Russian Energy Giant Taps BitRiver to Mine Bitcoin Using Flared Natural Gas

Russia’s third-largest oil producer inks agreement with green crypto mining hosting company BitRiver to set up mining facilities on oil fields.

As debates rage on in North America about the alleged impact of bitcoin and Ethereum mining on the environment, state-owned Russian energy giant Gazpromneft wants to add to Russia’s contribution to global hashrates.

The oil company has tapped BitRiver, Russia’s largest mining co-location service provider, to construct green cryptocurrency mining data centers on its oil fields powered by flared natural gas. BitRiver will build the centers at new oil fields lacking transport accessibility or remote locations. The new facilities will allow for the expansion of up to two gigawatts of power capacity in the next two years.

“Over the next two years, BitRiver intends to implement projects to create its own data centers for power-intensive computing with power scaling up to 2 [gigawatts], including [associated petroleum gas], which will additionally provide high and stable power consumption,” said the Gazprom founder and CEO in a statement on Thursday.

The deal was inked at the St. Petersburg International Economic Forum on June 16, 2022. Gazpromneft is a subsidiary of Gazprom, with headquarters in St. Petersburg.

BitRiver’s Role in the Ukraine-Russia war

Founded in 2017, BitRiver operates a 100-megawatt renewable energy mining data center in Bratsk, Siberia.

BitRiver landed in hot water with the U.S. Treasury’s Office of Foreign Assets Control in April this year, becoming the first cryptocurrency mining company to be sanctioned as part of a regime to isolate Russia after it invaded Ukraine back in February.

The department highlighted that BitRiver operated three offices in Russia, despite relocating ownership of its digital assets to Switzerland last year. It also said that the mining firm, by subcontracting capacity to international clients, helped the Kremlin monetize its assets.

Crusoe Energy Systems pioneers digital flare mitigation

Companies like U.S. oil giant ExxonMobil recently floated plans to mine bitcoin using this cleaner energy source in North Dakota.

At the same time, Oman’s sovereign wealth fund purchased a stake in Denver-based Crusoe Energy Systems Inc. to mine cryptocurrencies using flared natural gas as part of Crusoe’s proprietary “digital flare mitigation” initiative. Both North Africa and the Middle-East account for 38% of flaring globally.

Oman’s government signed an agreement to end regular flaring by 2030 and has been an investor in Crusoe since early last year before buying a more significant stake in April this year.

It remains to be seen whether BitRiver’s flared natural gas operations continue to be sustainable. A JPMorgan analyst Nikolaos Panigirtzoglou estimates that the cost of mining one bitcoin has risen to $15,760, meaning less profits for bitcoin miners as the bitcoin price dips below $20,000 at the time of writing.

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