Exxon Considering Expanding Bitcoin Mining Pilot to 4 Countries: Report

Bitcoin mining captures excess gas that would otherwise go into the atmosphere, and provides additional income for energy producers.
Exxon Considering Expanding Bitcoin Mining Pilot to 4 Countries: Report
Image: Bloomberg / Contributor via Getty Images

Exxon is considering expanding its Bitcoin mining pilot project, Bloomberg reported on Thursday citing anonymous sources with knowledge of the plan.

The oil giant, which launched a pilot program in January, 2021 that uses excess natural gas that would otherwise be flared or vented generated by the Bakken oil field in North Dakota—the site of fervent protest in 2016 near the Standing Rock Sioux reservation—to mine the Bitcoin blockchain, is thinking about recreating the project in Alaska and four other countries: Nigeria, Argentina, Guyana, and Germany.

Advertisement

A spokesperson for Exxon declined to comment on “rumors and speculations” regarding the project in an email to Motherboard. 

The pilot project is the product of an agreement with Crusoe Energy Systems Inc., a crypto mining company that uses natural gas flares to power computers called Application-Specific Integrated Circuits (ASICs) to mine Bitcoin. Bitcoin mining involves winning a global lottery to validate the next block of transaction data and add it to the chain by crunching numbers. The energy that mining uses provides security for the Bitcoin blockchain, as this so-called Proof-of-Work costs money, making it too expensive to alter the chain of transaction data. As a reward, successful miners receive newly-minted bitcoins. 

Mining has recently become desirable among energy producers, especially in fossil fuels, where gas that would otherwise be vented into the atmosphere can be captured and turned into energy. Currently, Crusoe takes 18-million cubic feet of gas per month from oil well pads in the Bakken region to power mobile generators that power these ASICs, Bloomberg reported. The arrangement offers Exxon a way to use surplus natural gas that couldn’t be fed into pipelines around the oil field—gas that would otherwise need to be burned (a process known as “flaring”) or released directly into the atmosphere (a process known as “venting.”) Both options are bad for the environment, but venting is worse.

Advertisement

Instead, feeding excess natural gas into generators for Bitcoin mining saves Exxon from potentially wasted profits, while also mitigating a source of emissions. Because natural gas is predominantly made of methane, a greenhouse gas that’s understood to be around 86 times more potent than carbon dioxide in its warming potential, venting it simply releases this into the atmosphere. Burning methane produces CO2, another greenhouse gas, and produces heat, noise pollution, and carcinogens. Reducing the frequency of this practice, which is an industry standard, reduces these harmful byproducts.

Mining may also help the company meet growing scrutiny around their greenhouse gas emissions without actually reducing the amount of stranded gas they produce. While this solution seems like a win-win-win for Bitcoin, Big Oil, and the planet, environmentalists fear that this marriage between industries is merely a Band-Aid for just one problem with fossil fuel use without addressing the need to curb it entirely. 

Advertisement

Danielle Fugere, president of environmental shareholder advocacy group As You Sow, told Bloomberg she’d like to see the company work more aggressively to transition from fossil fuels.

“At the end of the day, they’re still burning natural gas,” Arvind Ravikumar, a research associate professor in petroleum and geosystems engineering at the University of Texas at Austin told The Guardian about partnerships of this kind in December. 

The partnership between Exxon and Crusoe is one of a number of enterprises that would use stranded natural gas from oil drilling to generate Bitcoin. Motherboard recently visited another, smaller operation of this kind in Texas.

At Giga Energy’s Bitcoin mining operation in east Texas, natural gas flares, too, power generators that feed electricity into ASICs. Co-founder Brent Whitehead told VICE News reporter Alice Hines, who visited the setup for the second episode of CRYPTOLAND that the project was a “perfect alignment.” 

But critics disagree. In a panel interview with Motherboard on CRYPTOLAND, Alex De Vries, a data scientist at the Netherlands’ central bank and founder of Bitcoin energy tracking project Digiconomist, noted that the industry’s overall carbon footprint remains steep regardless of what individual miners are doing. 

“This network, which consists of roughly 2.9 million devices around the world consumes as much electrical energy as a country like Argentina, in total—it’s more than half a percent of our global electricity consumption,” De Vries said. “The only thing we get in return for that is a system that can at best do seven transactions per second.”