Oil mining and Bitcoin mining have crossed paths – two operations that may sound similar, but are unrelated. What has brought about their relationship? The need for cheaper energy to mine Bitcoin and the need to produce more Petroleum while adhering to government’s regulations.
Canadian Oil Company Supplies Natural Gas to Crypto Mining Generators
Based on a media outlet’s report on March 30, operators at a Canadian-based oil company are no longer allowing natural gas to waste on fields. Instead, it is sent directly to an electricity generator that powers a Bitcoin mining farm. The natural gas is the by-product which is produced when petroleum is mined and the gas is usually flared.
In the same vein, it is really not profitable when sold given that its price has plummeted in the last couple of years. Moreover, this natural gas is not scarce in order to impact on its price. The government, on other hand, has regulated the amount of natural gas an oil company can flare in a day in order not to give off too much of these waste products into the fields. As such, it affects how much oil can be mined daily.
Ryan Wartman, a production foreman for Black Pearl Resources also explained this further when he said:
It was the best option for us… We’re using it to bring ourselves below the government-regulated amount that we can vent on location and keep producing oil
Miners’ Complaints About High Cost of Mining Bitcoin
Alternatively, large scale miners of late have been pointing out that the cost of mining Bitcoin is worth less its price and a lot has been attributed to the high energy it consumes. Therefore, miners and oil producers in the area have found a way to benefit from each other. While the natural gas is supplied to their generators, it allows the oil company to mine more oil since there is a reduction in its gas supply to the fields.
Stephen Barbour, a consultant is reportedly the brain behind the utilization of energy by both industries. He stated that he was inspired after reading how profitable it can be to mine Bitcoin. According to him:
I knew about all the wasted energy that goes on… Reading about bitcoin mining and how it could monetize energy through the internet, I just thought that was unbelievable
This symbiotic relationship is unarguably beneficial to either industry and there are expectations that other companies from both might do the same. With the mining cost reduced for miners, it could encourage more people to begin mining as well.