The Russian oil industry is looking to redirect wasted flare gas into crypto mining near oil production. Regulators are considering business requests to mine amid a backdrop of legal uncertainty for crypto mining in Russia as a whole.
That is happening amid a major expansion of the Russian crypto mining industry, following an exodus of miners from China.
Russian regulators are considering a push from oil and gas firms, looking for authorization to mine cryptocurrencies using natural gas that’s otherwise wasted in oil drilling.
Per an October 20 report from business outlet Kommersant, the Russian Central Bank, Ministry of Industry and Trade and Ministry of Digital Development are discussing authorization for oil industry players who wish to use wasted natural gas to power data centers for crypto mining.
“Associated petroleum gas” is natural gas that lies on top of oil reserves. That gas is usually not profitable to extract and ship, which means that oil drilling typically burns it off — a process known as gas flaring that ends in the continuously burning flames that accompany oil rigs. Those flares produce greenhouse gases without any productive energy output.
In its reporting, Kommersant refers to a September 7 letter from Deputy Minister of Industry and Trade Vasily Shpak to colleagues at the other two agencies.
The issue is that cryptocurrency mining is unregulated in Russia, and never absolutely authorized. Similarly, cryptocurrency by and large has been awaiting laws. The latest expulsion of miners from China, however, has resulted in neighboring Kazakhstan and Russia occupying the second and third places, respectively, in world hashrate, behind the US. That wave places new pressure on authorities to return to phrases with the mining business.
The curiosity of the Russian oil industry compounds that political pressure. The majority of Russia’s national budget comes from the export of fossil fuels. Oftentimes the barriers between the key oil firms and the government are porous.
Jurica Bulovic, an executive at US-based miner Foundry Digital, told: “Because bitcoin mining operations are mobile and will be deployed anyplace in the world the place there is cheap energy and an internet connection, a rising pattern is mining bitcoin on oil and gas wells using extra natural gas which can’t otherwise be monetized and is typically flared or vented. In these conditions, bitcoin mining will be seen as flare mitigation technology.”
Whereas the redirection of gas from flaring to crypto mining doesn’t eliminate emissions, it at least finds a use for open flames that otherwise produce nothing. Indeed the mobility of miners and their willingness to relocate to sources of vitality that can’t be transported is a generally cited defense against frequent attacks on the Bitcoin network’s energy use.
Nonetheless, cryptocurrency miners relocating to unused sources of electricity is a controversial practice, especially for environmentalists. In the U.S., upstate New York has seen outdated power plants restarted and crypto miners setting up shop in the shadow of nuclear facilities, upsetting significant blowback from lawmakers at the state and federal levels.
Source: theblockcrypto
