Bitcoin miners and oil drillers bond over natural gas

Shale gas development in the United States has enabled oil and gas exploration in Africa. It is not just because of improvements in drilling technology but due to a depletion of natural gas resources on that continent. To make your bitcoin trades valuable and easy, visit öl profit. But this isn’t about shale gas but how bitcoin miners and oil drillers found common ground over natural gas supplies. 

The story starts with Bitcoin miners in China scrambling to find new sources of electricity after the government slapped restrictions on coal use for power generation and ultimately shut down coal-fired power plants that had been providing much-needed electricity to Bitcoin mining operations across its western provinces, including Yunnan province where some 33% of all transactions worldwide were originating as recently as January 2021.

 Bitcoin Miners Turn to Burning Trash

The big mystery is how they were able to continue mining bitcoin, given the newly imposed restrictions on coal-powered power plants. But according to a report from Reuters this January, it was something quite simple: cheap natural gas. 

The report quotes several former and current senior HPB miners depicting that the spot value of natural gas, alongside its availability, is much cheaper than coal and other energy resources. It explains how the miners could switch from coal to gas despite the lower generation rate of both energy resources.

Oil Drillers Switching from Coal to Natural Gas

The more significant twist in the story is how this switch from coal to natural gas began a ripple effect that ultimately ended up benefiting oil drillers as well. According to reports, coal-powered electricity generated for HPB mining operations was enough to power 2 million households in China and some 1.5 million households in Inner Mongolia. In addition, these coal-fired power plants offered much-needed job opportunities for residents.

But now, with the news of a coal shortage from HPB miners and little to no alternative resources in its western provinces, oil drillers in those same regions were able to start profiting from this spot price difference between natural gas and coal. According to Reuters, the price difference between natural gas and coal is now more than 300 Yuan ($45) per ton of coal. It means that oil drillers are now able to earn up to more money per month as compared to just $10 million before.

But this is even better news for bitcoin miners as they now have access to much cheaper electricity that allows them to maximize their profits. One notable benefit of cheap natural gas is that it is an excellent fuel source for high-powered generators. 

How does bitcoin mining affect the price of oil globally?

The above-listed portion proves that the global demand for bitcoin mining is strong and impacts the global energy supply and demand.

The question is whether or not bitcoin miners can change their approach to electricity generation and leverage these advantages to maximize their profits while reducing their carbon footprint from resource extraction. In other words, can they become more environmentally sustainable? Yes, utilization of natural gas cause negligible or no harm to the environment, but it also means reducing carbon footprint and consumption.

What remains to be seen is if they can continue their association with oil drillers and convert their mining farms to spot buying natural gas at lower prices. One thing is sure: both bitcoin miners and oil drillers need cheap power. The enthusiasm of bitcoin miners has powered them to increase their revenue in the first quarter of 2022 by $10 billion, nearly the same revenue that oil companies generated for 2019 as per the latest reports. 

Finally, how long the current association between the two can last and if they will continue to leverage natural gas to earn more profit is something worth watching closely. But, of course, the other side is that bitcoin miners are less reliant on natural gas, making them less vulnerable to future oil price shocks. 

Bitcoin Mining- The Power Eater:

The process of validating and recording transactions on the blockchain network requires a lot of computer processing power; the process is called mining because it involves a lot of mathematical calculations. Computation powers are driven by specific mining hardware, which is responsible for the energy-guzzling attitude of bitcoin mining. Natural gas can be a fabulous alternative for bitcoin miners as it can correspondingly skyrocket the incentives of bitcoin mining.