Gazprom Neft, a subsidiary of Russian gas giant Gazprom, is offering crypto mining.

With bitcoin having scaled an all-time high of US$ 34,000, it is becoming increasingly lucrative to mine the cryptocurrency, especially if energy costs are low, or free. Gazprom Neft, a direct subsidiary of Russian gas monopoly Gazprom (MCX: GAZP), is converting gas from its oil fields that would otherwise have been flared, into usable energy for bitcoin mining. (Yahoo Finance)

Twin benefits

Oil production from oil fields often releases natural gas that has to be burnt off into the atmosphere. This creates a carbon emission footprint that could result in environmental fines. However, in the Khanty-Mansiysk region of northwestern Siberia, Gazprom Neft is using a power plant to transform this waste gas into electricity.

The company is now offering a crypto mining venue for utilizing this energy generated from the waste gas. By doing this, it is killing two birds with one stone. On the one hand, it reduces its emission footprint and associated environmental costs. On the other, it earns a revenue stream.

Gazprom Neft has no intentions to conduct cryptocurrency mining on its own account. However, it plans to offer this low-cost, byproduct energy to crypto miners.

The single-largest cost element for crypto mining outfits is the energy that runs their mining rigs.

Their mining margins improve if they can procure energy at a low cost. Therefore, it is a win-win situation for both Gazprom Neft and the crypto miner.

Taking a leaf from the American playbook

“Since bitcoin miners are paid through the internet and awarded bitcoin the value of electricity is now directly correlated with the value of bitcoin,” observes Upstream Data’s Steve in a blog. “This means that stranded, useless energy located even on a remote oil well has the same baseline value as useful grid-connected energy flowing from a hydroelectric dam.”

Upstream Data Inc has developed a solution for vented and flared natural gas (“stranded energy”) at upstream oil and gas facilities. It pairs modular bitcoin mining datacenters to natural gas engines, thereby converting this energy into useful work and monetizing it.

Perhaps, Gazprom Neft’s strategy is from the same playbook.

In November, we reported that Russian aluminum and hydro giant En+ (LON: ENPL), had forayed into crypto mining. It partnered with BitRiver, which owns the largest crypto mining venue in Russia.

“Our energy assets in the region produce low-carbon, inexpensive electricity from renewable sources, and we are able to offer surplus energy to these partnerships,” said Mikhail Khardikov, head of En+ Group’s energy business, at the time.

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Image Credit: Gazprom Neft’s Omsk Refinery