Hyperlink Sunday—Exxon Considers Expansion of Its Bitcoin Mining Operations
March 27th, 2022
Exxon Expands Its Bitcoin Mining Program
Exxon Weighs Taking Gas-to-Bitcoin Pilot to Four Countries [Bloomberg]
Exxon Mobil is considering the expansion of its Bitcoin mining program which was put in place last year, as the oil major aims to reduce its flaring emissions. Flaring, or burning off excess gas that is not able to be sent through pipelines, has been widely criticized for its massive carbon footprint. Bitcoin mining offers a productive use for that excess energy that would otherwise go to waste, transforming wasted energy into productive revenue-generating activity.
Exxon’s Bitcoin mining pilot is currently operating at its North Dakota facilities, and utilizes up to 18 million cubic feet of gas per month, which would otherwise have been flared. Exxon has committed to stopping all flaring emissions by 2030.
Exxon, the largest U.S. oil producer, is considering similar pilots in Alaska, the Qua Iboe Terminal in Nigeria, Argentina’s Vaca Muerta shale field, Guyana and Germany, one of the people said. [Bloomberg]
What is Bitcoin Mining?
Bitcoin mining uses advanced hardware to solve computational math problems in order to update and secure the Bitcoin network. New bitcoins are produced as reward for the computer, or group of computers, that are able to find the correct solution to the problem.
Bitcoin mining is energy-intensive, and thus naturally gravitates to the lowest-cost sources of energy to power the mining hardware. In practice, the lowest-cost energy tends to come in the form of excess energy produced by oil companies, and excess production from renewable sources.
Renewables and Bitcoin Mining
As the world transitions to renewable energy sources, several problems have emerged. The first is that renewable energy production is often sporadic, and it is difficult to store and transfer energy produced from these sources. Thus, most renewables produce energy in a surplus during certain times, and the surplus production often goes to waste. During times when renewables sources do not produce enough energy to support the grid, the difference is often made up with energy from fossil fuels, which are purchased just-in-time at premium prices.
Bitcoin mining offers an outlet for the energy produced during times of excess production. By redirecting this energy toward Bitcoin mining, renewable energy companies are able to produce revenue from the energy that would have otherwise been wasted.
Cryptocurrency mining has the potential to address the obstacles to more widely adopting renewable energy. By incorporating cryptocurrency mining operations into renewable energy projects, developers can increase their profitability and pricing power. [Blockworks]
By increasing the profitability of renewable energy operations, and solving for the problem caused by fluctuating periods of excess and deficit production.
The balance that Bitcoin mining brings to energy producers incentivizes increased investment and adoption of renewable energy.