Matt Lohstroh's video of the mining rig.
A video of a mining rig turning natural gas into Bitcoin recently went viral on Twitter. The video shows mining equipment on an oil well in east Texas, sitting on land that was previously deforested by the oil mining company that uses the pipeline there.
Matt Lohstroh, a co-founder of natural gas Bitcoin mining company Giga Energy, posted the video from their east Texas oil well in February:
It's loud and dirty on the outside, but inside, multiple racks of mining rigs strewn with red wires perform computational puzzles to "mine," or create new Bitcoin as a reward for processing blocks of transaction data.
The video has gotten more than a thousand replies, and almost 3,000 quote tweets so far, mostly from people concerned or criticizing the practice as wasteful or damaging to the environment. The idea that cryptocurrency is harmful to the environment due to mining has gained more attention recently due to the popularity of blockchain collectibles called non-fungible tokens or NFTs.
What Giga Energy is doing is a bit different and more nuanced than extracting fossil fuels to use for mining bitcoins, however. Lohstroh told Motherboard that his company's process involves harvesting natural gas, the otherwise-wasted byproduct of an oil pipeline.
When oil flows out of the ground through a pipeline, some gas comes along with it. That surplus gas, in the form of methane, is damaging to the environment, especially if it's allowed to leak out unfettered—the "flare stack" that you see alongside oil wells converts the methane to CO2, which is less bad for the planet, but still quite bad. What Lostroh is doing is making that otherwise wasted resource useful by siphoning it off to mine Bitcoin, rather than extracting more of it for a specific purpose.
In an earlier video, you can see the flame in the flare stack going out as the generator comes on:
By converting the methane to energy that can power a mining rig, as Lohstroh is doing, he believes it's putting that wasted energy to use.
"What we're doing is saying hey that's wasted—how about we come in, take that natural gas off your hands, get rid of the headache, and monetize that resource?" Lohstroh said.
On a windy day, according to Lohstroh, the flame doesn't burn as efficiently and can go down to 30 percent combustion of the gas—releasing the rest into the air. "It's just horribly bad for the environment," he said, "So we come in, and we're able to get 98 percent combustion with our generators."
Experts have been saying for years that using electricity to mine Bitcoin accelerates climate change, and one Bitcoin transaction represents enough mining energy to power an average US home for a week. So companies that burn things like tires to power rigs are looking for new, more sustainable ways to mine. More importantly, though, they’re looking for cheap power. Sometimes, that means looking for similar inefficiencies or quirks in renewable power systems such as hydro to exploit. But with the recent hype around NFTs or non-fungible tokens, more people are confronting the carbon footprint of intensive computation such as cryptocurrency mining, although as the outrage to Lohstroh’s setup shows, misconceptions still abound.
Is it “green?” No. Is it single-handedly boiling the oceans? Also, no. What it is doing is exploiting a niche in an inefficient system to cheaply transform waste into profit. Fossil fuels are still harmful to the planet, however, and clearly these dirty energy sources still power a chunk of the Bitcoin network.