Despite advances in the public’s understanding of Bitcoin, the energy debate surrounding the digital currency carries on unperturbed. The debate regarding whether Bitcoin consumes excessive energy and imposes an unjustified harmful impact on the environment is unlikely to go anywhere soon.
Bitcoin and mining advocates will point to research studies highlighting that a high portion of mining is powered by renewable energy sources. Regions such as Sichuan represent the dominant source of hashpower during Chinese rainy season. This hashpower is dominantly powered by renewables given the overbuilt hydropower infrastructure in the region. However, coal-powered regions such as Xinjiang and Inner Mongolia also represent significant hashpower.
The development of resources such as the CBECI have added nuance to this debate but the jury is out for the everyday person. Industry professionals will highlight that Bitcoin miners actively seek the lowest source of energy which oftentimes leads them to renewable sources or energy which would have otherwise been wasted. However, it also can lead them to energy sources with a toxic carbon footprint as is mostly the case in Xinjiang, Inner Mongolia, and Kazakhstan.
But there is one thing in the energy debate that we should universally agree upon. When Bitcoin uses energy that would have otherwise been stranded, this is a net positive. Utilizing energy which would have been leaked directly into the atmosphere through flaring is one such incident.
What is Flaring?
Flaring is the process by which natural gas is burned off. Flaring is carried out by upstream oil and gas companies to burn natural gas which cannot be stored. Flaring has a particularly harmful impact on the environment given that it releases carbon dioxide and sometimes methane directly into the atmosphere.
Utilizing the energy from this natural gas to mine Bitcoin is one alternative to leaking it directly into the environment. Marty Bent from Great American Mining estimates that there is roughly 60 GW of energy available from flaring that could be used for this purpose. As it stands, the Bitcoin network is currently estimated to consume 7.41 GW of energy.
Equinor-Crusoe Flare Mitigation Partnership
The concept of using flared gas for Bitcoin mining is not new. Companies such as Upstream Data have already been implementing solutions for oil and gas producers for several years.
However, the concept got significant validation last week when Norwegian energy company Equinor partnered with Crusoe Energy Systems. Equinor will use technology by Crusoe to use energy which would have been leaked through flaring to mine Bitcoin.
Equinor is a majority-owned by the Norwegian government. The company will use digital flare mitigation technology owned by Crusoe Energy Systems at the US oilfield. Project leader Lionel Ribeiro had the following to say about the partnership:
“Mining cryptocurrency requires a lot of electricity to power computers, while a valuable commodity is wasted, and carbon emissions are created when we flare. By connecting these inverse pains, we can satisfy both needs with no cost to market expense.”An internal document circulated among Equinor estimates that the venture will reduce CO2 emissions by 20 thousand tonnes per year. The technology will be implemented at an Equinor oil field in Bakken, North Dakota. The otherwise wasted energy will be sold to Crusoe who will deploy it to mine cryptocurrencies.