Cryptocurrency is rapidly rising around the globe, and the Permian Basin is playing an increasing role in the technology.
Bitcoin – a cryptocurrency created in 2009 – mining utilizes a lot of computing power and electricity, and Permian Basin natural gas is increasingly utilized to power those computers. In fact, bitcoin mining has grown so significantly in the Permian Basin over the last six months that the Midland-Odessa Transportation Alliance (MOTRAN) Wednesday held a workshop on the subject.
Kat Galloway, chief executive officer of Artemis Energy and founder of Bright Sky Environmental, told a packed auditorium at the Petroleum Museum that the two industries work well together because they solve each other’s problems.
“Bitcoin needs energy, oil and gas operators need to reduce their emissions,” she said.
She explained that instead of flaring the natural gas, it could be put to use generating electricity for other purposes, such as bitcoin mining. That natural gas can be used to power equipment on site, a concept that is not new, Galloway said. “What is new is what we do with that power,” which is bitcoin mining.
She estimated that using oilfield gas for bitcoin mining — instead of flaring it — reduces volatile organic compound emissions by 98 percent, carbon monoxide emissions by 69 percent, nitrogen oxide emissions by 43 percent and greenhouse gas emissions in the form of carbon dioxide equivalents by 28 percent.
“By using flared gas to reduce emissions, bitcoin mining can be pollution abatement,” she said, adding that if the infrastructure is designed properly, it provides real and credible emissions reduction for operators.
It is also a revenue generator for operators, she said, estimating bitcoin mining generates $10 to $30 per Mcf in revenue.
Cole Harrison, business development manager for Baseline Energy Services, a rental provider of natural gas generators across the country, said bitcoin miners have been using his company’s larger generators for their operations.
For oil and gas producers to effectively partner with bitcoin miners, Harrison said they need to provide a consistent supply of gas and room on well pads for the generators. Off-grid mining utilizes flared gas, stranded gas or excess gas to power their operations.
“We’re seeing operators wanting to diversify and delegate some of their gas production to bitcoin miners,” he said.
Not only does bitcoin mining reduce emissions but creates jobs for pumpers, information technology specialists, electricians and construction workers who need to extend well pads, Harrison said. It also provides new revenue streams in terms of increased royalties and production taxes.
Education in the Permian Basin as well as the city of Midland could benefit as bitcoin mining expands and matures in the region, said Paul Cockerham, who currently manages Fortress Energy’s operated assets as operations engineer and Verde Mining’s flare gas bitcoin mining.
Bitcoin mining could attract highly-skilled workers to Midland and drive innovation, Cockerham said. It could also help area schools – Midland College and the University of Texas Permian Basin – attract research grants and projects.
Focusing on education, Cockerham said he wants to start touting the benefits to high school students before they head to college. If they’re able to study the technology at local schools, he said, they may stay and build their careers.
Cockerham also sees tax benefits through tax abatements for those who use natural gas to power mining operations, such as those offered in Wyoming. He predicted that could bring about an end to gas severance taxes.
Midland “will also have a cleaner environment – lower emissions, better air quality, less light pollution. When I first moved here, I could see stars,” he said.
