Russia seems to be preparing to mine Bitcoin with flare gas

Published at: June 17, 2022

The Russian government continues to establish links with major players in the cryptocurrency mining industry despite staying skeptical about legalizing cryptocurrency trading and payments.

Russia’s state-owned gas giant Gazprom Neft has entered into a partnership with BitRiver, the largest crypto-mining colocation services supplier in Russia providing hosting services for major crypto mining operations. Gazprom will provide BitRiver's partner data centers with electricity generated from the associated petroleum gas, the companies officially announced on June 16.

As part of the collaboration, BitRiver will be developing a digital infrastructure based on the oil fields that Gazprom provides crypto mining services from the flare gas.

Gazprom first deputy CEO Vadim Yakovlev emphasized that the business model of ​​Gazprom, itself, doesn’t envision work with digital assets. The gas giant is rather aiming to optimize the use of energy resources ito enable renewable energy by enabling “new ways of beneficial use of associated petroleum gas,” he noted, stating:

“Reducing our carbon footprint is an essential component of Gazprom Neft's ESG policy. [...] By combining technologies and competencies with partners, we create the best industry practices for the efficient and environmentally friendly use of natural resources.”

Gazprom is one of the largest oil and gas companies in Russia and also one of the biggest gas suppliers for the European Union. The oil giant was reportedly ranked as the world’s third-largest producer of carbon emissions as of 2019.

According to the announcement, flare gas-powered crypto mining projects are especially relevant when working in new oil fields that do not have any established gas transmission infrastructure. Another option is to set up such developments on remote oil fields in Siberian regions as such fields are associated with surplus electricity and unprofitable flare gas logistics.

BitRiver founder and CEO Igor Runets noted that the new partnership with Gazprom is part of the company’s ambitious plan to increase its total power capacity to 2 gigawatt in the next two years.

The Russian government had previously considered a project to mine Bitcoin with associated petroleum gas in October 2021.

Related: Gov't says crypto miners consume 2% of total electricity in Russia

Russia is a major player in global energy markets as well as Bitcoin (BTC) mining. The country was the third largest BTC hash rate producer in the world as of August 2021, according to the Cambridge Bitcoin Electricity Consumption Index. According to the latest index update, Russia tumbled to the fifth spot as its BTC hash rate declined to 8.6 EH/s in January 2022 from 13.6 EH/s in August 2021.

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