Mining Bitcoin often requires vast amounts of expensive electricity. With U.S. oil companies producing vast amounts of unwanted natural gas, Bitcoin miners are increasingly sending mining rigs out to oil fields as it's one of the cheapest ways towards mining the leading cryptocurrency.
U.S. oil companies produce vast amounts of unwanted natural gas every year. Companies sometimes give away the gas for free to cryptocurrency miners; other times they take to selling it.
In some cases, cryptocurrency miners pay the oil firms for their natural gas wholly or in part using the cryptocurrencies they mine.
With Tesla’s recent announcement on dismissing the leading cryptocurrency as payments citing concerns over "rapidly increasing use of fossil fuels for Bitcoin mining and transactions", the flagship cryptocurrency went on the rapid downhill.
Musk’s outright rejection of Bitcoin over environmental concerns sparked debates among environmental advocates that cryptocurrencies are not a long-term solution to unwanted natural gas emissions, as cryptocurrencies produce their own emissions.
Now, oil companies and Bitcoin miners are seemingly forming alliances, taking over large-scale Asian Bitcoin mining operations that rely largely on coal-powered electricity.
The mobility of mining from different energy sites gives miners flexibility in drawing natural gas from different sites based on their availability, providing an alluring advantage.
Former electricity trader and president of crypto mining company Imperium Digital, Haley Thomson, remarks:
“The idea that you could plug in these (computers) and then take them somewhere else just really caught my imagination.”
In the coming times, government regulations and incentives could further benefit oil and cryptocurrency companies.
For instance, in April, the U.S. Senate passed a measure to reverse ex U.S. President Donald Trump’s weakening of methane emission regulations.
Experts say that could ultimately fuel the use of Bitcoin mining to make the best out of unwanted natural gas by oil companies.
This year, North Dakota and Wyoming passed regulations that give tax breaks to oil producers that provide gas to cryptocurrency miners in an effort to make the best out of unwanted natural gas.