Oil Producer in Utah is using wasted natural gas to mine bitcoin
Wesco Operating Company, an
oil field operator near Moab, Utah found a high-tech way of using the by-product
natural gas in burning electrical generator which in turn power two mobile data
centre that processes Bitcoin transactions.
For several years, this oil producer is
pumping crude oil out of 18 north of Moab, which was producing a lot of natural
gas as by-products. Due to the problem in the pipeline that connects wells to
the Blue Hills gas-processing plant, these by-product gas couldn’t be
transported out of the plant to the market. Hence a big part of this gas was
being wasted and burned. According to Steve
Degenfelder, Wesco representative, that instead
of eliminating this natural gas by burning it off, the company started using it
to run electrical generators which is giving power to bitcoin mining rigs.
For this process, the company connected with
EZ Blockchain, a Chicago-based firm and got the two Bitcoin “miners” which came
in 30-foot-long boxes called
a Smartgrid Flaring Mitigation System. Three
generators were installed by Wesco at the Blue Hills site to convert the gas
into electricity which is used for mining Bitcoin. EZ Blockchain's
CEO, Sergii Gerasymovych said “Mining Bitcoin means running power-hungry
computer equipment that validates transactions for Bitcoin network.” The system
went fully operational from February after getting tested for four months. According
to Steve Degenfelder, to achieve the target of almost
no gas flaring since February, the
company used a significant amount of capital investment. A cut of each
transaction the miner's process is provided to the Wyoming-based Kirkwood
Companies, Wesco’s parent company.
As Degenfelder said the company is paying 12.5% royalty on the gas it burns in the generators. Utah Board of Oil, Gas, and Mining, praised Wesco for taking this step. In recent years, Wesco joined hands with other oil producers who are also seeking ways to capitalize their “stranded” natural hydrocarbon gas energy which would otherwise is getting wasted for lack of financial incentives to capture it.
CBW - External Analyst