At a recent meeting of 200 oil and gas executives and bitcoin miners in Texas, flared, vented and stranded gas assets were discussed as a way forward for bitcoin miners to deal with their ever-increasing electricity and energy requirements.
One Texas native described in a report by CNBC on the topic named Hayden Griffin Haby III, formerly a surface landman, has been exclusively mining bitcoins for the last nine months. Haby co-founded a company that powers bitcoin mining setups with flared, vented, and stranded natural gas assets.
An interesting confluence of events occurred, with the Chinese government banning crypto mining rigs this past spring. This could potentially result in an influx of Chinese crypto-miners into Houston, to make use of the novel energy resource provided.
Considering that bitcoin miners care about finding cheap energy, the deregulated power grid, coupled with inexpensive power sources in Texas, provides them a perfect fit.
A proponent of bitcoin, Parker Lewis, who is an Executive at Unchained Capital, a bitcoin financial services firm, was a key figure in linking the energy generation capability of Texas with bitcoin miners. He envisions Texas as becoming the bitcoin capital of the world and has been traveling across Texas to spread awareness about bitcoin.
Methane combustion fundamental to mining energy generation
In the past, when oil and gas companies hit a natural gas formation while drilling for oil, a pipeline was required for delivering the gas. If a pipeline was very close to the drilling site, the gas could be sold on the same day. If the drilling site is 20 miles away from the nearest pipeline, then it’s not so easy to sell the discovered gas. Something else must be done.
One option is to vent the gas into the atmosphere, which has detrimental effects from an emissions perspective. The other option is to “flare” it, which involves externally igniting the gas. Flares release CO2 and H2O in place of CH4 methane, and this process is 75% to 90% efficient.
The other option is on-site feeding of methane through an engine or generator, which allows 100% of methane to be combusted. This option is the most economically feasible.
Bitcoin miners get what they want in either case, which is cheap energy.