A US-owned resource company hopes to use “flare” gas from fracking wells to mine cryptocurrency in a process it says will reduce emissions.
the main points:
- Black Mountain Energy wants to set up a cryptocurrency mining project at its proposed Kimberley fracking site
- It claims that it will reduce emissions from burning gases during the fracking process
- Experts and environmentalists criticize the project and say it will have no net benefit in reducing emissions
Black Mountain Energy revealed the plan in a statement to ASX last week, which will see methane, a by-product of fracking, and crypto-powered servers.
The company is studying options to roll out the project at the fracking site at the Valhalla Project in the Canning Basin in Kimberley in collaboration with Wyoming startup Highwire Energy.
Cryptocurrency mining uses computer servers to resolve cryptographic algorithms, which validate transactions and maintain a shared record of transactions. The so-called miners are automatically rewarded with a portion of the digital currency.
Flaring is a process in which excess natural gases are burned during or after the resource extraction process.
A company that promotes benefits
In an interview with the financial website, The Market Herald, Black Mountain Energy CEO Rhett Bennett said the project will use gas left over from fracking to power the servers.
“The gas is transferred from the wellhead to generators, and then those generators convert the gas into electricity that runs the mining servers,” he said.
“Burning natural gas is definitely not an ESG [environment, social and governance]Friendly… So being able to use that gas for energy and eventually create a product, in this form of cryptocurrency, is a much better solution. “
The process will see lower emissions compared to burning excess gas, Bennett said.
“One hundred percent of the methane will be burned [during the crypto mining process] This ultimately reduces your emissions by about 63 percent compared to burning. “
According to an ASX statement, Black Mountain Energy and Highwire are negotiating the use of 5 terajoules of gas to supply up to 25 megawatts of power to cryptocurrency servers.
ABC understands that 25 megawatts of power can be converted into roughly A$100,000 per day of Bitcoin if the company uses the best crypto-mining equipment.
But bitcoin investors have taken massive hits in recent months, with the cryptocurrency dropping from its 2021 high of more than A$90,000 per coin to its current price of around A$28 thousand.
Kimberly faces “industrialization”
The anti-fracking organization, Lock the Gate Alliance, said the idea was “crazy” and called the proposal a “parasite project” that could force “industrialization” in the Kimberley.
“Kimberley is home to the largest intact tropical savannah in the world. It cannot be compromised by fracking, let alone bitcoin mining,” a Kimberley spokesperson said.
“If bitcoin miners want to mine bitcoin in Australia, they must be forced to use renewable energy — not the crack gas that is causing the climate crisis.”
The director of the Center for Software Practice at the University of Western Australia, Dr David Glance, said that bitcoin mining operators have had problems using renewable energy sources as well.
“Other organizations have put their mining operations close to renewable sources or things like hydropower [power stations]And it caused problems wherever they put these things.”
Dr. Glance said that setting up crypto-mining operations in the hot and remote areas of the Kimberley would also require more power to cool the computers.
“They generate a huge amount of heat and a lot of energy cost keeps computers cool,” he said.
He said the project, while likely to be financially viable, would not provide a net benefit to the environment when it came to reducing greenhouse gas emissions.
“From an environmental perspective, it makes absolutely no difference if they burn gas or use it to mine cryptocurrency,” said Dr. Glance.
“CO2 production will continue.”
Project Valhalla has not yet been approved
The fracking proposal at the Valhalla site would see up to 20 exploration wells drilled at the company’s residence located between Fitzroy Crossing and Derby, spread across multiple ownership claims.
But the proposed hydraulic fracturing project has not yet passed the approval processes.
The head of the Environmental Protection Agency, Professor Matthew Tonts, said he did not expect the report to be finished before March 2023.
“The final environmental consideration on this proposal will be made by the Minister of Environment,” he said.
“It is expected that the proponent’s environmental review document will be released for public review for an eight-week period later this year.”
In a statement to ABC, a spokesperson for Black Mountain Energy said that the company plans to drill wells and stream gas in 2024, and hopes to have crypto-mining facilities on site by then “in order to mitigate gas flaring.”
ABC has contacted the traditional owners for comment on the proposed crypto-mining project.
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