- Russian oil companies are considering using flared gas to mine crypto to improve their profitability.
- The oil companies are seeking clarification from authorities before moving on with the plans.
- American mining companies are already using this method of Bitcoin mining to improve their productivity.
Russia’s cryptocurrency mining industry is experiencing a surge amid mass migrations from embattled Chinese miners. In light of the bustle in the mining industry, oil companies are weighing the options of increasing revenue through crypto mining.
Flared Gas For Bitcoin Mining
Russian oil companies are reportedly considering the option of opening mining farms on their oil fields for the mining of cryptocurrencies. The intention is to use flare gas for the generation of electricity to mine cryptocurrencies while providing a measure of value for the gas.
Vasily Shpak, a deputy head of Russia’s Ministry of Trade wrote a letter to the Ministry of Digital Industry and the Central Bank to seek the legal position of such a move. The letter specifically hints that “the implementation of the mechanism should increase the efficiency of the use of natural gas in thermal generation through hybrid modules for the extraction of digital currencies.”
The letter revealed that the idea for this method of cryptocurrency mining came from the oil companies themselves. Flared gas mining is not known to Russian law and some sort of guidance from the regulators will lay the cornerstone for the burgeoning mining industry.
Russia is one of the world’s largest producers of natural gas and is now home to a bulk of the miners fleeing the Chinese cryptocurrency crackdown. It is believed that if regulatory clarity is positive, Russia can become a world leader in cryptocurrency mining. The country is lagging behind the US and Kazakhstan in the list of Bitcoin’s largest hash rate providers and there are reports that the country is considering increasing the electricity tariffs applicable to Bitcoin miners.
There Is Precedent To Be Followed
Last year, Gazpromneft, a Russian oil company blazed the trail and announced the creation of a mining farm in an oil field located in Siberia. The firm did not undertake mining activities directly but served as a host to Bitcoin miners, and secured Vekus as its first client. Vekus went on to successfully mine 1.8 BTC in one month with 49,500 cubic meters of gas, hinting at a potentially profitable venture for oil companies.
Igor Dorofeev, head of Association of Data Center Industry Participants comments that the idea seems “logical” on paper “but on the other hand, this is a non-core business for oilmen and costly in terms of servicing data centers.”
Across the Atlantic, American Bitcoin mining firms are forging ahead with the concept of mining Bitcoin in oil fields. Upstream Data Inc, Giga Energy, and Crusoe Energy are setting a solid precedent for the rest of the world to follow. According to Bitcoin maximalist, Anthony Pompliano, “oil companies earn extra revenue, miners have ridiculously cheap energy, and the planet stays a little cleaner.”