Bitcoin Mining Rush Now Includes Canadian Oil Companies

Bitcoin Mining Rush Now Includes Canadian Oil Companies

Fundamental transparency is one of the many features that attract investors to Bitcoin. Aside from the public distributed ledger of all transactions, Bitcoin investors, traders, and miners are aware that circulation is limited to 21 million tokens, and that the potential reward for mining operations will be reduced by half on May 24, 2020. These two fundamental bits of information are fueling a new rush towards mining, and even Canadian oil extraction companies want to get in on the action. 

As recently reported by the Wall Street Journal, oil field operators in Canada have found an interesting use for the natural gas that is normally wasted during petroleum extraction operations. Instead of burning off this byproduct of oil production, which is usually routed to a flaring device for combustion, oil extraction rigs are using this natural gas to run electricity generators, which in turn power Bitcoin mining rigs. The energy consultants who came up with this idea initially believed that Bitcoin mining would offset some of the considerable costs associated with oil extraction; however, the prospect of a Bitcoin rally this year could actually result in profits. 

The Efficiency of Natural Gas for Bitcoin Mining

There is an additional benefit to converting natural gas into electricity for Bitcoin mining rigs: consultants have realized that this routing of natural gas is actually more efficient than the usual flaring. Those who are familiar with Bitcoin mining know that electricity generation accounts for about 90 percent of expenses, and this is the main reason mining cartels have been relocating to China in recent years. More than half of electricity production in China comes from coal-fired plants, which happens to be very cheap despite being terrible in terms of air pollution and environmental destruction. 

As for the upcoming halving of Bitcoin mining rewards, seasoned miners have already cut their losses in light of the cryptocurrency bear market that lasted all of last year, but newcomers are rushing to get into mining before May 2020. New miners who are able to somehow reduce their electricity costs could be in good shape to profit this year. As of late March, BTC/USD was touching the $4,200 mark, and traders were optimistic as to the prospect of Bitcoin reaching $5,000 over the next few weeks.