• Russia considers using oil field by-products for ‘hybrid modules’ of Bitcoin mining

  • The exodus of Bitcoin miners from Chinese mining hotbeds has left a vacuum that many global players are scrambling to fill. It was recently noted that most of the lost hash power has been restored, thanks to renewed operations in North America.

    Other miners, on the other hand, are looking to relocate to areas closer to China, such as Kazakhstan and Russia. Furthermore, Russia appears to be all in, with the government considering a Bitcoin mining project that would utilize associated petroleum gas.

    The Russian deputy minister of Industry and Trade, Vasiliy Shpak, filed a proposal with the Russian central bank and the Ministry of Digital Development earlier today, according to a local news outlet, Kommersant. It was filed last month to mine cryptocurrencies using byproducts from the country’s vast oil fields.

    The initiative was reportedly started by local oil and gas companies, and Shpak’s proposal appears to have gotten the government’s approval. The byproduct in question is associated gas, which has been exclusively mentioned by the companies as the energy source that would power nearby Bitcoin mining data centers.

    Associated gas is a byproduct of oil drilling that is frequently wasted through gas flaring, in which it is simply burned off in the absence of proper gas infrastructure. This has been a source of contention for the Russian government, which is stepping up efforts to reduce emissions caused by gas flaring.

    In the letter, Shpak stated that rather than burning off the excess gas, its utilization efficiency in thermal power generation can be improved through “hybrid modules of digital currency extraction.”

    The proposed project would also involve “one of Russia’s largest oil companies,” which is struggling to expand its current BTC mining throughput due to regulatory uncertainty.

    Natural gas flaring is also practiced in American oil fields, with miners reportedly striking deals with oil drillers to gain access to this by-product. Using this natural gas for mining is a win-win situation for all parties involved, including the Earth, which is saved from harmful emissions. Senator Ted Cruz of the United States recently stated that there is a “enormous opportunity for Bitcoin […] to capture that gas rather than wasting it.”

    The announcement of this proposal comes on the heels of recent reports indicating a softening of Russia’s stance toward cryptocurrencies. Just last week, Russian President Vladimir Putin mentioned mining while stating that cryptocurrency can “exist as a means of payment.” He stated,

    “However, the production of cryptocurrency necessitates massive amounts of energy.” And, for the time being, we must rely on traditional hydrocarbons.”

    Russia currently has the world’s third-highest BTC mining output, accounting for more than 11.23 percent of the average global monthly hash rate as of August 2021. This is primarily due to the low cost of electricity and the cold climate found in several Russian regions.

    Surprisingly, due to increased strains on power grids, Russian miners are expected to be exempted from the preferential electricity tariffs enjoyed by households, causing them to pay more for their mining activities.

    What's your reaction?