Russian oil giant provides energy support for local Bitcoin mining industry

Gazpromneft, the oil subsidiary of Russian gas and global energy company Gazprom, has provided power to local Bitcoin mining farms using excess natural gas for electricity generation. The Russian company has allowed a small Bitcoin mining company to benefit the Bitcoin mining industry by using excess natural gas on-site at an oil field.

According to multiple reports, Russian oil drilling subsidiary Gazpromneft has enabled Bitcoin miners to exploit excess gas produced by oil drilling to mine the leading cryptocurrency by market cap.

A small mining operation called Vekus was the first to take advantage of Gazpromneft’s surplus gas, with local publication Forklog stating that Vekus installed a container with 150 Antminers, and that during the trial the group used “49,500 cubic meters of associated gas and produced 1.8 BTC.”

Vekus’ CFO Yuri Kudryashov commented on the project, saying:

The largest share of mining costs is electricity costs. Therefore, Vekus is constantly looking for reliable sources of cheap electricity. We are pleased to respond to Gazprom’s proposal to organize a pilot project in one of these areas.

Gazpromneft provided electricity processed with excess natural gas, and Vekus received cheaper prices for electricity than if it purchased it directly from the grid. Vekus also handled all equipment maintenance and statistics collection, the report also stated. The Russian energy giant plans to invite more Bitcoin miners to the facility so that they can benefit from the excess natural gas.

Kudryashov noted that the biggest hurdles facing small-scale mining operations are coordination with oil field employees and obtaining the necessary permits for production operations.

“The delivery of the equipment will not take too long. The main part of the work is preparing permits, coordinating actions with the oil field employees, installing the equipment and connecting the field to the grid,” Kudriashov stressed.

The Vekus executive further added:

At the same time, problems that would not arise in the city had to be solved: setting up the internet, building specialized containers to protect equipment from dust, and organizing the lives of people working on container repairs.

Signs that bitcoin miners are using excess natural gas and renewable energy to mine cryptocurrencies reinforce the fact that bitcoin mining is becoming industrialized. Just as Gazpromneft offers miners the opportunity to mine bitcoin using excess natural gas, New York-based Greenidge Generation also offered the same type of service last year.

Greenidge’s operations are different, however, as it hosts 7,000 of its own Bitcoin mining machines, but in April 2020, its “behind the scenes” Bitcoin mining operation sold 106 petahash of hashing power to an undisclosed buyer.