Gazpromneft, a subsidiary of a state-owned natural gas giant Gazprom (MCX:GAZP), partnered with Bitcoin (BTC) mining company BitRiver to build mining facilities at oil fields.
Russia accounts for about 11% of the global processing power used for minting new units of Bitcoin and is the third biggest crypto-mining nation in the world. On June 16, Gazpromneft announced a 2-year collaboration agreement with BitRiver to supply them with energy resources to sustain their cryptocurrency mining operations.
Gazprom and BitRiver were both included in a sanctioned company list after Russia started a full-scale war against Ukraine.
Using Flared Gas for Mining
Attention to flared-gas mining has been increasing over the past year. Crusoe Energy startup, which pioneered Bitcoin mining by using wasted natural gas as a power source, got backed up by Abu Dhabi and Oman as investors. Oil giant ExxonMobil (NYSE:XOM) is exploring possibilities to use oil fields in North Dakota to power bitcoin mining operations.
Flared-gas mining enables oil producers to use methane gas, freed during the drilling process, to generate electricity. Usually, by burning the gas, the energy is just wasted in the atmosphere.
For the miners, it provides cheap or almost free electricity. One of the highest costs in cryptocurrency mining is the power needed for the mining rigs.
“Over the next two years, BitRiver intends to implement projects to create its own data centers for power-intensive computing with power scaling up to 2 gigawatts, including associated petroleum gas, which will additionally provide high and stable power consumption,” said Igor Runets, founder and CEO of BitRiver, in the statement.
Shady Players
BitRiver is one of the largest mining companies in Russia, with its local subsidiary managing over 300 megawatts of data centers. On April 20, BitRiver was the first cryptocurrency mining company to be sanctioned by the United States under the sanctions imposed against Russia. The company has called the measures unfair and anti-competitive, saying that the business continued to operate as usual.
Government-owned Gazprom has the gas monopoly in Russia and is the world’s 10th-biggest oil producer. The company is behind big-scale projects, such as Nord Stream and South Stream cross-border pipelines, transporting gas from Russia to Europe. The CEO of Gazprom has close ties to Putin’s regime and was included in the sanctioned Russian oligarchs list.