Bitcoin is turning the heads of energy companies, including a Frisco company that exploits skyrocketing cryptocurrency using excess gas at drill sites.
Oil and gas driller Silver Energy is among dozens of companies turning to mobile cryptocurrency mining units that require large amounts of power to perform the complex data center operations required to the creation of new cryptocurrency units through mining.
Silver Energy chairman Joel Gordon said his company bought a rig in the fall for $ 350,000 from a Chicago company called EZ Blockchain, which builds the units that can be transported on a semi-truck to remote locations in places like West Texas, North Dakota or Alberta, Canada.
Officials at Silver Energy and EZ Blockchain said mobile platforms are helping solve the problem of pollution from flaring natural gas, which is responsible for around 1% of human-produced carbon emissions. in the world.
In turn, this energy is being used in the increasingly competitive world of Bitcoin mining, which requires massive amounts of energy to validate the blockchain transactions that form the backbone of the crypto market. -change.
After spending most of the last year trading between $ 9,000 and $ 10,000, Bitcoin prices have skyrocketed since December. The cryptocurrency was trading 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, algorithms become more complex and require more computing power. This is where mobile units and natural gas drilling sites come in.
“Flared gas is very impractical to capture [and] very expensive so gas flaring is a big deal, ”said Joel Gordon, who grew up in Canada and now runs Silver Energy. “And for Bitcoin miners, the # 1 expense is energy. We are able to produce gas without electricity. “
Chicago-based EZ Blockchain manufactures mobile data centers specifically for oil and natural gas producers. Founder Sergii Gerasymovych said he has delivered a dozen Bitcoin mobile mining units to power producers in North America and demand is growing.
The platforms exploded in popularity in 2020 when the COVID-19 pandemic drastically lowered the price of oil and natural gas as the economy stammered. At the same time, investors have shown renewed interest in Bitcoin and other cryptocurrencies.
Gerasymovych said companies were also increasingly concerned about environmental regulations and potential penalties, both financial and social, due to the release of pollutants such as carbon dioxide into the atmosphere.
“It’s not just Bitcoin, we’re bullish on stranded natural gas,” Gerasymovych said. “There is so much energy stuck in the world.”
Silver Energy has installed the Bitcoin mining unit at a natural gas drilling site outside of Brooks, Alberta, Canada.
These types of sites can provide 30% to 50% less energy than plugging into the traditional grid, Gerasymovych said. This gives companies like EZ Blockchain and Silver Energy a huge advantage in the energy-hungry cryptocurrency mining industry. The units only need a simple satellite uplink to operate and a lot of electricity.
Silver Energy’s Bitcoin mining unit uses the heat from natural gas flaring to power a generator that produces around 3 megawatts of electricity, all of which power the data center that would fit in the back of a semi-truck. Since Silver Energy started mining for Bitcoin, demand has increased and EZ Blockchain now typically trades in units that produce significantly more electricity.
Silver Energy would like to buy more units, but strong demand has caused prices for mobile units to skyrocket.
“It’s really a short-term opportunity,” Gordon said. “With the amount of electricity that Bitcoin mining uses, it really needs renewable energy to be successful.”
Gerasymovych sees it differently, with burnt natural gas providing a gateway to cheaper electricity for Bitcoin mining.
“That was our whole philosophy behind mobile data centers,” he said. “Bitcoin doesn’t need a lot of bandwidth, just electricity.”