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INSIDE A BITCOIN MINE AT A NATURAL GAS WELL IN TEXAS


Bitcoin miners are turning gas that would otherwise be flared into the
atmosphere into electricity and tapping into Texas' wind boom to make bank.
by Audrey Carleton
March 17, 2022, 3:08pm
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Image: Motherboard

This article is a writeup of the first episode of CRYPTOLAND, Motherboard’s
documentary series about how cryptocurrency is affecting culture, politics, the
environment, and our shared future. Watch it on Motherboard’s YouTube

At the border of Texas and Louisiana, an oil rig sits on a grassless patch,
tucked between lush forest. In oil-heavy Texas, where regulations on the
industry are notably lax, rigs like this one can often be found flaring—burning
off surplus natural gas that’s extracted alongside oil stores. Shooting flames
into the sky, those blazes are usually burning methane, a greenhouse gas, and a
cocktail of carcinogens like benzene, toluene, ethylbenzene, and xylene, for
starters. 

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At this particular oil rig, though, you won’t find any flares. That’s because
the stranded natural gas it produces isn’t being burned off at all. It’s being
used to generate energy to power a Bitcoin mine. 

Motherboard visited Giga Energy Solutions in east Texas for the latest episode
of CRYPTOLAND, an eight-part documentary series on how cryptocurrency is
affecting our world.



Mines like Giga’s are at the center of heated debate over cryptocurrency’s
environmental impact. To critics, turning natural gas into bitcoins is
emblematic of everything wrong with the growing industry. To Giga Energy
co-founders Brent Whitehead and Matt Lohstroh, though, they’re undertaking an
environmental service—generating virtual currency using harmful gas that would
otherwise be  sent into the atmosphere. Instead of combusting surplus natural
gas from an oil rig, they’re diverting it into a generator, which converts it
into electricity to power computers that mine for bitcoin. This process still
comes with greenhouse gas emissions, but reports from similar operations claim
they’re lower than they’d otherwise be if the gas was flared or simply released
into the air. 

“I think it’s a perfect alignment,” Whitehead said of the relationship between
cryptocurrency and oil and gas operations. 

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“This gas is unable to be sold to a pipeline, so otherwise they’re either
venting or flaring the gas. If you are venting the gas you’re just literally
venting the methane into the atmosphere,” he said. “It’s really bad. We can come
in and we can add the benefit of lowering emissions, while also adding revenue
to the community. That’s a win-win for everybody.”

Texas legislators like Republican senator Ted Cruz have since sided publicly
with miners like Whitehead. After a ban on mining in China led to an exodus of
mining firms to the U.S., many set up shop in Texas due to its abundant energy,
which includes fossil fuels but also a booming wind power industry. At the Texas
Blockchain Summit in October, 2021, Cruz lauded Bitcoin miners’ potential to
spur an energy transition and strengthen the state’s widely-criticized grid by
going offline during times of strain. 

“I think cryptocurrency is a net plus for the environment, and in fact, a big
net plus for the environment,” he told Motherboard’s Alice Hines at the
convention. “Being able to unlock a lot of renewables is really important for
the environment. I think being able to take stranded natural gas and put it to
productive use is a big positive for the environment.” 

A number of crypto mines have also emerged in the last ten years that rely on
renewable energy to generate coins—a process that takes place through brute
force number-guessing on specialized computers called  Application-Specific
Integrated Circuits (ASICs). In places like British Columbia and San Jose, Costa
Rica, that’s helped keep dying hydropower plants open and incentivized the
buildout of affordable clean energy. (One Coinshares report from 2019 estimated
that some 74 per cent of Bitcoin are generated using renewables.)  

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But Bitcoin has no allegiance to any particular source of energy. It just needs
to be cheap. In many places, Bitcoin mining often relies on fossil fuels either
directly or by pulling from the grid, along with whatever renewables are
contributing to the regional power mix. It’s also led to the resuscitation and
expansion of old fossil fuel-fired power plants that would otherwise have been
on their last legs. 

At facilities like Riot Whinstone, the largest bitcoin mine in the country,
located in Rockdale, Texas, those energy volumes are gigantic. The 100-acre
facility is home to between 95 and 100,000 ASICs, CEO Chad Harris told Hines.
The facility only plans to scale up—here, the aim isn’t to reduce power use, but
to multiply it with the aim of mining more coins.

Alex De Vries, a data scientist at the Netherlands’ central bank and founder of
Bitcoin energy tracking project Digiconomist who spoke with Motherboard reporter
Audrey Carleton as well as  Hines and CRYPTOLAND host Krishna Andavolu, says
Bitcoin’s reliance on the fossil fuel sector is making vast and irreversible
contributions to climate change, however. It’s an argument that has found
significant traction among critics of Bitcoin and all proof-of-work
cryptocurrencies, which use the cost of real-world energy to verify transactions
and secure a digital ledger by making it far too expensive for malicious actors
to alter. While Bitcoiners see the energy expenditure of the system as a whole
as being necessary for its security, critics look at all those machines using up
energy without minting a coin and see waste. 

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“This network, which consists of roughly 2.9-million devices all around the
world consumes as much electrical energy as a country like Argentina in total,”
De Vries said. “It’s more than half a percent of our global electricity
consumption. It’s the world’s most environmentally expensive game of ‘guess the
number.’”

De Vries puts more faith in new models of cryptocurrency mining, like
proof-of-stake, which affords the ability to generate new coins to miners based
on the number of coins they already own, rather than forcing all miners to duke
it out, as in proof-of-work mining, which generates more energy than is truly
needed for mining. However, critics see proof-of-stake as being essentially
plutocratic, while proof-of-work is more decentralized and open. 

Ethereum, the world’s second-largest cryptocurrency, anticipates that switching
its own transaction validation mechanism to proof-of-stake would eliminate 99.95
percent of its energy use. 

Even so, de Vries remains skeptical of the role that Bitcoin plays in
society—and whether its existence, given its environmental drawbacks, is
necessary at all.

“Most people are putting their money in Bitcoin simply because they expect the
value of Bitcoin to go up,” he said. “If that’s the situation, where there is
just not much possible practical use, but there is a very large energy impact,
then my verdict would be that’s absolutely not worth it.” 

Tagged:texasBitcoincryptocurrencybitcoin miningcryptoland


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