Meet the company mining bitcoin using the flare gas from oil drilling – and drawing investment from Coinbase and the Winklevii

Bitcoin mining flare gas
One of Crusoe Energy’s flare-mitigation centres in Montana.

  • Crusoe Energy captures the energy from flare gas at oil patches and uses it to “mine” bitcoin.
  • The company is now one of the US’s biggest miners and has attracted investment from Coinbase.
  • The crypto world is increasingly focused on the climate, particularly after Elon Musk’s criticisms.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Hunter Lowe, a 27-year-old electrician from Tennessee, was working for around $10 an hour in his home state and supporting a family of three when he decided to move to North Dakota and look for a new job.

He never expected to end up working in the bitcoin business.

But Lowe is now an electrician at Crusoe Energy, a company that captures the flare gas from oil patches and uses the energy to “mine” for bitcoin. It says its systems slash CO2-equivalent emissions from gas flaring by up to 63% and that each one has the equivalent effect of taking around 1,700 cars off the road.

Lowe describes it as “the best job I’ve ever had,” which pays “way more than fair.” And he says business has been good during 2021’s crypto boom. “We’re getting busier and busier every time another company finds out about us,” he told Insider.

Crusoe isn’t the only company in the business, with others including EZ Blockchain doing similar things. Yet it’s one of the biggest, and has attracted investment from the listed crypto exchange Coinbase and the Winklevii twins‘ Winklevoss Capital.

Crusoe mines bitcoin directly on site

So how does it work? When oil companies drill for the black stuff, they often hit natural gas too. Yet, most drillers lack the infrastructure to sell the gas and so burn it off in a process called flaring, creating the distinctive flames above oil sites.

This is where Crusoe comes in. It installs a piping system to divert the natural gas away from the flares and into generators. They produce electricity which is then used to power computers directly at the oil site.

The computers “mine” bitcoin – that is, they solve complex puzzles which help to secure the bitcoin network and create new coins. One bitcoin was worth around $39,000 on Thursday.

“We pay the operator for the gas that we use in our generators, providing them with an incremental revenue stream where they were previously flaring the gas for zero,” Crusoe’s president Cully Cavness told Insider.

He said Crusoe, which has deployed units in North Dakota, Colorado, and Montana among other states, is now one of the biggest bitcoin miners in North America.

The focus on bitcoin’s energy use has intensified

Yet, for some people, paying oil companies for their byproducts is simply propping up the fossil fuels industry. Others argue that bitcoin is socially useless and there are much better uses for energy.

New York University economist Nouriel Roubini has slammed cryptocurrencies as pointless and inefficient, for instance, saying that “the Flintstones had a better monetary system.”

Elon Musk, once the most prominent bitcoin evangelist, has halted payments for Tesla cars in the token and attacked its “insane” energy use. Bank of America analysts have estimated that each $1 billion of inflows into bitcoin uses the same amount of energy as 1.2 million cars.

Yet, Cavness says Crusoe “maintains an internal [environmental] standard to select projects only if they’re net reducers of greenhouse gasses.”

He also said Crusoe’s prices are such that “we don’t create an economic incentive to opt out of traditional midstream gas capture systems.”

And he says the company’s generators aren’t only focused on bitcoin, but are increasingly powering other energy-intensive processes such as cloud computing.

Investors are keen on the technology

Musk’s attacks on bitcoin’s energy consumption have shone a light on the issue and crypto companies are paying more attention to the climate than ever.

The green focus appears to be helping Crusoe, which recently raised $128 million to help expand its flare capture technology to more than 100 units, from around 40 currently. Investors included Valor Equity Partners, Bain Capital, and the Agnelli family’s Exor.

As someone who’s worked for Halliburton and natural gas companies, Lowe admits he was skeptical about “the whole green thing” in the past. Being at Crusoe has changed his mind, however, and he argues its work is “definitely for the better.”

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EY says it will be ‘carbon negative’ by the end of the year – here’s its 7-point plan for getting there

Ey
EY office in London.

  • Ernst & Young aims to be carbon negative this year, cut emissions by 40%, and be net zero in 2025.
  • Steve Varley, EY chief sustainability officer, told Insider he was inspired by Microsoft’s strategy.
  • The company plans on removing more carbon dioxide from the atmosphere than it emits through seven key goals.
  • Visit Business Insider’s homepage for more stories.

Accounting giant Ernst & Young announced Monday plans to become carbon negative in 2021, “net zero” in 2025 and cut its total emissions by 40% with seven key commitments.

The London-headquartered firm achieved its goal of becoming carbon neutral in 2020, but after reviewing the science and talking to the company’s climate change experts, it became clear that being carbon neutral wasn’t enough.

Steve Varley, EY’s chief sustainability officer who was appointed in July 2020, told Insider the company emitted 1.1 million tonnes of carbon dioxide in 2019. The travel restrictions brought on by the coronavirus crisis has meant these emissions have fallen to 769,ooo tonnes, but Varley said EY’s commitment is “regardless” of the impact of the pandemic. 

“Our commitment is to remove more carbon dioxide from the atmosphere than we emit every year, forever,” he said.

Varley said he was inspired by Microsoft becoming carbon negative in January 2020. “That’s been on our minds and part of the inspiration for EY also declaring that we become carbon negative.”

“Wouldn’t it be fantastic if society recognized that business is a positive driver rather than a negative contributor” to the environment, he said.

Here are the seven ways in which EY plan to become carbon negative this year.

Cut down on business travel emissions

EY’s first commitment is to reduce travel emissions produced by the business by 35% by 2025. That includes employees or clients travelling by plane, train or bus.

Of the 1.1 million tonnes of carbon emitted by EY in the financial year of 2019, three quarters (76%) of those emissions came from air travel. Since the pandemic struck in March, this amount has reduced as less people are travelling.

While the pandemic won’t last forever, Varley said EY expects employees to continue to use technology such as Zoom to communicate which will ultimately reduce the need to travel. The company is also investing in collaboration technologies to help achieve this goal, he said. Many EY clients have made similar commitments to reduce their carbon emissions, Varley said, who believes there will be teamwork between both parties to make sure they cut down together. 

Reduce overall office electricity usage

Another commitment EY has made is lowering the electricity usage in its offices and procuring 100% renewable energy for the remaining needs of the company. This will help EY become a member of the RE100, a group of organizations worldwide committed to renewable electricity, by 2025, the company said.

Given that coronavirus has forced many employees to work from home, this may seem quite easy to reduce. But Varley said the commitment includes calculating how much carbon EY employees, like himself, are emitting from home working.

“The future we see is a mixed economy of working,” said Varley, who said staff and clients have been working in a range of places including home, offices, and client’s sites.

Structure electricity supply contracts

EY also want to sign more contracts with electricity suppliers so any electricity they don’t use can go straight back into the national grid.

Varley said it has a multi year deal with Lightsource BP, a subsidiary of BP, which will provide the accounting firm with renewable electrivity. The deal involves EY buying more electricity than it needs from Lightsource BP, and the electricity it doesn’t use is put back into the national grid for others to use as renewable electricity, Varley said.

Provide employees with tools that calculate how much carbon they’re emitting

In order for employees to take matters into their own hands, EY are providing them with a modelling tool which will work out how much carbon they’re emitting whilst working.

The tool will work similar to another tool that EY uses to calculate the financial budget on a project, according to Varley. It will show you how you can achieve the same result but with a lower footprint, he said.

Plant trees and use technologies to remove carbon from the atmosphere

One of the projects EY has invested in as part of its strategy to cut down on carbon is helping to protect five million trees in the Amazonia rainforest through an organization called South Pole.

EY plans to use more nature-based solutions and carbon-reducing technologies to offset more carbon than it emits every year.

Read more: ‘Big 4’ salaries, revealed: How much Deloitte, KPMG, EY, and PwC accountants and consultants make, from entry level to executive roles

Invest in services to help EY clients decarbonize their company

Varley said EY is accelerating its investment in the company’s Climate Change and Sustainability Service (CCASS) practice, which helps clients and companies identify and understand how to be more sustainable.

The accounting firm is also planning to invest in its tax practice, Varley said, as it’s increasingly likely that many countries will introduce or strengthen carbon taxes.

EY is also part of the “Terra Carta” – a charter unveiled by His Royal Highness The Prince of Wales on January 10, which gives businesses a roadmap to a more sustainable future.

Ensure EY suppliers set science-based targets

EY will require 75% of its suppliers to set science-based targets, which help businesses reduce emissions in line with the Paris Agreement goals, by no later than 2025. Having a science-based target means that companies will reduce their emissions at a quicker pace to make sure they’re not warming the planet up, according to Varley. 

“I wouldn’t be surprised that in subsequent years we don’t increase that 75% to 100%,” Varley said. “We realise that we have a role to play systemically because we’re a big global organisation of making sure our supplier also live our values and don’t contribute to the warming of the planet.”

Not enough [companies] have gone carbon negative in their announcement, according to Varley. “There’s an opportunity to get a science-based target, to become net zero and to remove more carbon from the atmosphere than they emit.”

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