Australian Regulators Mull Deal to Power Bitcoin Mines from Gas Fracking

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Aus­tralian ener­gy and resources com­pa­ny Black Moun­tain Ener­gy has entered into a deal with a U.S. ener­gy com­pa­ny to use gas from frack­ing to pow­er Bit­coin servers.

The ini­tia­tive will har­ness the gas emit­ted from well­heads, the sur­face ter­mi­na­tion point of a gas well, and direct them to gen­er­a­tors for con­ver­sion to elec­tric­i­ty. This elec­tric­i­ty will then pow­er Bit­coin min­ing ASICs.

Black Mountain’s CEO Rhett Ben­nett says that burn­ing strand­ed gas incurs a high envi­ron­men­tal cost, incom­pat­i­ble with envi­ron­men­tal and social gov­er­nance goals. Burn­ing the flared gas from the well­head emits tox­ic chem­i­cals like methane and sul­fur dioxide.

It is bet­ter, in his view, to cre­ate a prod­uct such as Bit­coin with sur­plus ener­gy and reduce methane emis­sions by 63%.

Black Moun­tain is nego­ti­at­ing with Wyoming-based High­wire Ener­gy Part­ners LLC to sup­ply five ter­a­joules of gas to be con­vert­ed into 25 megawatts of elec­tric­i­ty for Bit­coin min­ing ASICs. High­wire, in 2021, pur­chased 40 nat­ur­al gas wells in South Dako­ta for min­ing Bit­coins and runs sim­i­lar oper­a­tions at var­i­ous sites in Wyoming, rent­ing out gen­er­a­tors from third parties.

Environmental pushback to fracking

Black Mountain’s Val­hal­la Project frack­ing site in Can­ning Basin, Kim­ber­ley, West­ern Aus­tralia, is still await­ing approval from the Envi­ron­men­tal Pro­tec­tion Agency, which only expects to fin­ish its report dur­ing or after March 2023. 

The final deci­sion on whether to allow this project or not will come from the Min­is­ter for Envi­ron­ment. If approved, 20 explo­ration wells will be drilled.

Local anti-frack­ing oppo­nents argue that the project could be the start of the indus­tri­al­iza­tion of the Kim­ber­ley area, believed to be the largest trop­i­cal savan­na in the world and that the hot cli­mate could cre­ate cool­ing issues for Bit­coin ASICs, threat­en­ing the pur­port­ed envi­ron­men­tal benefits. 

Oth­er crit­ics say that Bit­coin min­ers look­ing to oper­ate in Aus­tralia should be com­pelled to use renew­able ener­gy sources.

Is stranded gas delaying the shift from fossil fuels?

In the U.S., Exxon­Mo­bil has part­nered with Cru­soe Ener­gy Sys­tems to pilot a sim­i­lar project in North Dako­ta. Cru­soe Ener­gy spe­cial­izes in pipelin­ing strand­ed nat­ur­al gas into generators. 

The com­pa­ny has admit­ted that com­bust­ing nat­ur­al gas inside a gen­er­a­tor does not elim­i­nate methane emis­sions. Rather, it does less harm to the envi­ron­ment than burn­ing it in the open atmosphere.

Last year, Texas Sen­a­tor Ted Cruz sug­gest­ed using nat­ur­al gas cap­tured on-site to mine Bit­coin. Crit­ics say this prac­tice encour­ages com­pa­nies to con­tin­ue drilling instead of look­ing at fos­sil fuel alternatives.

The third-largest oil pro­duc­er in Rus­sia, Gazprom Neft, recent­ly announced a part­ner­ship with BitRiv­er, Russia’s largest co-loca­tion min­ing ser­vice provider, to cre­ate min­ing data cen­ters on its oil fields that use ener­gy from flared nat­ur­al gas.

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