of coins. These supercomputers require vast amounts of electricity and it all happens quickly because time is always limited.

To fulfill such enormous electricity needs, cryptocurrency miners rely on oil and gas companies. They use the gas that otherwise flares to generate electricity for their supercomputers. Ultimately, they help gas companies to reduce their losses while lowering the impacts of harmful gases on the environment. 

How Fracking Companies Can Benefit from BTC Mining

The process of hydraulic fracturing, also known as "fracking," has been used for centuries to extract natural gas and oil from rock by artificially breaking it up. Fracking companies have been facing stranded gas problems since the inception of oil extraction. Cryptocurrency mining helps fracking companies utilize natural gases and eradicate long-lasting operational problems. 

With cryptocurrency mining becoming more and more centralized over the years, there’s a strong case that power used in this process will be gradually decentralized. And, this will be the direct result of solutions like crypto mining.

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