Argentina Taps Waste Gas To Mine Bitcoin

Cryptocurrency companies have been increasingly looking to power mining operations in more sustainable and affordable ways, as governments worldwide crack down on energy-intensive crypto operations by introducing more regulations in the sector. We have previously seen companies across the U.S. establish mining operations on existing oil and gas sites, using waste gas from fossil fuel production activities to power mining. But this is getting more and more difficult as the government pursues a green transition and some states introduce strict regulations on digital currencies. Now, many crypto companies are looking to Argentina to set up similar operations and bolster the country’s flailing currency. 

As governments worldwide put pressure on oil and gas companies to decarbonise, many have sought innovative ways to prevent CO2 from being released into the atmosphere. This has largely been supported by the incorporation of carbon capture and storage (CCS) technology into operations. However, some have begun to work with cryptocurrency companies that are seeking to use waste energy from gas-flaring activities to power digital currency mining. Previously, gas released from flaring on oil sites was not captured and reused, as it was deemed to not be economically viable. Governments are increasingly calling on oil and gas companies to stop highly polluting flaring practices. However, many companies are finding an alternative solution by letting crypto companies use their waste gas. 

Some of the first of these operations took place in 2019, when Giga Energy Solutions signed agreements with several oil and gas producers in East Texas to use their waste energy. Giga puts shipping containers filled with thousands of Bitcoin miners on an oil well, diverting the natural gas into generators. This gas is then transformed into the electricity that is used to power the miners. This helps oil and gas companies reduce their emissions by around 63 percent compared to conventional gas flaring activities.

Now, Giga is looking to expand its crypto-mining operations into new markets. The Mendoza province in Argentina is home to the world’s second-largest shale gas reserve – Vaca Muerta, which could provide immense quantities of waste energy to be used by digital currency miners. In March, Giga announced plans to expand into Argentina following the successful rollout of operations across the U.S. and its entrance into Shanghai. It will partner with the oil and gas company Phoenix Global Resources, as well as the IT services company Exa Tech, to develop a 2 MW project on Vaca Muerta. 

This will help the oil and gas producers both reduce emissions as well as turn waste into something valuable. Brent Whitehead, the co-founder of Giga, explained “By capturing stranded natural gas to power modular data centres for energy-intensive computing, Giga is actively contributing to reducing global methane emissions.” 

Argentina has been battling an economic crisis with an inflation rate that rose above 211 percent in December, according to official data. This marked the highest inflation level since the 1990s. The country’s libertarian President Javier Milei has been hoping to avoid hyperinflation through strict austerity measures. In December, the new government devalued the peso currency to try and tackle inflation. 

As the country has faced greater financial insecurity, with a highly volatile currency, the government has increasingly embraced digital currencies in recent years. Milei is seen as a crypto-friendly President and at the end of last year, the government “ratified and confirmed” that contracts can be set in Bitcoin. Grayscale Investments stated, “Milei sees Bitcoin as a crucial tool in countering the inefficiencies and corruptions of centralised financial systems.” If Argentina is seen to welcome cryptocurrency, this could encourage other countries in the region to follow suit. 

In addition, while Bitcoin has had its ups and downs in recent years, its value has increased by 170 percent over the last six months and has touched several all-time high prices, making it very attractive. Giga has achieved revenues of over $10 million so far this quarter, according to the co-founder of the company Matt Lohstroh. Giga plans to launch small-scale operations before expanding. The company expects to eventually reduce carbon emissions by around 30,000 tonnes a year at the Vaca Muerta upstream facility, with excess power being sold to the Argentinian grid. 

However, it is not the only crypto company looking to develop operations in Argentina, which is one of the biggest methane emitters globally. There is a huge opportunity to develop crypto mining operations in Argentina, particularly under the leadership of a pro-crypto president. Giga will likely be one of many crypto companies to enter the Argentinian oil and gas market over the coming years with companies such as these offering a win-win scenario for fossil fuel companies.  

By Felicity Bradstock for Oilprice.com

More Top Reads From Oilprice.com: