A Winklevoss-backed ‘green’ Bitcoin mining startup that’s supposedly good for the environment and the oil industry may actually drive fossil fuel use, say researchers.
As reported by The Guardian, Crusoe Energy works with oil companies to transform waste gas into fuel for Bitcoin mining operations.
Crusoe Energy’s big idea is to build mining data centers near oil drilling sites and pay oil companies for their unwanted gas, which is usually burned off in “flares.”
The Denver-based firm then uses energy generated from that gas to mine Bitcoin, an energy-intensive process attracting scrutiny from climate hawks.
Crusoe says this “digital flare mitigation” could lead two of society’s most pressing problems — the climate crisis and the need for cheaper power — to solve each other.
Co-founder and chief exec Chase Lochmiller told The Guardian about switching the first prototype on in January 2019.
“We flipped the switch and saw all the Bitcoin mining servers light up green, and you could see the flare physically shrink a little bit,” he said (our emphasis).
“It was kind of a Frankenstein moment, like ‘oh my god, it’s alive!’”
Crusoe Energy raised over $125 million in an April Series B from the likes of Winklevoss Capital, Coinbase Ventures, and DRW Venture Capital.
‘Green’ Bitcoin could just lead to more drilling
There’s considerable debate about whether Crusoe’s supposedly green Bitcoin mining is as eco-friendly as it appears.
Flare mitigation schemes like Crusoe’s are “false solutions” as long as we rely on oil and gas, said experts quoted by The Guardian.
In fact, University of Texas researcher Arvind Ravikumar out-right claimed that flare mitigation is a scam.
He believes it may actually encourage the use of fossil fuels, which could lead to more drilling. “At the end of the day, they’re still burning natural gas,” said Ravikumar.
University of California political science professor Paasha Mahdavi agreed. He noted that while these technologies seem to reduce emissions, they may have the opposite effect by creating new demand for gas.
“It’s like if you had a leaky gasoline pipeline and, instead of fixing the problem, you plugged in a Humvee next to the leak, and left the engine on in perpetuity with the [air conditioning] on full blast,” said Mahdavi (via The Guardian).
Unsurprisingly, Crusoe insiders see things slightly differently. They say the company is buying the oil industry time to transition to more eco-friendly means.
But the idea that mining Bitcoin with excess gas is a step toward a greener future doesn’t seem to impress many scientists.
Professor Heather Price from North Seattle College told reporters: “I have no faith that this use of flares for crypto would be a temporary situation.”
“The fossil fuel industry and crypto companies should not get a ‘cookie’ for this move,” said Price.
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