Crusoe Energy
- Crusoe Energy captures the energy from flare gas at oil patches and uses it to “mine” bitcoin.
- The company is now one of the US’s biggest miners and has attracted investment from Coinbase.
- The crypto world is increasingly focused on the climate, particularly after Elon Musk’s criticisms.
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Hunter Lowe, a 27-year-old electrician from Tennessee, was working for around $10 an hour in his home state and supporting a family of three when he decided to move to North Dakota and look for a new job.
He never expected to end up working in the bitcoin business.
But Lowe is now an electrician at Crusoe Energy, a company that captures the flare gas from oil patches and uses the energy to “mine” for bitcoin. It says its systems slash CO2-equivalent emissions from gas flaring by up to 63% and that each one has the equivalent effect of taking around 1,700 cars off the road.
Lowe describes it as “the best job I’ve ever had,” which pays “way more than fair.” And he says business has been good during 2021’s crypto boom. “We’re getting busier and busier every time another company finds out about us,” he told Insider.
Crusoe isn’t the only company in the business, with others including EZ Blockchain doing similar things. Yet it’s one of the biggest, and has attracted investment from the listed crypto exchange Coinbase and the Winklevii twins‘ Winklevoss Capital.
Crusoe mines bitcoin directly on site
So how does it work? When oil companies drill for the black stuff, they often hit natural gas too. Yet, most drillers lack the infrastructure to sell the gas and so burn it off in a process called flaring, creating the distinctive flames above oil sites.
This is where Crusoe comes in. It installs a piping system to divert the natural gas away from the flares and into generators. They produce electricity which is then used to power computers directly at the oil site.
The computers “mine” bitcoin – that is, they solve complex puzzles which help to secure the bitcoin network and create new coins. One bitcoin was worth around $39,000 on Thursday.
“We pay the operator for the gas that we use in our generators, providing them with an incremental revenue stream where they were previously flaring the gas for zero,” Crusoe’s president Cully Cavness told Insider.
He said Crusoe, which has deployed units in North Dakota, Colorado, and Montana among other states, is now one of the biggest bitcoin miners in North America.
The focus on bitcoin’s energy use has intensified
Yet, for some people, paying oil companies for their byproducts is simply propping up the fossil fuels industry. Others argue that bitcoin is socially useless and there are much better uses for energy.
New York University economist Nouriel Roubini has slammed cryptocurrencies as pointless and inefficient, for instance, saying that “the Flintstones had a better monetary system.”
Elon Musk, once the most prominent bitcoin evangelist, has halted payments for Tesla cars in the token and attacked its “insane” energy use. Bank of America analysts have estimated that each $1 billion of inflows into bitcoin uses the same amount of energy as 1.2 million cars.
Yet, Cavness says Crusoe “maintains an internal [environmental] standard to select projects only if they’re net reducers of greenhouse gasses.”
He also said Crusoe’s prices are such that “we don’t create an economic incentive to opt out of traditional midstream gas capture systems.”
And he says the company’s generators aren’t only focused on bitcoin, but are increasingly powering other energy-intensive processes such as cloud computing.
Investors are keen on the technology
Musk’s attacks on bitcoin’s energy consumption have shone a light on the issue and crypto companies are paying more attention to the climate than ever.
The green focus appears to be helping Crusoe, which recently raised $128 million to help expand its flare capture technology to more than 100 units, from around 40 currently. Investors included Valor Equity Partners, Bain Capital, and the Agnelli family’s Exor.
As someone who’s worked for Halliburton and natural gas companies, Lowe admits he was skeptical about “the whole green thing” in the past. Being at Crusoe has changed his mind, however, and he argues its work is “definitely for the better.”