For years, oil and gas companies have struggled with the problem of what to do when they accidentally hit a natural gas formation while drilling for oil. Whereas oil can easily be trucked out to a remote destination, gas delivery requires a pipeline.
If a drilling site is right next door to a pipeline, they chuck the gas in and take whatever cash the buyer on the other end is willing to pay that day. "There's no choice. There's no middle finger. Whatever gas comes out that day has to be sold," explained Haby. But if it's 20 miles from a pipeline, things start to get more complicated.
More often than not, the gas well won't be big enough to warrant the time and expense of building an entirely new pipeline. If a driller can't immediately find a way to sell the stash of natural gas, most look to dispose of it on site.
One method is to vent it, which releases methane directly into the air – a poor choice for the environment, as its greenhouse effects are shown to be much stronger than carbon dioxide. A more environmentally friendly option is to flare it, which means actually lighting the gas on fire.
"Chemistry is amazing," explained Adam Ortolf, who heads up business development in the U.S. for Upstream Data, a company that manufactures and supplies portable mining solutions for oil and gas facilities. "When CH4, or methane, combusts, the only exhaust is CO2 and H2O vapor. That's literally the same thing that comes out of my mouth when I exhale," continued Ortolf. But Ortolf points out, flares are only 75 to 90% efficient. "Even with a flare, some of the methane is being vented without being combusted," he said.
This is when on-site bitcoin mining can prove to be especially impactful. When the methane is run into an engine or generator, 100% of the methane is combusted and none of it leaks or vents into the air, according to Ortolf.
Bitcoin makes it economically sustainable for oil and gas companies to combust their methane rather than externally combust it with a flare.
"There is no such thing as stranded gas anymore," said Haby. But Ortolf has taken years to convince people that parking a trailer full of ASICs on an oil and gas field is a smart and financially sound idea.
"In 2018, I got laughed out of the room when I talked about mining bitcoin on flared gas," said Ortolf. "The concept of bringing hydrocarbons to market without a counter-party was laughable." Fast forward three years, and business at Upstream, a company founded by lead engineer Steve Barbour, is booming. It now works with 140 bitcoin mines across North America.
It is also helping to curtail the overall carbon footprint of some of these oil and gas sites. Recent production stats show that in the U.S. alone about 1.5 billion cubic feet of natural gas is wasted on a daily basis. And these are just the reported numbers, so the actual figures are likely higher.
