23-year-old Texans Brent Whitehead and Matt Lochstroh founded a company that mines Bitcoin on oil fields. As CNBC reports.
Their transport containers with thousands of ASIC miners sit atop oil wells in East Texas. Natural gas flared during drilling is directed into generators, which convert it into electricity to power the equipment.
According to a Crusoe Energy Systems study from Denver, this process reduces emissions in CO2-eq by about 63% compared with continuous flaring.
The idea to mine the first cryptocurrency came to Whitehead and Lochstroh in 2019, when they were sophomores at Texas A&M University. They invested funds earned from school jobs to form Giga Energy Solutions.
For years, oil and gas companies have faced the challenge of locating natural gas pockets during drilling. To sell the gas found, an additional pipeline is required. However, in remote fields, drillers must burn it in flares. Such installations can vent up to 25% of methane into the atmosphere, polluting it.
In these conditions, using associated gas to generate electricity becomes most efficient — when fed to an engine or generator, 100% of the methane is combusted with no losses.
“As a child, I always saw gas flares and understood how wasteful it was. Our project not only reduces emissions but also monetizes the gas,” said Brent Whitehead.
According to him, Giga Energy Solutions has signed deals with more than 20 oil and gas companies, four of which are publicly traded. They are also in talks with sovereign wealth funds and are targeting expansion. In February 2022, six additional employees joined the 11-person team.
Lochstroh and Whitehead bet that Bitcoin mining could, in the long run, alter the economics of the energy industry.
“No one controls Bitcoin, and you don\’t need to ask for permission to use it,” noted Matt Lochstroh.
Entrepreneurs estimate that in 2021 revenue for Giga Energy Solutions exceeded $4 million. By the end of 2022 they expect to earn more than $20 million.
Lochstroh predicts that at the next stage the energy companies themselves will begin mining Bitcoin.
In 2020 Gazprom Neft opened the possibility of using associated gas from oil production at the Bakken field in the United States to mine Bitcoin. More on this in ForkLog’s special project.
In the same year the Norwegian energy company Equinor Energy announced its readiness to direct the associated gas produced at Bakken in the US to electricity generation and Bitcoin mining.
In a separate ForkLog piece, it examined whether mining Bitcoin with solar energy is profitable.
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