Russian oil company Gazprom Neft will use excess gas released during oil drilling to mine bitcoins in order to limit greenhouse gas emissions. Gazprom Neft signed an agreement with the sanctioned mining company BitRiver, which provides the equipment.

State-owned Gazprom Neft is one of Russia’s largest oil companies and the world’s third largest polluter in terms of greenhouse gas emissions. The company plans to reduce emissions using bitcoin mining.

Flaring

A large part of the emissions is caused by ‘ flaring ‘, the flaring off of natural gas that is released as a by-product during oil drilling. There is often no local application for the gas, the infrastructure to dispose of it is lacking and it is not economically viable to capture it. In the past it was therefore released into the atmosphere ( venting ), but to limit climate damage it is currently burned ( flaring ).

That is still very bad for the climate. Flaring and venting are collectively responsible for as much as 6% of total global greenhouse gas emissions. It is also a shame, because about 8% of global gas production is wasted in this way. For oil producers, however, the gas is an undesirable waste product

Bitcoin mining

To limit emissions, Gazprom Neft will no longer burn the excess gas but will use it for bitcoin mining, according to a press release from Gazprom Neft (website blocked? The press release can also be found here). Gazprom Neft entered into a partnership with mining company BitRiver.

A mobile generator and mining equipment are connected to the excess gas to generate electricity on site and to mine for bitcoins. Bitcoin mining is location-independent and all you need is an internet connection and cheap energy. And the energy is probably nowhere as cheap as where it is burned out of necessity.

This changes the excess gas from a climate-unfriendly waste product to a source of income that stimulates efforts to limit emissions as much as possible. Emit greenhouse gases? These are now lost revenues.

?ǣReducing our carbon footprint is an essential part of Gazprom Neft’s ESG policy ,?ǥ states an attached quote from Vadim Yakovlev, Vice Chairman of Gazprom Neft’s Management Board.

Concealing terms

Remarkably, Yakovlev uses quite cryptic wording and does not mention bitcoin mining by name.

“Thanks to the introduction of new technologies and the launch of new infrastructure projects, the company is consistently increasing the degree of rational use of associated petroleum gas, and is also continuously looking for new and more efficient technological solutions ,” writes he, “By combining technologies and partner competencies, we create industry-wide best practices for the efficient and environmentally friendly use of natural resources.”

BitRiver CEO Igor Runets also uses concealing terms such as ‘data centers’ and ‘energy-intensive computations’ in a quote.

?ǣOur data centers have a stable and high energy consumption, which allows us to produce and consume energy from oilfield energy sources in the most efficient way possible, contributing to the environmentally friendly use of APG and methane. Over the next two years BitRiver plans to implement projects to create its own power-intensive compute data centers with an increase in power consumption of up to 2 GW ,?ǥ said Runets.

However, BitRiver is known as one of the larger bitcoin mining companies operating in Russia. A few weeks ago, BitRiver was also in the news because the US imposed sanctions on the company.

The developments do not come out of nowhere either. Gazprom Neft already completed a pilot with bitcoin mining at Siberian oil fields in January 2021, which was expanded due to success. The collaboration with BitRiver seems to be an extension of that.

Oil companies

Oil companies seem increasingly interested in bitcoin. For example, it recently emerged that ExxonMobil has also been experimenting with bitcoin mining as a remedy for flaring for a year. The pilot was well received and the oil giant is now considering similar projects in Alaska, Nigeria, Argentina, Guyana and Germany.

ConocoPhilips, the third largest oil company in the US, is also conducting a similar pilot in North Dakota, as is Norwegian energy giant Equinor. In oil-rich Oman, some major oil producers will soon also start pilots with bitcoin mining, also to reduce flaring.

Read more about how bitcoin mining offers financial incentives against flaring.