Oil and gas, one of the world’s largest industries, converges with the magic internet money infrastructure, but bitcoin’s sustained market sales have taken some of the shine of these monumental partnerships. Even some cryptocurrency traders to ask sarcastically If energy is to be a new bullish story for Bitcoin, it’s bringing winds to fill its metaphorical sails as the leading cryptocurrency sits over 50% of its record prices at the end of 2021.
Kidding aside, the “energy narrative” for bitcoin mining is real and is gaining momentum as a growing list of mining companies and energy producers join forces. Evaluating the short-term price implications of these partnerships is beyond the scope of this article, but the long-term benefits for bitcoin mining as an industry and the broader bitcoin economy are enormous. This article reviews the partnerships that led to the merger between bitcoin mining and oil companies and provides some brief analysis of why these mergers are important.
North American Mining Partnerships
In the news media and general discourse, partnerships between miners and oil companies focused primarily on North America. Much of that attention is paid here for good reason, as some of the biggest names in the oil industry work with North American miners.
In 2021, ExxonMobil reported annual revenues of more than $285 billion, with global daily production reaching over two million barrels per day of oil and gas for the same period. This titan of the oil industry is also reportedly working with a bitcoin mining company in North Dakota to convert otherwise wasted gas into energy for mining operations. The news spread like wildfire among the Bitcoin community when it was first published, but some off-grid mining teams already knew about Exxon’s dealings with miners. For example, Matt Lohstroh, co-founder of Giga Energy in August 2021 I said Exxon was already selling some gas to miners.
But as the premise of this article suggests, Exxon is far from the only oil company that deals with miners.
ConocoPhillips also provides gas to bitcoin miners, which has been widely reported by various mainstream media outlets, including CNBC and Bloomberg.
Marathon Oil, a Houston-based multi-billion dollar oil company, also powers its gas co-located bitcoin mining operations. On its website’s emissions control page, Marathon states that it uses gas that would “otherwise ignite” due to the lack of gas connectivity or gas takeaway capacity limitations. [to] Generate electricity to power co-located computing and data centers used for Bitcoin mining.”
EOG Resources, another American oil company rumored It is dealing with miners by members of the industry, although no formal deals have been reported yet.
Texas Pacific Land has recently signed a deal with two mining companies Mawson and JAI Energy to launch JAI Energy co-founder Ryan Leachman. in your name “Biggest bitcoin-related announcement in oil and gas to date.”
International Mining Partnerships
Still, it’s not just American companies making the headlines for bitcoin and oil deals. A subsidiary of Russian oil giant Gazprom has been planning and building its own bitcoin mining venture in oil drilling fields since late 2020.
Below the equator, oil wells in remote parts of Australia are used by Canadian gas company Bengal Energy to power bitcoin mining machines. According to a report from Australia“Basically for six months we thought the wells were ready but no outlet,” said Bengal CEO Kai Eberspaecher, noting that his team was “dealing with stranded assets.”
This seems like a perfect fit for some off-grid hashing.
Why Are These Partnerships Important?
Bitcoin mining as an industry is gaining mainstream legitimacy as more traditional energy companies start working with bitcoin miners. While the overall size of ongoing partnerships is small compared to the entire mining industry, let alone the global energy market, the importance of these first few deals cannot be underestimated. Exxon and others sprinkle legitimacy on an industry that has historically been vilified, misunderstood and overshadowed. These are some of the biggest names in oil and gas production, but work with companies that manage computing power for the fifteen-year magic internet money industry. Even four years ago, the idea of all these names signing contracts with mining companies would have been almost unbelievable. Other metaphorical dominoes will inevitably fall soon.
Regarding its legitimacy is the impact these partnerships have on bitcoin mining, which takes place as energy infrastructure on or off the power grid. Speaking to the audience at Bitcoin 2022, Paul Prager, CEO of public mining company TeraWulf, said, “Bitcoin mining is energy infrastructure. That’s what it is.”
It’s hard to ignore this view as institutional energy giants sign deals with bitcoin miners. Of course, these mining partnerships have a very small share of Bitcoin’s total hashrate, but this share is sure to grow in the coming years.
Where Every Big Oil Producer Is Bitcoin Miner
It’s easy to imagine a future where every major oil producer is also a bitcoin miner, or at least operates a bitcoin mining arm, and may soon become a reality. For the oil and gas industry in particular, bitcoin miners continue to move forward with more reported deals between these two industries. The milestones these partnerships represent were almost unimaginable three to five years ago.
While the Bitcoin price is far from record highs, the future of the infrastructure supporting the Bitcoin network is brighter than ever. The union between oil producers and bitcoin miners is just getting started.
This is guest post by Zack Voell. The opinions expressed are their own and are not their own and BTC Inc. or Bitcoin Magazine.