Bitcoin is turning the heads of energy companies, including a Frisco company that is exploiting the cryptocurrency that fired using excess gas at drilling sites.
The oil and gas drilling rig Silver Energy is among dozens of companies looking for mobile cryptocurrency mining units that need large amounts of energy to perform the complex data center operations needed to create new cryptocurrency units through mining.
Silver Energy President Joel Gordon said his company bought a platform in the fall for $ 350,000 from a Chicago company called EZ Blockchain, which is building units that can be transported by truck to remote locations in places like West Texas, North Dakota or Alberta, Canada.
Silver Energy and EZ Blockchain officials said mobile platforms help solve the problem of pollution from burning natural gas, which accounts for about 1% of the world’s carbon emissions.
In turn, this energy is put to use in the increasingly competitive world of Bitcoin mining, which requires large amounts of energy to validate the blockchain transactions that form the backbone of the cryptocurrency market.
After spending most of last year trading for about $ 9,000 to $ 10,000, Bitcoin prices have skyrocketed since December. The cryptocurrency was trading for more than $ 54,000 per Bitcoin on Tuesday, after reaching a peak of $ 63,745 in late April.
Bitcoin miners are rewarded with new Bitcoins each time they solve a new algorithm that is added to the existing Bitcoin transaction chain. But with each mathematical problem solved, the algorithms become more complex and require more computing power. This is where mobile units and natural gas drilling sites come in.
“The flared gas is very impractical to capture [and] very expensive, so burning gas is a big problem, ”said Joel Gordon, who grew up in Canada and now runs Silver Energy. “And for Bitcoin miners, expenditure # 1 is energy. We are able to turn off the gas for free. “
Chicago-based EZ Blockchain manufactures mobile data centers specifically for oil and natural gas producers. Founder Sergii Gerasymovych said he has delivered about a dozen mobile Bitcoin mining units to energy producers in North America, and demand is growing.
The platform’s popularity exploded in popularity in 2020, when the COVID-19 pandemic caused the price of oil and natural gas to drop dramatically as the economy crackled. At the same time, investors have renewed interest in Bitcoin and other cryptocurrencies.
Gerasymovych said there is also a growing concern among companies about environmental regulations and possible penalties, both financial and social, for the emission of pollutants such as carbon dioxide into the atmosphere.
“It’s not just Bitcoin, we are optimistic about stranded natural gas,” said Gerasymovych. “There is so much energy lost around the world.”
Silver Energy placed the Bitcoin mining unit at a natural gas drilling site outside Brooks, Alberta, Canada.
These types of sites can provide power for 30% to 50% less than connecting to the traditional network, said Gerasymovych. This gives companies like EZ Blockchain and Silver Energy a big advantage in the cryptocurrency mining industry, which seeks a lot of energy. The units need only a simple satellite uplink to operate and a lot of electricity.
Silver Energy’s Bitcoin mining unit uses the heat of burning natural gas to power a generator that produces about 3 megawatts of electricity, all going to power the data center that would fit in the back of a truck. Since Silver Energy started mining Bitcoin, demand has grown and EZ Blockchain now normally trades in units that produce much more electricity.
Silver Energy would like to buy more units, but high demand has caused prices for mobile units to skyrocket.
“It’s really a short-term opportunity,” said Gordon. “With the amount of electricity that Bitcoin mining is using, it really needs renewable energy to succeed.”
Gerasymovych sees it differently, with natural gas on fire providing a cheaper gateway to electricity for Bitcoin mining.
“That was our whole philosophy behind mobile data centers,” he said. “Bitcoin doesn’t need a lot of bandwidth, just electricity.”