The exodus of Bitcoin miners from Chinese mining hotbeds has left a vacuum that many global players are trying to fill. Recently it was found that most of the lost hash power was restored thanks to new operations in North America.
However, other miners are trying to relocate their base to regions closer to China, such as Kazakhstan and Russia. In addition, Russia appears to be fully in on it, as the government is considering a bitcoin mining project that would use petroleum gas.
Local news agency Kommersant reported today that Russian Deputy Minister of Industry and Trade Vasiliy Shpak has submitted a proposal to the Russian Central Bank and the Ministry of Digital Development. It was filed last month to use by-products from the country’s sprawling oil fields to mine cryptocurrencies.
The initiative had reportedly come from local oil and gas companies, and Shpak appeared to be getting government feedback through his proposal. The by-product in question is associated gas, which the companies cited solely as an energy source that would operate nearby data centers for Bitcoin mining.
Associated gas is a by-product of oil drilling and is often wasted in gas flaring where it is simply burned in the absence of appropriate gas infrastructure. This has been a point of contention for the Russian government, which is stepping up efforts to reduce emissions from gas flaring.
Shpak noted in the letter that instead of burning this excess gas, its use efficiency in thermal power generation can be improved through “hybrid digital currency extraction modules”.
The Kommersant report goes on to say that the proposed project would also involve “one of Russia’s largest oil companies”, which is struggling to expand its current BTC mining throughput due to a lack of regulatory clarity.
Natural gas flaring is also practiced in American oil fields, where miners are believed to have reached agreements with oil drills to gain access to this by-product. Using this natural gas for mining is a win-win for everyone, including the earth, which is being saved from its harmful emissions. US Senator Ted Cruz recently said that there is “a tremendous opportunity for Bitcoin” […] to capture this gas instead of wasting it. “
News of this proposal followed recent reports suggesting a softening Russian stance on cryptocurrencies. Just last week, Russian President Vladimir Putin also touched on mining when he declared that crypto can “exist as a means of payment”. He said,
“But it takes tons of energy to produce cryptocurrency. And so far we have had to use traditional hydrocarbons. “
Russia currently has the third highest BTC mining production in the world, which was over 11.23% of the average global monthly hash rate as of August 2021. This is mainly due to the cheap electricity and cold climate in several Russian regions.
Interestingly, due to the increased load on the power grids, Russian miners are reportedly being exempted from preferred household electricity tariffs, resulting in them having to pay more for their mining activities.