“In Texas, the energy-rich state, Bitcoin finds its source of power in the depths of gas wells, forging a unique synergy between digital currency and fossil fuels.”
The oil and gas industry has found an unconventional way to make money during tough times: bitcoin mining. In a field outside Fort Worth, Texas, a company called 360 Mining is using power generated from natural gas produced by wells to mine bitcoin.
The idea is simple: instead of selling the gas for a low price, the producers can burn it to run power-hungry computers that mine bitcoin. This allows them to earn much more from burning the gas than they would from selling it.
While it’s an expensive and risky venture, some producers are taking the plunge. Todd Hallmark, who oversees the family-run Bob Hughes Oil Company, hired 360 Mining to help build his bitcoin mine. Hallmark had no interest in cryptocurrency until the operator of the pipeline that transports gas from his wells raised rates so much that burning the gas became more profitable.
Building a gas-powered mine costs at least a million dollars, and bitcoin’s value is notoriously unstable. But with natural gas prices at a low due to a warm winter, oil and gas producers are desperate for solutions, even if they seem outlandish.
Using their own gas to mine bitcoin helps minimize the major expense of power. However, their returns will still rise and fall with bitcoin’s value, and they face competition from other miners. The number of coins they earn can be reduced by new miners joining the market and old miners upgrading their machines.
Despite the risks, some oil and gas veterans are considering the idea. Bobby Flournoy, president of Energy Investment Partners, an oil and gas exploration and production company, doesn’t fully understand bitcoin but recognizes its longevity. Sandy Pofahl, who has developed oil and gas properties since the 1980s, is also looking into organizing a group to link some wells to a mine.
Bitcoin mining using natural gas may be an unconventional solution for the oil and gas industry, but it offers a way to make money during tough times. While there are risks involved, some producers are willing to take the plunge and explore the world of cryptocurrency.