According to a March report by CNBC, Exxon initiated a trial project to mine Bitcoin in North Dakota’s Bakken oil reserves in 2021. Bloomberg stated that the US’s largest oil and gas corporation is considering doing the same in Alaska, as well as sections of Nigeria, Argentina, Guyana, and Germany. And it’s not the only one. Other oil firms, such as ConocoPhillips in North Dakota, see the energy-hungry cryptocurrency as a way to reduce their carbon footprint while also potentially making money. Because the United States has become the world’s largest Bitcoin mining centre, this could become an increasing trend.
The story of how fossil fuel firms used the world’s dirtiest cryptocurrency to green their books begins with a persistent gas problem. When a business drills for oil, it frequently also extracts methane gas from the ground. Methane is a greenhouse gas that is even more potent than carbon dioxide. Over the next 20 years, if a corporation lets that methane escape into the atmosphere, which they are embarrassingly frequently guilty of, methane will trap heat with 80 times the potency of CO2.
Oil firms will frequently pump some of that gas back into the ground, not out of altruism, but to maintain the pressure that propels oil up from wells. However, there isn’t always enough space to return the unused gas to the ground. What’s the alternative? Make a fire with it. The process of burning methane, known as “flaring” in the industry, generates CO2. This is a harm-reduction strategy when it comes to the environment. It would be preferable to avoid releasing gas in the first place, but releasing CO2 is marginally better than allowing more potent methane to float up into the sky.
All of that gas could be converted to power, but that would necessitate the construction of infrastructure. And it appears that fossil fuel businesses are willing to accept such losses rather than spend the (very inexpensive) money and time needed to develop pipelines to get that gas to market. A more appealing option is to utilise that gas on-site near the oil well, eliminating the need to build a new pipeline to do so.
In a year, the Bitcoin network consumes almost the same amount of electricity as Malaysia. Miners use specific technology and a lot of electricity to solve increasingly complicated riddles in order to create new Bitcoin. According to Paasha Mahdavi, an assistant professor of political science at the University of California, Santa Barbara, Exxon’s decision to use waste gas for Bitcoin rather than finding a more practical purpose “is actually probably one of the worst case scenarios for an infrastructure project.”
It might be different if Exxon’s waste gas was delivered to the grid, where it could be used for a more important purpose, such as heating and lighting homes. The extra gas would then displace pollution that would have otherwise resulted from gas drilling elsewhere. When Exxon mines Bitcoin with waste gas, though, this isn’t the case.
