Crusoe, a bitcoin mining firm based in Denver, is installing equipment to collect flared gases in Muscat, Oman. An unexpected collaboration between a Denver-based mining firm and the government of Oman has set a positive tone for crypto’s role in reducing fossil fuel waste, as the heated debate on ethical issues related to fossil fuel use in cryptocurrency mining continues to be one of the major themes in the sector.
Oman backs Crusoe Energy to use stranded flared gas
On Wednesday 1 June 2022, Bloomberg revealed that Crusoe Energy, a firm repurposing discarded fuel energy to the computational power of crypto mining, is starting operations in Oman, a country that exports 21% of its gas output and aims to eliminate gas flaring by 2030.
In 2022, the American firm will set up an office in Muscat-Oman’s capital city and install equipment for collecting gas waste at well sites. It has already conducted a training session with OQ SAOC, Oman’s largest energy firm, and Petroleum Development Oman. According to Chase Lochmiller, Crusoe’s CEO, the firm’s first pilot project will be launched by the end of this year or early next year.
The Sultanate of Oman’s involvement in the partnership is motivated by a desire to reduce gas flaring. According to reports, the Sultanate of Oman has committed to eliminating routine flaring by 2030, and it invested in Crusoe last year. The government entity signed this particular agreement with the World Bank.
Oman is committed to reduce greenhouse gases in line with the Paris climate agreement.Al-Harthi.
Flaring is the term used to describe the burning of extra gas or any gas that leaks from the delivery tunnels into the atmosphere. While this has long been a standard technique intended to minimize environmental and health risks, it is under scrutiny due to its hazardous carbon emissions throughout the combustion process.
The Oman Investment Authority put $350 million into Crusoe in April as part of a $505 million funding round. Senior manager of technology investments at the Oman Investment Authority, Ismail Ibrahim Al-Harthi, said that the stake did not represent the size of stakes in the firm and that Crusoe denied commenting on the deal’s terms.
In addition to the $350 million in fresh credit lines, Crusoe Energy obtained another $155 million. Apart from OAI, its purpose is supported by about 20 more firms including Coinbase, Polychain Capital, Winklevoss Capital, Lowercarbon Capital, Bain Capital Ventures, and Founders Fund.
In March, it was reported that Exxon Mobil partnered with Crusoe to conduct a pilot Bitcoin mining project in the Bakken shale basin in North Dakota. The news, however, has not been verified by either firm.
MENA takes center stage in crypto adoption and Bitcoin mining
In an official statement, Lochmiller stressed his firm’s goal of establishing a presence in the Middle East and Northern Africa (MENA) to assist local governments in their struggle with flaring. Chase Lochmiller, CEO of Crusoe, has stated that the firm will open an Oman office to assist with Bitcoin mining operations. This will aid in the deployment of power generators and mining equipment to gather gas from predetermined locations.
We’ve always felt it was important for us to have a presence in the Mena region […] Having the buy-in from nations that are actively trying to solve the flaring issues is what we are looking for.Chase Lochmiller
The first Middle Eastern deployment is expected to begin operation by the end of this year or early next year, according to Lochmiller. He also stated that while financial market conditions and Bitcoin certainly have an impact on the company’s top-line revenue, it does not influence its growth and expansion plans.
According to a study by the World Bank, the Middle East, and North African(MENA) region accounts for around 57% of the world’s oil reserves and 41 percent of proven natural gas resources, making it a notorious hotspot for flared gas emissions. Crusoe’s entry into the area, especially in Oman, may help to reduce climate-related conflicts between crypto and the climate.
Oman, along with Algeria, Iraq, Libya, Egypt, and Saudi Arabia, has 90% of the Arab region’s flaring. The rest of the world consumes 38% of global gas. By the UN Economic and Social Commission for Western Asia’s estimate in 2018, 10% of all gas consumption in Oman was for flare.
Crusoe has already established operations in a number of United States locations, including North Dakota, Montana, and Colorado. Bitcoin mining is one of the most energy-efficient ways to generate coins. The company claims that by utilizing bitcoin mining, CO2 emissions from flaring gas can be reduced by up to 63 percent. This equals to taking approximately 1700 gasoline fuel cars off the road.
However, Crusoe is not the only energy firm interested in using natural gas to power its bitcoin mining operations. ConocoPhillips, an oil and gas exploration behemoth with interests in Alaska, has been using surplus natural gas from Dakota to power bitcoin mining operations. Exxon has also sold extra gas to bitcoin miners.
Lawmakers, as well as the Russian government and business community, have also expressed positive sentiments toward this brilliant concept. In response to a request from bitcoin miners, Gazpromneft launched a bitcoin mining operation in Siberia utilizing flaring gas.