Oil companies reduce their environmental impact thanks to Bitcoin

Bitcoin is often criticized for its high energy consumption. Greenpeace's recent campaign urging the Bitcoin community to stop mining Bitcoin clearly reflects the prevailing sentiment on this issue. Bitcoin mining does indeed consume energy. This is a fact the community doesn't deny. On the contrary, it has been a driving force for transforming the industry and seeking green initiatives to reduce its energy consumption.

One such initiative involves using burned natural gas to power Bitcoin mining farms. This approach aims to reduce emissions of methane, a greenhouse gas potentially more damaging than carbon dioxide.

Thus, some oil companies are starting to see this activity as an opportunity to reduce their carbon footprint and generate additional revenue. If the marriage between mining farms and oil companies does not seem obvious at first glance, the experiments carried out are more than promising.

In this article, we will explore how Bitcoin mining can help oil companies solve their excess gas problems and improve their profitability.

The problem of Bitcoin’s energy consumption

According to the University of Cambridge's " Bitcoin Electricity Consumption Index ," the Bitcoin network consumes as much energy as some countries like Argentina or Sweden. This consumption stems from the mining process, which requires powerful and energy-intensive computers (ASICs).

To reduce their carbon footprint, a growing number of Bitcoin miners are using renewable energy sources to power their mining facilities. According to the Bitcoin Mining Council , approximately 60% of the energy used in Bitcoin mining has come from renewable sources (wind, hydro, geothermal, etc.) since 2021. This means that today, and following the closure of mining farms in China, the trend toward "green mining" is helping to reduce Bitcoin's carbon footprint.

Various environmentally friendly solutions are being implemented today, such as the use of hydroelectric power plants in isolated villages in Africa , the use of surplus green electricity ( BBGS ), and the use of biogas in livestock farms, as seen in Ireland . Miners are competing to find innovative ways to reduce their carbon footprint while simultaneously seeking to optimize their electricity costs.

• The African village that mines Bitcoin

A new and even more surprising alternative involves reducing greenhouse gas emissions from oil companies. This new approach, according to ESG analyst Daniel Batten, could help reduce methane emissions by up to 8,5% by 2030 and potentially limit global warming by nearly 0,15°C by 2045.

Using excess gas from oil companies

When oil companies extract oil, they also produce natural gas in the extraction process. This gas, mainly methane, is often flared by default because it is not economically viable to store or transport it for other uses. Indeed, a whole new logistics infrastructure would be required to optimize the circuit of this gas. However, flaring contributes to the waste of a precious natural resource and contributes to greenhouse gas emissions. It is important to remember that methane is a much more potent greenhouse gas than carbon dioxide, which makes it a major environmental problem.

This is where Bitcoin mining comes in. New solutions involve valorizing these natural gases by using them to power Bitcoin mining farms. These initiatives are independent of the oil companies themselves. By using excess natural gas resources, they can generate electricity to power mining facilities, thereby avoiding flaring and adding value to these resources that are otherwise wasted.

A pilot project was implemented in 2021 with the oil company ExxonMobil , which supplied fuel to the Bitcoin mining farms of the mining company Crusoe Energy . Rather than simply burning this gas and contributing to greenhouse gas emissions, Crusoe uses it to generate the electricity needed to operate its mining farm. According to a study by Crusoe, this method reduces CO2 emissions by 63% compared to the traditional flaring process.

Methane gas is 28 times more damaging to Earth's atmosphere than carbon dioxide and more than 20% of global warming can be attributed to methane gas ( Borunda 2019 ).

Not only is this approach more environmentally friendly, but it also allows the company to generate additional revenue through Bitcoin mining operations.

The alliance between the oil industry and Bitcoin mining appears to be emerging as a new solution to address the challenges of climate change. Crusoe Energy recently announced a new partnership in the Middle East region to collaborate with oil companies in the area. The MENA region was responsible for over 38% of global oil flaring in 2020 and is among the countries with the highest flaring rates in the world . This represents a significant market for mining companies.

Read: Oman inaugurates a second mining center in the country.

Benefits for oil companies

Oil companies can benefit from several benefits by getting involved in Bitcoin mining or using cryptocurrency-related initiatives. Here are some of these benefits:

• Income diversification : Bitcoin mining offers oil companies an opportunity to diversify their sources of income. This can reduce their exclusive dependence on the oil sector and mitigate risks associated with oil price fluctuations. Having an additional Bitcoin mining business can provide a significant alternative source of income.

• Valorization of surplus resources : Oil companies can use the excess resources they produce, such as associated natural gas, to power Bitcoin mining farms. Instead of wasting these resources by burning or flaring them, they can use them productively to generate electricity needed for Bitcoin mining. This helps maximize the use of energy resources and creates additional value from these otherwise wasted resources.

• Brand image and environmental responsibility : Participating in Bitcoin mining can help oil companies improve their brand image by demonstrating their commitment to clean technology and innovation. By using excess resources to power mining operations, they can help reduce greenhouse gas emissions associated with flaring. This can be seen as a step towards greater environmental responsibility.

Of course, the benefits mentioned above may vary depending on each company's specific circumstances and market conditions.

The controversies aroused

While mining Bitcoin from surplus gas may offer environmental and economic benefits, this practice has drawn criticism. Some authors, such as Paasha Mahdavi , co-author of an article on methane reduction measures, argue that "projects designed to capture gas that would otherwise be burned or vented have led to an overall increase in gas production." Consequently, some fear that this initiative will incentivize oil companies to increase their oil production and contribute to rising greenhouse gas emissions.

According to The Guardian , this approach is a "false solution" because it amounts to "putting a band-aid on a gaping wound." It states that "simply finding other uses for 'waste gases' does not address the urgent need to reduce fossil fuel consumption."

Economist Alex de Vries points out that despite the efforts made by bitcoin miners, the issue of electronic waste is not resolved, increasing drastically with mining operations.

Finally, the authors of the study " Approaches to Utilizing Flare Gases at Oil and Gas Fields " believe that the practice can be advantageous in several respects but requires a more in-depth multi-sectoral analysis to be able to draw conclusions.

Final reflections

Bitcoin mining can offer an attractive solution for oil companies by allowing them to use excess gas to produce electricity and generate additional revenue. By reducing emissions of methane, a greenhouse gas potentially more harmful than carbon dioxide, this approach could help make the oil industry more sustainable and environmentally friendly.

From this perspective, Daniel Batten argues that Bitcoin mining is a counterintuitive solution and that it can be beneficial for the environment . The alliance between the mining industry and Bitcoin also demonstrates the efforts being made to help make Bitcoin a greener activity.

However, it is important to find a balance between the economic and environmental benefits of Bitcoin mining to ensure a sustainable transition to a greener economy. It would seem that the combined efforts of environmentalists and experts from various industries could lead to the creation of increasingly innovative solutions , making Bitcoin mining an activity that also contributes to the fight against climate change.

See also:

• Bitcoin is a “counterintuitive” solution that serves the ecological cause
• This is how a small bitcoin mining farm is improving the economy of African villages
• The story of the Irish farmer who mines bitcoin using his cows
• Here are the different ecological innovations used by bitcoin miners
• Debunking: 7 preconceptions about Bitcoin that are important to correct
• The difficult situation facing Bitcoin miners in Kazakhstan
• How does Texas has become a major location for bitcoin mining