3 ms·

I’m confused as to the economics of this. Can someone explain to me why it’s cost effective to make use of this gas for crypto mining but not for other purposes

by rsj_hn 5y ago

I’m confused as to the economics of this. Can someone explain to me why it’s cost effective to make use of this gas for crypto mining but not for other purposes? If you move crypto, you’d buy energy at the market price, no? Why pay more than the market price?

kindle-dev 5y ago
It's in the article: "Natural gas that is consumed on the site and would have otherwise been vented or flared under the authority of the Wyoming oil and gas conservation commission has no value and is exempt from taxation as long as the natural gas is certified by the Wyoming oil and gas conservation commission as to have originated from a qualifying well,” the new law reads."
freefal 5y ago
These are crude wells for which natural gas is just a byproduct. While crude can be stored in tanks near the wells and trucked intermittently to pipelines, the natural gas requires pipelines to the wellhead which may not be economic. Generally there isn’t a productive use of small quantities of natural gas in the middle of nowhere so it’s flared. The Bitcoin mining provides a “productive” use.
betwixthewires 5y ago
So the issue is the overhead infrastructure needed to do anything useful with the gas. The gas burns, so it is useful, and if they could've done anything profitable with it they wouldn't be burning it. It's not viable, so it is wasted. Well if you can use it on site to do something, like mine bitcoin, it can then be turned into something useful that doesn't require a ton of transport and storage infrastructure, so the state is trying to incentivize that so that they don't just keep burning it.
- rsj_hn 5y ago
  Ahh, thanks, So the issue is that crypto can consume on-site. Thank you.
skybrian 5y ago
Doing it on site avoids building either a gas pipeline or an electric power line to a well in a remote area, to get the gas or electricity somewhere more useful. But for cryptocurrency mining, you still need a generator and Internet access. It would be interesting to read more about how the costs work out.
- fuzzfactor 5y ago
  The model is to get absolutely free fuel which would otherwise be wasted, at the source, and using the most insignificant transportation infrastructure & costs, turn it into a thing of value that can be beamed out using the wireless infrastructure already in place. Every thing else cannot cost zero except for the fuel (which is what it should be since it is actually waste being recycled) so there must be no tax either on that in order to even have a chance. You can assume the coin will be what generates tax revenue instead. Regardless, the business might fail, but even a thin margin might still allow the most respectable scaleup when the raw fuel itself is truly free. It might require a lot of mining installations to dim some of the brighter flares, but there should be no net increase in CO2 emission from the portion of that waste natural gas running through generators rather than the flares. Alternatively it could also be expected that the CO2 from generators would be more physically feasible to capture without emisssion, and the coin might be lucrative enough to pay for it. It would be great if the business performance allowed for this to be one of the highest expenses and still yield adequate returns. And capture technology ideally should be able to be brought within reach in advance of it becoming cost-effective under non-free energy models. In a free energy economy you should be able to afford to be as environmentally responsible as possible. No doubt it would be very interesting to compare to solar and hydro mining.

by rsj_hn 5y ago

kindle-dev 5y ago

It's in the article: "Natural gas that is consumed on the site and would have otherwise been vented or flared under the authority of the Wyoming oil and gas conservation commission has no value and is exempt from taxation as long as the natural gas is certified by the Wyoming oil and gas conservation commission as to have originated from a qualifying well,” the new law reads."

freefal 5y ago

These are crude wells for which natural gas is just a byproduct. While crude can be stored in tanks near the wells and trucked intermittently to pipelines, the natural gas requires pipelines to the wellhead which may not be economic. Generally there isn’t a productive use of small quantities of natural gas in the middle of nowhere so it’s flared. The Bitcoin mining provides a “productive” use.

betwixthewires 5y ago

So the issue is the overhead infrastructure needed to do anything useful with the gas. The gas burns, so it is useful, and if they could've done anything profitable with it they wouldn't be burning it. It's not viable, so it is wasted. Well if you can use it on site to do something, like mine bitcoin, it can then be turned into something useful that doesn't require a ton of transport and storage infrastructure, so the state is trying to incentivize that so that they don't just keep burning it.

rsj_hn 5y ago
Ahh, thanks, So the issue is that crypto can consume on-site. Thank you.

skybrian 5y ago

Doing it on site avoids building either a gas pipeline or an electric power line to a well in a remote area, to get the gas or electricity somewhere more useful. But for cryptocurrency mining, you still need a generator and Internet access. It would be interesting to read more about how the costs work out.

fuzzfactor 5y ago
The model is to get absolutely free fuel which would otherwise be wasted, at the source, and using the most insignificant transportation infrastructure & costs, turn it into a thing of value that can be beamed out using the wireless infrastructure already in place. Every thing else cannot cost zero except for the fuel (which is what it should be since it is actually waste being recycled) so there must be no tax either on that in order to even have a chance. You can assume the coin will be what generates tax revenue instead. Regardless, the business might fail, but even a thin margin might still allow the most respectable scaleup when the raw fuel itself is truly free. It might require a lot of mining installations to dim some of the brighter flares, but there should be no net increase in CO2 emission from the portion of that waste natural gas running through generators rather than the flares. Alternatively it could also be expected that the CO2 from generators would be more physically feasible to capture without emisssion, and the coin might be lucrative enough to pay for it. It would be great if the business performance allowed for this to be one of the highest expenses and still yield adequate returns. And capture technology ideally should be able to be brought within reach in advance of it becoming cost-effective under non-free energy models. In a free energy economy you should be able to afford to be as environmentally responsible as possible. No doubt it would be very interesting to compare to solar and hydro mining.