When the largest U.S. oil producer is backing crypto miners, that’s big news and Palm Beach Letter editor Teeka Tiwari digs into this story….
Bitcoin may have found itself an unexpected ally… the U.S. oil industry.
According to Bloomberg, since January 2021, Exxon Mobil has been testing a program that uses excess natural gas to power crypto-mining operations.
In case you’re not familiar, oil companies regularly burn off excess natural gas in a process called “flaring.”
It’s a practice that goes back over 100 years, and it’s done for several reasons… from relieving well pressure, to disposal of natural gas that exceeds a company’s storage, refining, or pipeline capacity.
So instead of destroying the gas, Bloomberg reports that Exxon is using excess from its Bakken shale oil wells to fuel mobile generators powering on-site mining servers.
The program has been so successful, Exxon expanded the project last July. It also plans to launch similar programs on sites in Africa, South America, and Europe.
If you’re a longtime reader, you know that we regularly write about crypto mass adoption. It’s a catalyst we believe will send bitcoin prices soaring to $500,000 within the next 10 years.
So when the largest U.S. oil producer is backing crypto miners, that’s big news.
And it’s not just a one-off…
In February, ConocoPhillips announced it was selling excess natural gas (also from the Bakken shale) to a North Dakota bitcoin miner… with a company goal of reaching zero “routine flaring” by 2025.
It’s true that this shift to power crypto miners still produces pollution…
But recent estimates by Crusoe Energy show that using the excess for bitcoin mining reduces emissions by over 60% compared to routine flaring.
It’s evidence that crypto is becoming more “eco-friendly” than gold mining or traditional banking…
Now, you probably won’t see this make major headlines in mainstream finance. For example, the story above was tucked away in Bloomberg Green, the outlet’s green-energy column.
And crypto haters love to argue that bitcoin is bad for the environment… but a clearer picture emerges when you dig into the numbers.
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Bitcoin Is “Greener” Than Gold and Banking
Over the last year, one of the biggest anti-crypto arguments is that bitcoin mining is energy inefficient and bad for the environment.
But when Daily editor Teeka Tiwari had us dig into bitcoin’s energy usage, we discovered a different story…
According to the Cambridge Center for Alternative Finance, bitcoin mining consumes about 110 terawatt-hours (TWh) per year… or about 0.55% of global electricity production.
A terawatt-hour is equivalent to outputting one trillion watts in one hour… and 110 TWh is roughly the same annual energy use of a small country like Sweden.
Since bitcoin is a store of value and an independent monetary network… you need to compare its energy usage to that of the banking and gold mining industries.
Bitcoin mining uses 110 TWh of energy and produces 70 metric tons (mt) of CO2 annually. (CO2, or carbon dioxide, is a greenhouse gas.)
By comparison, the banking system uses an estimated 700 TWh of energy and produces 400 mt of CO2 every year.
And the gold industry uses 265 TWh of energy and produces 145 mt of CO2.
So banking and gold mining use 536% and 141% more energy, respectively, than bitcoin mining… And they produce 471% and 107% more greenhouse gases, respectively.
But we don’t see those crypto haters criticizing banks for the number of buildings they own, computers they run, or data centers they operate.
And they’re not tweeting or writing op-eds calling for lawmakers to close gold mines.
So, why aren’t we seeing the same anger directed at the traditional banking system?
And who exactly benefits from badmouthing bitcoin?
The answer: The legion of bankers plowing their high-wealth clients’ capital into crypto.
Today, big banks like JPMorgan, Wells Fargo, and Goldman Sachs all have at least a handful of crypto-focused employees and projects.
JPMorgan’s team of more than 200 crypto employees is one of the largest… the bank is even using its own digital currency (called JPM Coin) to send payments worldwide.
And just days ago, Goldman Sachs announced that it would soon offer investments in bitcoin and other cryptos to its high-wealth clients.
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The Truth About Bitcoin Energy Use
Here’s what’s really happening with bitcoin’s energy use…
Unlike Wall Street, bitcoin miners are taking actual steps to reduce carbon emissions and become more energy efficient.
According to a 2020 study from the Cambridge Center for Alternative Finance, about 76% of crypto miners use a mix of renewable and traditional energy sources to power their operations…
The same study found that about 39% of crypto mining’s total energy consumption comes from renewable sources.
In addition to current “green” operations, several large miners are moving more of their mining to renewable sources.
- Gryphon Digital Mining raised $14 million to build a renewable U.S. mining operation.
- DMG Blockchain partnered with Argo Blockchain to develop the first-ever bitcoin mining pool running exclusively on renewable energy.
- Genesis Mining established an operation in Iceland that’s powered by geothermal energy.
- Bitfarms partnered with Canadian utility Hydro-Quebec to use hydropower for its mining operations.
- And billionaire investor Peter Thiel contributed $50 million to launch a wind-powered bitcoin mining operation in Texas.
These projects show that bitcoin miners are taking environmental sustainability very seriously.
So while using excess gas to power mining operations isn’t as green as using renewables… it’s a step in the right direction.
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Big Oil’s Backing Will Help Push Bitcoin Higher
Regardless of how you feel about carbon emissions and climate change… using excess gas to power crypto miners is better than just burning it off into the atmosphere.
And it’s unlikely this trend will stop with Exxon and ConocoPhillips.
The World Bank estimates that about 150 billion cubic meters of natural gas are flared each year.
Using even a fraction of that for crypto mining wouldn’t just help the environment… it would save these companies vast sums of money in the long term.
It would also boost the price of bitcoin and the companies seeking more energy-efficient ways to mine crypto.
So if you haven’t already, consider picking up some bitcoin today.
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