By Matt Whittaker / NewsBreak Denver
(Denver, Colo.) A Denver company that uses waste natural gas from oil wells to power data centers is continuing its expansion by purchasing a Bitcoin mining company that operates in the oil fields of North Dakota and Montana.
Crusoe Energy Systems said this month it bought Great American Mining, a North Dakota-headquartered company using natural gas that would otherwise be burned as waste to create electricity to run high-powered computers that help back Bitcoin, the world’s most popular cryptocurrency.
The company didn’t disclose the deal’s financial terms. Crusoe said the acquisition gives it more than 10 additional megawatts of capacity and adds approximately 4,000 specialized computing systems to its operations.
The deal also brings commercial relationships with energy producers in the Bakken region of North Dakota and Montana, 24 specialized employees and a Louisiana manufacturing facility that Crusoe will use as a research and development operation.
With the acquisition, Crusoe adds about 9 percent to its capacity, bringing to 125 its natural gas-powered data centers. The company now can reduce flaring by about 20 million cubic feet of natural gas per day.
Bitcoin, a digital currency based on blockchain technology, runs on a computer network that ensures transactions are legitimate and correctly added to the code that governs the cryptocurrency.
These computers compete to validate a series of transactions called blocks, and their owners are rewarded with bitcoin if their computers are the first to add a block to the blockchain code. The businesses operating the most powerful computers are at an advantage and use a tremendous amount of electricity.
Meanwhile, oil and natural gas producers routinely “flare” excess gas by burning it because capturing and transporting it is expensive or impractical. The wasteful practice has drawn the ire of investors, regulators and environmentalists.
By building modular data centers that run off electricity produced on-site from gas that would otherwise be flared, firms like Crusoe and Great American Mining turn that waste into a revenue stream for fossil fuel companies.
At the same time, this technology reduces greenhouse gas emissions.
Crusoe said the Great American Mining acquisition will enable it to reduce an estimated 800,000 metric tons of CO2-equivalent emissions per year primarily by eliminating uncombusted methane from open flares. That’s comparable to removing about 170,000 cars from the road, the company said.
The deal also marks the latest round of expansion for Crusoe, which in April said it secured $350 million in equity financing from climate technology venture capital firm G2 Venture Partners and other technology, energy, climate and crypto investors. It also closed credit facilities of up to $155 million in debt capital with SVB Capital, Sparkfund and Generate Capital.
In June, Crusoe said it bought Easter-Owens Electric, an Arvada-based manufacturer of modular data centers and specialized electrical systems. Earlier that month, Crusoe said it would expand into the Middle East with financing from sovereign wealth funds in Oman and Abu Dhabi, part of the $350 million in funding it had announced in April.