Energy giants’ BTC mining potential is rising

According to Bloomberg, oil giant ExxonMobil is trying to use waste resources to switch to Bitcoin mining.

ExxonMobil signed an agreement with Crusoe Energy System to use excess natural gas from its North Dakota wells to power a Bitcoin mining operation. The project started last January, and ExxonMobil is already looking to build similar projects in Alaska, Nigeria, Argentina, Guyana and Germany.

The report noted that the program utilizes natural gas that would otherwise be wasted, recovering 18 million cubic feet per month, or about 0.4% of the company's reported business in the state.

In fact, as oil and gas production is challenged by carbon emissions due to climate change, most energy companies are beginning to work with Bitcoin mining companies to use these energy sources that might otherwise be discarded, rather than simply wasting them.

Last month, oil and gas exploration and production giant ConocoPhillips (COP) revealed that it is piping excess natural gas from one of its projects in North Dakota’s Bakken region to provide the necessary power for bitcoin mining operations.

“ConocoPhillips currently has a bitcoin pilot project in the Bakken where natural gas that would otherwise be flared is instead routed to a bitcoin mine owned and managed by a third party,” a ConocoPhillips spokesperson said.

Ethan Vera, CFO and COO of cryptocurrency investment firm Viridi Funds, commented in an interview, “While ConocoPhillips is one of the major energy companies that has publicly announced its entry into Bitcoin mining, there are many other energy companies that have begun the process of setting up small test sites. If the economic growth of Bitcoin mining and the total mining revenue in US dollars grow, many large energy producers will seek to enter the field in a larger way.”

Admittedly, the practice of using such waste energy to mine Bitcoin is not new.

In March 2021, Norwegian energy service provider Aker Solutions announced the establishment of a cryptocurrency investment company Seetee, which aims to explore the Bitcoin ecosystem. Seetee plans to establish a mining business to transfer stranded electricity to various assets.

Earlier in 2020, international energy giant Equinor ASA decided to cooperate with Crusoe Energy Systems to convert natural gas burned and emitted into the atmosphere from oil fields in North Dakota, USA, into electricity, and use and utilize the electricity for Bitcoin mining.

However, it is worth noting that due to geopolitical tensions, the cost of energy such as oil, natural gas, and electricity has soared rapidly. Analysts believe that this may lead to a major reshuffle within the Bitcoin mining industry. Josh Olszewicz, head of research at crypto asset investment company Valkyrie Funds, said that the least efficient Bitcoin miners will suffer a blow, and if electricity costs continue to rise, they will not be able to make as much profit as before.

Bloomberg analysis believes that as the price of Bitcoin is still 40% below its high point in November last year, and the conflict between Russia and Ukraine has pushed up energy prices, the profit margin of Bitcoin has dropped from 90% to around 70%. As the profit margin of the Bitcoin mining industry continues to shrink, energy companies that do not need to purchase electricity from outside have gained an advantage over their competitors. Energy companies such as Beowulf Mining, CleanSpark, and Stronghold Digital Mining are becoming the main force in the cryptocurrency field.