Colorado’s ban on the flaring of natural gas from oil wells in the state has led to an interesting fight as oil operators sell their surplus methane to cryptocurrency miners.
But you see, environmentalists don’t like it, even though it is in accordance with the state anti-flaring law. Environmentalists contend that all the process is doing is allowing continued development of fossil fuels in the state.
Check out the story from the Colorado Sun.
Tan pump jacks, 140-year-old oil field technology, bob up and down amid the purple sage in this rural corner of Colorado, lifting oil from deep below and also fueling a very 21st century frenzy: cryptocurrency mining.
The pump jack wells are tied to natural gas generators powering trailers filled with bitcoin mining computers, linking this remote valley to the global cryptocurrency market.
The marriage of old oil and gas and trendy cryptocurrency is one of convenience. Drillers focused on producing oil have to find something to do with the natural gas that also comes out of the well. Crypto miners are always looking for cheap electricity to power their energy-hungry computers.
A single bitcoin transaction consumes 1,449 kilowatt-hours — 50 days worth of power for the average U.S. household, according to the Digiconomist Bitcoin Energy Consumption Index.
In areas with a lot of oil production and few pipelines — such as Texas’ Permian Basin and North Dakota’s Bakken — twinning oil and gas operations and bitcoin mining has lured operators from wildcatters drilling a well or two to ExxonMobil.
The stakes in Colorado are different. The state is rich in pipelines to carry away oil and gas, but it also has a ban on flaring, the burning off of natural gas from wells. If an operator can’t connect to a gas pipeline or find some other use for the gas — under state rules — the well must be shut down.
This has led to at least half a dozen operators bringing cryptocurrency mining operations to their well sites, according to the Colorado Oil and Gas Conservation Commission.
