Stranded Energy

Stranded energy is energy produced in places or at times where it can’t economically reach consumers. It’s more common than most people realise, and it’s a genuine waste problem.

The clearest example is flared natural gas at oil wells.

When oil is extracted, natural gas comes up with it. In remote locations without pipeline infrastructure, this gas has no market. The economics of building a pipeline don’t work. So the gas gets flared — burned off at the wellhead. About 140 billion cubic metres of gas gets flared globally each year. It releases CO2 into the atmosphere without generating any useful energy. It’s waste in the literal sense — energy produced and immediately destroyed.

Bitcoin mining can capture this.

A containerised mining operation placed at a wellhead converts the otherwise flared gas into electricity for Bitcoin mining. The gas that would have been flared is combusted more completely through a generator, which reduces methane and other pollutants compared to open flaring. The environmental outcome improves. The oil operator earns revenue from previously wasted gas. The miner gets cheap electricity.

Several companies now do exactly this — operating mobile mining units at oil fields specifically to monetise stranded gas.

The same logic applies to curtailed renewable energy and to remote hydroelectric power that can’t economically reach population centres. Bitcoin creates an economic market for energy with no other buyer.

This isn’t a complete solution to climate change. But it’s a concrete example of Bitcoin mining improving an environmental outcome — not through mandate or subsidy, but through straightforward economics.

Tomorrow: a story — an oil field in Texas and the Bitcoin miner next door.

— The Daily Bit