The US Department of the Interior (DOI) intends to require gas royalties from companies that use oil rigs on federal land to power cryptocurrency mining operations.
In a late-last-month advisory opinion, DOI officials stated that numerous operators with oil and gas claims on federal lands in Colorado diverted gas to run electric generators for cryptocurrency mining without paying royalties.
DOI Urges Crypto Mines To Pay Power Bills
It has been a win-win situation for bitcoin enterprises and oil drillers, but the Biden administration wants to change it so that the federal government receives its royalties, despite the fact that it is tough to manage.
In recent years, cryptocurrency miners and oil drillers have partnered to reduce waste and pollution from oil and gas fields by converting trash from gas flaring or other useless products into energy to fuel the generators used to manufacture bitcoin.
ConocoPhillips and Exxon, two of the world’s largest oil drillers, tried to diversify their portfolios with cryptocurrency mining, while a number of enterprises in the oil fields of Wyoming and Texas rushed to form arrangements with drillers.
Often, both sides would benefit from such an arrangement. Oil drillers would receive a fee from cryptocurrency miners and reduce waste from their operations, while cryptocurrency miners would have a steady source of energy to continue mining bitcoin and earning money. And in doing so, they would help save the earth.
Read more: Amazon CEO Jeff Bezos $500 million yacht spotted sailing for the first time!
Cryptocurrency Mining Is Not Eco-Friendly
Cryptocurrency mining consumes a great deal of energy, which hurts the environment. Nonetheless, when drilling for petroleum resources, natural gas is often discovered, but due to a lack of resources or pipeline availability, a massive amount of natural gas is released into the atmosphere or burned in a process known as flaring, according to a 2021 document.
Paasha Mahdavi, an associate professor in the Department of Political Science at the University of California, Santa Barbara who studies government-oil industry relations, argued that cryptocurrency firms and oil producers were simply exploiting and profiting from a loophole in a federal law intended to combat climate change.
The loophole arises because, until recently, companies were not required to pay any penalties for methane that is directly discharged into the atmosphere or not precisely captured by flaring, Mahdavi stated in an email.
The recently enacted Inflation Reduction Act (IRA) includes two sections that would apply a royalty to gas burned on-site at federal leases, discouraging crypto miners from using the gas as an energy source and compelling oil companies to reduce methane emissions rather than passing the buck to avoid paying the new methane fees.
But may the legislative changes impact consumers’ financial lines if they abandon a profitable methane alternative in response to increased gasoline costs and corporate profits? Mahdavi affirms, but not as anticipated.
Read more: Stimulus internet credit: How to claim ACP payment?
