In November 2020, Colorado enacted a ban on gas flaring, venting, and release of raw gas into the atmosphere. While the state is home to numerous well sites, a recent report by the Colorado Sun reveals that roughly half a dozen Colorado-based oil and gas companies are leveraging gas-to-bitcoin flare mitigation systems—and they are reaping substantial amounts of bitcoin.
Colorado's Flaring Ban Spurs Bitcoin Mining Innovation
On August 29, 2022, Colorado Sun reporter Mark Jaffe detailed how oil and gas firms are teaming up with bitcoin miners. The report notes that at least six refiners in the natural-gas-rich state are using gas-to-bitcoin solutions to capture excess natural gas that would otherwise be flared or vented.
Colorado's regulatory watchdog, the Colorado Oil and Gas Conservation Commission (COGCC), strictly enforces the flaring ban. Any company failing to connect to a pipeline faces shutdown. COGCC spokeswoman Megan Castle told the Colorado Sun that these gas-to-bitcoin operations are "definitely on our radar."
While some operations are profitable, others have faced closure. For instance, Renegade Oil and Gas partnered with Datahawk Energy, but Adams County's oil and gas inspector shut down the business. County spokeswoman Christa Bruning declined to comment on the ensuing lawsuit.
Crusoe Energy Cuts Methane by 99.8% Using Bitcoin Mining
The report highlights Houston-based D90 Energy's collaboration with Crusoe Energy in Jackson County, Colorado, where the North Park Basin has significant oil and gas activity. D90 President Dan Silverman told the COGCC that the basin lacks pipeline infrastructure within 60 miles, forcing oil to be trucked away.
D90 Energy showcased six Crusoe Energy flare gas mitigation modules at its well site. Silverman predicted that more Crusoe modules would appear in the coming years, with plans to drill about seven wells per year over the next three to four years.
Crusoe's president and co-founder Cully Cavness explained at a June hearing that the company's technology reduces 99.8% of methane compared to 93% for traditional flaring. In April 2022, Crusoe raised $505 million, and three days before the report was published, it filed a lawsuit against a competitor.
This trend shows that under strict environmental regulations, bitcoin mining is becoming an effective tool for the oil and gas industry to reduce greenhouse gas emissions while generating additional revenue. As more companies adopt similar solutions, Colorado may serve as a proving ground for gas-to-bitcoin technology.