Australian Regulators Mull Deal to Power Bitcoin Mines from Gas Fracking

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Australian Regulators Mull Deal to Power Bitcoin Mines from Gas Fracking
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Australian energy and resources company Black Mountain Energy has struck a deal with a U.S. energy company to use natural gas from hydraulic fracturing to power bitcoin servers.

The plan will take the gas emitted from the wellhead (the surface termination point of the gas well) and channel it to a generator to be converted into electricity. This electricity will then power the Bitcoin mining ASICs.

Black Mountain chief executive Rhett Bennett said burning stranded natural gas would have high environmental costs and be inconsistent with environmental and social governance goals. Burning the burning gas from the wellhead releases toxic chemicals such as methane and sulfur dioxide.

In his opinion, it would be better to create a product like Bitcoin that has surplus energy and reduces methane emissions by 63%.

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Black Mountain is in talks with Wyoming-based Highwire Energy Partners LLC to supply 5 terajoules of gas to convert into 25 megawatts of electricity for bitcoin mining ASICs. Highwire bought 40 natural gas wells in South Dakota for bitcoin mining in 2021, and is running a similar business at various locations in Wyoming, renting out generators from third parties.

Environmental resistance to hydraulic fracturing

Black Mountain’s fracking site at the Valhalla project in Western Australia’s Kimberley Canning Basin is still awaiting approval from the Environmental Protection Agency, which expects to complete a report in March 2023 or later.

The final decision on whether to allow the project will come from the environment minister. If approved, 20 exploration wells will be drilled.

Local opponents of fracking argue that the project could be the start of industrialization in the Kimberley region, considered the world’s largest savanna, and that the hot climate could threaten Bitcoin ASICs with cooling problems to the so-called environmental benefits.

Other critics say bitcoin miners wishing to operate in Australia should be forced to use renewable energy.

Will Stranded Natural Gas Delay the Shift to Fossil Fuels?

In the United States, ExxonMobil partnered with Crusoe Energy Systems to pilot a similar project in North Dakota. Crusoe Energy is focused on getting stranded natural gas into generators.

The company admits that burning natural gas inside generators does not eliminate methane emissions. Conversely, it is less harmful to the environment than burning in the open air.

Last year, Texas Senator Ted Cruz suggested using on-site captured natural gas to mine Bitcoin. Critics say the practice encourages companies to keep drilling instead of finding alternatives to fossil fuels.

Russia’s third-largest oil producer, Gazprom Neft, recently announced a partnership with BitRiver, Russia’s largest managed mining service provider, to create mining data centers in its oil fields that use natural gas-burning energy.

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