Cryptomining Using Gas? Winklevoss Are In

May 13, 2019

The Winklevoss brothers, who are the well-known digital entrepreneurs, cryptocurrency apologists, and bitter adversaries of Mark Zuckerberg, invested a hefty sum in what is believed to be the innovative way of mining cryptocurrencies. A private equity firm Winklevoss Capital Management LLC, headquartered in Dallas, Texas, provided $4.5 million in funds to Crusoe Energy Systems Inc., a company that assists oil producers across North America to lower the flaring on natural gas and eliminate the excessive carbon emission.

Crusoe has developed a mechanism for turning the unexploitable natural gas into electricity through the use of specially designed mobile data centers which operate directly at the well site. The obtained electrical power will be used to facilitate cloud computing and cut the cost of cryptocurrency mining in a significant way. Apart from Winklevoss Capital, Cruscoe received substantial funding from Bain Capital Ventures, Founders Fund Pathfinder, and Dragonfly Capital Partners.

The burning problem of flaring

The main reason why this project has drawn heightened attention from the powerhouses of venture capital investment is that Crusoe may have developed a solution to a problem that had been nagging the entire oil industry for decades.

The producers are forced to burn large volumes of natural gas which occur as a byproduct of oil extraction because they simply don’t have the necessary pipeline networks, as well as the accompanying infrastructure, to transport the excess gas to the potential purchasers. As a result, the operating companies must pay third-party contractors to relieve them of the surplus of that fossil energy source, or resort to the mentioned method of burning gas directly at the drilling site, also known as flaring.

Despite the fact that flaring seems to be the simplest fix, it often faces severe regulations as well as the tenacious oppositions from various environmental groups - and for a good reason.

According to the study conducted by the World Bank, the volume of global flaring has been gradually increasing over the last years, reaching 141 billions of cubic meters in 2017, which causes the emission of nearly 350 million tons of carbon on a yearly basis that does an immense harm to the environment.

In addition to the environmental concerns, there is an economic dimension to this problem because the flared gas contains vast amounts of energy that must be put to good use. Prior to the introduction of mobile data centers by Cruscoe Energy Systems, millions of dollars have been going up in smoke. 

The Cruscoe solution

The Cruscoe’s modular mobile data center is packed in a 20-foot shipping container that feeds off the electricity generator which runs on natural gas that is being piped into this unit directly from the oil production site. The company has been seeking funding to expand its scope of operations and find application to the produced electricity. The Winklevoss brothers might have invested in a solution that will help satisfy the Bitcoin’s appetite for electricity, which currently amounts to 22 TWh per year.

Author: Alex Paulson for
Cryptocurrency: Bitcoin

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