Australian energy and resources company Black Mountain Energy has entered into a deal with a U.S. energy company to use gas from fracking to power Bitcoin servers.

The initiative will harness the gas emitted from wellheads, the surface termination point of a gas well, and direct them to generators for conversion to electricity. This electricity will then power Bitcoin mining ASICs.

Black Mountain’s CEO Rhett Bennett says that burning stranded gas incurs a high environmental cost, incompatible with environmental and social governance goals. Burning the flared gas from the wellhead emits toxic chemicals like methane and sulfur dioxide.

It is better, in his view, to create a product such as Bitcoin with surplus energy and reduce methane emissions by 63%.

Black Mountain is negotiating with Wyoming-based Highwire Energy Partners LLC to supply five terajoules of gas to be converted into 25 megawatts of electricity for Bitcoin mining ASICs. Highwire, in 2021, purchased 40 natural gas wells in South Dakota for mining Bitcoins and runs similar operations at various sites in Wyoming, renting out generators from third parties.

Black Mountain’s Valhalla Project fracking site in Canning Basin, Kimberley, Western Australia, is still awaiting approval from the Environmental Protection Agency, which only expects to finish its report during or after March 2023.

The final decision on whether to allow this project or not will come from the Minister for Environment. If approved, 20 exploration wells will be drilled.

Local anti-fracking opponents argue that the project could be the start of the industrialization of the Kimberley area, believed to be the largest tropical savanna in the world and that the hot climate could create cooling issues for Bitcoin ASICs, threatening the purported environmental benefits.

Other critics say that Bitcoin miners looking to operate in Australia should be compelled to use renewable energy sources.

In the U.S., ExxonMobil has partnered with Crusoe Energy Systems to pilot a similar project in North Dakota. Crusoe Energy specializes in pipelining stranded natural gas into generators.

The company has admitted that combusting natural gas inside a generator does not eliminate methane emissions. Rather, it does less harm to the environment than burning it in the open atmosphere.

Last year, Texas Senator Ted Cruz suggested using natural gas captured on-site to mine Bitcoin. Critics say this practice encourages companies to continue drilling instead of looking at fossil fuel alternatives.

The third-largest oil producer in Russia, Gazprom Neft, recently announced a partnership with BitRiver, Russia’s largest co-location mining service provider, to create mining data centers on its oil fields that use energy from flared natural gas.

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