Flare Gas Mining – A 150 billion cubic meters opportunity

The impact of Bitcoin Mining on the environment has been a hot topic for a while now. However, the renewable energy usage for BTC mining grew nearly 60% in a year. Next to hydro, wind, solar and geothermal energy, Bitcoin Mining is also trending towards stranded and wasted energy resources such as flared methane. Each year about 150 billion cubic meters of natural gas is flared so the potential for flare gas as an energy source for mining is huge. In this article I will dive into the theme of flare gas mining and will discuss the following topics:

  • What is Gas Flaring
  • Impact on the Environment
  • Alternative to Flaring
  • Monetizing Flare Gas Through Bitcoin Mining
  • Meeting Environmental Standards & Regulation
  • How it works
  • The Potential

 

 

What is Gas Flaring?

Gas flaring is the burning of natural gas associated with oil extraction. Flaring gas is done at industrial plants like refineries and gas processing facilities but also common at oil & gas extraction sites and offshore rigs.

At industrial plants, flare gas is used mostly when the plant (partially) starts up or shuts down, or to burn flammable gas that is released by safety valves when there is over-pressuring in the plant. At extraction sites for oil & gas, gas flares are used for similar reasons but also for disposing unwanted gas that is being created by the extraction of oil.

 

Impact on the Environment

So why is the gas being flared? If the gas would be not be flared, methane will be released directly into the air. This is very bad for the environment as the greenhouse effects of methane are more than 80 times stronger than the carbon dioxide (CO2) which is released after flaring. Unfortunately, even with flaring 10-25% of the methane is still being vented into the atmosphere without being combusted.

According to the World Bank, each year about 150 billion cubic meters of natural gas is flared, emitting 400 million tons of CO2-equivalent emissions and other pollutants, including methane and black carbon (soot).

Twitter avatar for @BlockwareTeamBlockware Solutions @BlockwareTeam

144 billion cubic meters of gasoline are flared every year. This is a colossal waste of resources. #Bitcoin mining fixes this.

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July 24th 2022

5 Retweets

 

Alternative to Flaring

Some gas is wastefully flared instead of conserved or used for productive purposes. Negative environmental effects of flare gas can be mitigated by capturing, storing or transporting the gas. However, developing a value chain to capture, store, transport and distribute flare gas is often a costly challenge. Traditional methods of capturing and transporting flare gas can be applied, depending on the location. These systems are difficult to apply in remote and hard to reach areas or areas with little infrastructure. There are innovations that tackle this but these new technologies are expensive, making them economically unviable without an incentive structure. This is especially true for individual and small-scale operators. Deploying flaring reduction options usually needs an economies of scale that smaller companies do not have.


Monetizing Flare Gas Through Bitcoin Mining

In many cases capturing flare gas is not economically sustainable. Generators cost money to acquire and maintain. So companies will not run the gas through a generator unless they can make money. This is where Bitcoin mining comes in. Bitcoin mining does make it economically sustainable to combust methane in generators. This is viable in remote areas because mining hardware is portable and location agnostic. Also it is possible to combine different amounts of mining machines into different levels of load, making it modular and applicable to different situations. In addition, Bitcoin mining operations are interruptible as they can withstand changes in levels of electricity generation based on the variable flow of gas.

 
Flaring mitigation project by EZ Blockchain in Watford, ND

 

Meeting Environmental Standards & Regulation

Using Bitcoin Mining as a solution to monetize flare gas capturing is not the only reason why companies are engaging in it. Next to an economic incentive, capturing flare gas to mine Bitcoin also helps companies meet environmental standards. The process of combusting flare gas in a generator reduces not only the emission of methane up to 98%, but also CO2 emissions by about 63% compared to continued flaring.

 
% emission reduction by capturing flare gas to mine bitcoin (Source: Crusoe)

Using Bitcoin Mining to mitigate environmental impact of flaring is not only done by ‘smaller’ companies. According to CNBC, Exxon is looking at bitcoin mining as a way to meet the World Bank’s Zero Routine Flaring by 2030. Similarly, ConocoPhillips is running a test pilot project, selling extra flare gas to bitcoin miners in North Dakota which is known as an important source of new oil production in the U.S..

Twitter avatar for @BrianGittBrian Gitt @BrianGitt

Bitcoin mining could slash Exxon’s gas flaring emissions by 63%. cnbc.com/amp/2022/03/26…h/t @Mon3yMik3yExxon is mining bitcoin in North Dakota as part of its plan to slash emissionsExxonMobil has been working with Denver-based Crusoe Energy Systems to mine bitcoin in North Dakota.cnbc.com

July 30th 2022

4 Retweets

Some people are sceptical that gas powered Bitcoin Mining is really a win for climate, arguing that monetizing flare gas only creates an incentive for more drilling. Not only does flare gas mining make extractions more profitable, in many countries regulation states that the amount of oil a company can extract is correlated to the amount of emissions these companies are authorized to release into the atmosphere.

“You’re making fossil fuel mining more profitable, so you’re not helping” Alex de Vries – founder of Digiconomist.

 

How it works

Explained in a very simplistic way: the flare gas is captured at the production site . The gas is run through a generator that converts it into electricity. The mining machines are installed in a fully equipped container and tap into the onsite generators. The electricity goes through the transformers, powering the ASICs in the container to produce Bitcoin.

 

 
Mining operation of TypeX energized with captured flare gas
Twitter avatar for @MuskMinersMusk Miners @MuskMiners

1.1 MW Waukesha generator fueled by wasted flare gas based energy rolling and ready to mine #btc ! Next up is container placement! #flaregas

July 29th 2022

142 Retweets

Twitter avatar for @denverbitcoin🏔Adam O🏔 @denverbitcoin

The future of oil & gas is intertwined with the #bitcoin network. Every day more O&G producers are awakened to the fact that they can export their energy to bitcoin — improving hydrocarbon revenue while mitigating waste. ⁦@upstreamdatainc⁩ customers send the best videos 💯

August 9th 2022

20 Retweets

 

The Potential

Each year about 150 billion cubic meters of natural gas is flared. The U.S. (where around 37% of the Bitcoin miners are located) is the number four country when it comes to flaring gas (behind Russia, Iraq and Iran). According to the World Bank, the approximated costs of flared gas is $30,6 billion. The Cambridge Bitcoin Electricity Consumption Index estimates that global gas flaring recovery could run 4.6 bitcoin mining networks (based on May 8, 2022 energy usage), so the potential is enormous.

 
Top 7 countries in the world when it comes to flare gas (source: The World Bank)

 
Satellite-Detected Natural Gas Flaring (source: SkyTruth)
 

In addition to the availability of a huge amount of flare gas, there are emission reduction programmes launched by the World Bank and various governments that incentivise oil & gas companies to tackle the issue of methane and CO2 emissions. These programmes, can work in favour of deploying flare gas mining operations. Some examples are: The Global Gas Flaring Reduction Partnership, Zero Routine Flaring by 2030 and The Climate and Clean Air Coalition.

Twitter avatar for @BitPaineBit Paine⚡️#648 @BitPaine

The US government just passed a $1.5B subsidy for #bitcoin mining. @thetrocro

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August 8th 2022

62 Retweets

How much Bitcoin you can mine capturing flare gas depends on various elements:

  • The amount of M3 gas being flared

  • The quality of the gas, most importantly % of methane

  • Amount of hashrate at site

  • Efficiency of the mining machines used

  • Network difficulty

 

 

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Bitcoin Mining Farm Tour at a Texas Flare Gas Site

 

Bitcoin Mining With Flared Gas To Reduce Carbon Emissions – Upstream Data Inc

 

Building A Sustainable Cryptocurrency Future Using Bitcoin Mining With Natural Gas

 

Forbes – Business of Climate Change

The digital mining of Bitcoin and other cryptocurrencies is an incredibly energy-intensive process. EZ Blockchain keeps greenhouse gasses out of the atmosphere by utilizing wasted energy with the help of Bitcoin mining and high-density computing.

Quantifying The Potential Impact of Bitcoin Mining on Global Methane Emissions
Daniel Batten – Batcoinz

Using Bitcoin mining to combust leaking methane sources can eliminate 5.32% of all global emissions by 2045. This represents 23% of all global methane emissions: more than half the UNEP’s targeted reduction of methane of 45% by 2045.

Think Inside the Box
Kyle Drew – Nakamotor

The Anatomy of a Bitcoin Mining deployment at a wellsite.

Estimating the Economics of Bitcoin Mining Using Natural Gas Destined for the Flare Stack
Ben Montalbano – BuyCorbomite

The post will examine the primary costs related to onsite (i.e., at or near oil and gas wellheads) Bitcoin mining using excess produced natural gas: capital expenditures (CAPEX) for power generation (natural gas turbines), power generation feedstock costs (flare gas isn’t quite free), mining infrastructure costs, and mining economics.

 

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About the Author

Nico Smid born and raised in the Netherlands, living in Argentina with my family for a year now. Expert in international business development with 15 years of experience in guiding European companies doing business in the South American market and vice versa. Bought my first Bitcoin in June 2017 and went down the rabbit hole ever since. As of 2021, I started mining to create an extra income stream for my family. This triggered me to study the industry and I found it so fascinating that I created a business in the industry. I am a co-founder of Digital Mining Solutions  providing various services to companies who want to mine bitcoin next to their core business. As part of my journey I decided to publish what I am learning in a weekly free newsletter called The Bitcoin Mining Block Post , focusing on market insights and trends.

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