Profitable Bitcoin Story on Methane Reduction – Bitcoin Magazine

0

This is an opinion piece by Robert Warren, Partner at Distributed Hash and Business Development at Upstream Data Inc.

It’s the story of a father and son team who started their journey in search of cheap energy, but found themselves sitting on one of the biggest sources of waste energy in the industry. . The natural gas industry has found itself an ideal partner in bitcoin mining, and Adam Ortolf of Stranded Energy Investments has the mine to prove it.

In a truly entrepreneurial scenario, Adam Ortolf of Colorado (AKA @DenverBitcoin) went from running a print shop on Front Range to building a stalled natural gas bitcoin mine, and now helps make Upstream Data Inc. the industry supplier it is today. today.

In 2017, Ortolf ran a UPS store on the Colorado Front Range. One particularly busy afternoon, a patient client noticed his work ethic and offered him a position at his oil and gas accounting firm. Knowing nothing about oil and gas, Ortolf was skeptical of the offer, but after some thought decided to join the small team that helped facilitate production accounting and oil well management.

It was there that Ortolf developed an idea of ​​the oil field from the hundreds of pages of production documentation he sifted through to produce reports. His mentor, Rick, took the time to sit him down and put everything from planning to production in the oil field on a whiteboard: “He taught me how to drill a well, from drilling to casing to by punching…I started to understand the economics of oil and gas.At that point I didn’t even have a deep understanding of bitcoin.

“I learned oil and gas accounting and reporting just by doing it,” says Ortolf. “Gas can have a million different little variables. Maybe you burn some of the gas, sell some of the gas, and maybe some of the gas is directed here to a generator that powers a light and your Internet. How do you count that each month?” Looking at the numbers, Ortolf developed a hunch for wellsite operations. “I started noticing that the numbers were wrong,” he says.

It was in the numbers that Ortolf began to see how the patchwork of oversight and legal requirements around natural gas underestimated the amount of gas produced and often disposed of at sites.

“I learned what human beings are actually doing at the well site because I was reporting all the important information…in the United States right now, what’s being reported, and that’s an important distinction, which is reported is not real. It’s what you pay taxes on and what you get paid for, but what doesn’t count are gas lines bursting, leaks, venting. If you are required to report on it, you must estimate, and if you are going to be fined, you estimate low,” Ortolf said.

With this caveat in mind, it is often reported that approximately one billion cubic feet of natural gas is vented or flared daily, with the majority coming from Texas. However, because Texas is more permissive when it comes to venting and flaring, these estimated numbers are considered artificially high compared to other oil-producing states. When venting or flaring is heavily regulated or fined in a state, producers have an incentive to underreport what is happening at the wellsite.

Some rough estimates indicate that twice as much gas is vented or burned as reported. That’s enough power to double the current bitcoin hash rate (around 200 exahash of wasted power at the current difficulty).

The natural gas waste opportunity

With his eyes wide open to the vast amounts of natural gas being wasted or lost every day, Ortolf found himself bridging two disparate worlds – that of Bitcoin and oil and gas.

“There was an article about the mining death spiral. This term intrigued me then. Now understanding mining is just FUD (Fear, Uncertainty and Doubt). It is a market function. But being a naive person, I thought Bitcoin was just another internet money scam.

Understanding the energy, Ortolf wanted to understand how this magical internet scam actually worked. He thought, “I bet you the guys pulling the strings are the miners.” I bet I can understand how they do it. So I went to learn about mining to understand how these guys were scamming everyone.

After studying the Bitcoin protocol and how mining works in the system, Ortolf came to an unexpected conclusion: “Holy shit, you can’t cheat this game, nobody can cheat this game – you can’t not cheat a kWh.”

This is where the connection between the often stranded, wasted or unaccounted energy he worked with every day merged with bitcoin mining, “I understood energy, I understood oil and the gas. I figured out at this point that natural gas powers a significant percentage of the world, and a lot of it is wasted…how to produce it [bitcoin] is to generate electricity, and it’s a very low barrier.

If Bitcoin network miners used this immense amount of wasted natural gas, you would have a cost-effective and environmentally friendly way to fund the operation.

Ortolf explained, “We can sequester it and mitigate it [waste gas] in an economical way, in a way that is really profitable and that reduces air emissions. All of a sudden, you don’t need foundations anymore to donate to save the planet, it’s a self-sustaining way to reduce waste.

He did some research to see who else had made this connection. With little progress after weeks of hunting, he set up a Google alert for “flare gas extraction” and combed through the results. One day Google’s recommended answer returned the name “Upstream Data”.

Ortolf browsed the website, “Finally, I was reading things I had only thought about…As much as it’s obvious today, back then it didn’t feel like it. At At the time, I felt a bit crazy, like I was dreaming here.

The upstream data connection

Ortolf immediately scheduled a call with his business partner (his father) and Upstream Data. After a few hours of that first phone call with CEO Steve Barbour to discuss the oilfield and bitcoin mining, Stranded Energy Investments decided to invest in an off-grid bitcoin mining operation via Upstream Data, which is now called a Hash Combo.

What Ortolf said he liked about Upstream Data was the customer-focused nature of the company. Instead of the many get-rich-quick companies that have come and gone in this space over the years, “This guy was trying to build a 50-year-old gas company,” says Ortolf, “This company is going to be one of the best companies oil and gas companies of the century, it [Steve] has the vision and leadership skills to succeed.

The upstream version consisted of a 50 kW generator powering older generation Antminer S9s. Ortolf and his father invested in the building, generator and ASICs first, and used Upstream Data’s engine maintenance services to run the rig on a Canadian well. In total, they generated about 400 terahash on an engine that consumed about 15 MCF of natural gas per day. This earned around $40/day at a hash price of $0.10.

But even with operations running on cheap gas, they have been hit by stagnating hash price and increasing mining difficulties. It was the rainy season in China and the miners were feasting on the glut of hydroelectric power being produced. Ortolf explained how he and his father asked themselves the question: “How is it possible that we have the cheapest electricity in the world and are stuck? And then, boom – the rainy season ends in China, a ton of hash rates go out, then bitcoin starts going up again…it happened fast, bitcoin was at forty-five thousand dollars and it felt like we were buying it for eleven.”

From these experiences, Ortolf continued his advocacy, consulting with oil and gas companies and energy producers to discuss the use of failed or wasted energy for productive purposes. Due to his experiences with Upstream Data Inc., he continued to send clients to them for their builds. “It was the only place I knew how to send people,” adds Ortolf.

upstream data methane gas extraction

In a final twist of fate, just as his oil and gas mentor, Rick, noticed Ortolf’s efforts at the print shop, Steve Barbour got to see the passion Ortolf brought to his consulting. Steve called Ortolf and offered him a position with the Upstream Data business development team. So today, when you contact Upstream Data to set up your first operation, you may have the opportunity to chat with Ortolf about his experiences setting up that first mine in the oilfield.

upstream data methane gas extraction

This is a guest post by Rob Warren. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Share.

Comments are closed.