Although cryptocurrency prices have been on a steady decline from its $2.97 trillion market cap in November 2021, it remains a largely traded asset with the market cap of all cryptocurrencies now hovering around $1 trillion.
Due to its growing popularity, an increasing number of both individuals and companies are beginning to mine for cryptocurrencies or upscale their existing production.
Cryptocurrency mining creates individual blocks that are then integrated into the blockchain, which in turn, makes the blockchain more secure. As a reward for adding new blocks to the blockchain, miners are given cryptocurrency, which is how new coins are put into circulation. The process of creating new blocks is attainable through using costly, high-processing computers that solve difficult mathematical equations.
However, these computers require a significant amount of energy in order to mine cryptocurrency, as the energy consumed for bitcoin mining alone would place it within the top 30 countries of energy consumption. Because of this, cryptocurrency mining companies have begun looking for a reliable and relatively cheap energy source. As a solution, companies have started to use both stranded and opportunistic natural gas.
One major benefit for natural gas and oil companies is that it allows them to revolutionize flaring into an efficient and useful process. Crusoe Energy Systems Inc. has developed a “Digital Flare Mitigation” program that has no upfront costs to operators. The company delivers its systems to the site, as well as oversees logistics and operations. Instead of flaring natural gas, their system pipes it into generators, producing electricity that fuels their bitcoin mines. Crusoe Energy pays the company for the gas consumed, that would have otherwise been burned for nothing. Not only does this process provide an additional stream of revenue, but it also reduces emissions. With growing pressure for oil and gas companies to reduce emissions from both the government and individuals, Crusoe Energy’s process could be a potential solution, as methane emissions can be reduced by up to 95% when compared to flaring.
Exxon Mobil has already partnered with the company and is currently providing 18 million cubic feet of gas per month to Crusoe Energy Systems to mine bitcoin. Recently, Exxon Mobil has been considering expanding this process to sites in Germany, Guyana, Argentina, and Nigeria. Similarly, one of their competitors, ConocoPhillips, has also started to sell their excess of natural gas to third parties to mine bitcoin.
With such large natural resource companies paving the way into the cryptocurrency market, it would not be surprising to see many other companies follow suit. Even though cryptocurrency prices have been on a recent decline, this idea presents a potentially lucrative opportunity that is something to be on the lookout for in the future.
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