A United States-owned resources company hopes to use “flared-off” gas from fracking wells to mine cryptocurrency in a process it says will curb emissions.
Black Mountain Energy wants to set up a cryptocurrency mining project at its proposed Kimberley fracking site
It claims it will reduce emissions caused by the flaring of gases during the fracking process
Experts and environmentalists criticise the project and say it will have no net benefit towards emissions reductions
Black Mountain Energy revealed the plan in a statement to the ASX last week, which will see methane, a usually burned off fracking by-product, power “cryptocurrency servers”.
The company is investigating options to roll out the project at its Valhalla Project fracking site in the Kimberley’s Canning Basin in conjunction with Wyoming-based start-up, Highwire Energy.
Cryptocurrency mining uses computer servers to solve cryptographic algorithms, which validates transactions and maintains a shared record of transactions. The so-called miners are automatically rewarded with a portion of the digital currency.
Flaring is a process where excess natural gases are burnt off during or after the resource extraction process.
Company touts benefits
In an interview with finance website, The Market Herald, Black Mountain Energy’s chief executive officer Rhett Bennett said the project would use gas left over from fracking to power the servers.
“Gas from the wellhead is diverted to generators, and then those generators turn the gas into electricity which powers the mining servers,” he said.
“Flaring natural gas certainly is not ESG [environment, social and governance]-friendly … so the ability to utilise that gas for power and ultimately create a product, in this form crypto, is a much better solution.”
Mr Bennett said the process would see a reduction in emissions in comparison to flaring off the excess gas.
“One hundred per cent of the methane would be combusted [during the crypto mining process] and that ultimately reduces your emissions by approximately 63 per cent compared to flaring.”
According to the ASX statement, Black Mountain Energy and Highwire are negotiating the use of 5 terajoules of gas to supply up to 25 megawatts of power for the cryptocurrency servers.
The ABC understands 25 megawatts of power can be converted into about $AUD100,000 per day worth of Bitcoin if the company uses the best cryptocurrency mining equipment.
But Bitcoin investors have taken huge hits in recent months, with the cryptocurrency’s price plummeting from 2021 highs of more than $AUD90,000 per coin to its current price at about $AUD28,000.
Kimberley facing ‘industrialisation’
Anti-fracking organisation, Lock the Gate Alliance, said the idea was “madness” and labelled the proposal a “parasitic project” that could force the “industrialisation” of the Kimberley.
“The Kimberley is home to the largest area of intact tropical savanna in the world. It can’t be put at risk for fracking, let alone Bitcoin mining,” a spokesperson said.
“If Bitcoin miners want to mine Bitcoin in Australia, they should be forced to use renewable energy — not climate crisis-inducing fracked gas.”
University of Western Australia’s Centre for Software Practice director Dr David Glance said Bitcoin mining operators had run into problems using renewable energy sources as well.
“Other organisations have put mining operations near renewable sources or things like hydro [power stations], and it’s caused issues wherever they’ve set those things up,” he said.
Dr Glance said establishing cryptocurrency mining operations in the hot and remote areas of the Kimberley would also require more energy to cool the computers.
“They generate an enormous amount of heat and a lot of the cost in energy is keeping the computers cool” he said.
He said the project, while likely to be financially viable, would not provide a net benefit to the environment when it came to reducing greenhouse gas emissions.
“From an environmental perspective, it makes absolutely no difference whatsoever if they burn the gas or they use it to mine cryptocurrency,” Dr Glance said.
“It will still produce carbon dioxide.”
Valhalla Project yet to be approved
The fracking proposal at the Valhalla site will see up to 20 exploration wells drilled at the company’s tenement situated between Fitzroy Crossing and Derby, spreading across multiple native title claims.
But the proposed fracking project is yet to pass the approval processes.
Environmental Protection Authority (EPA) chairperson Professor Matthew Tonts said it did not expect to finalise its report before March 2023.
“Final environmental consideration on this proposal will be made by the Minister for Environment,” he said.
“The proponent’s environmental review document is expected to be released for an eight-week public review later this year.”
In a statement to the ABC, a Black Mountain Energy spokesperson said the company planned to drill wells and flow gas in 2024, and hoped to have the cryptocurrency mining facilities on site by then “in order to mitigate flared gas”.
The ABC contacted traditional owners for comment on the proposed cryptocurrency mining project.