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Pipe Dream: Analysts Exploit Bitcoin Mining Operating on Natural Gas


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A group of Wall Street analysts has a unique idea to allow Permian Basin shale producers to Texa to take advantage of the huge amount of natural gas that is currently wasted as a result of shale extraction: exploit it to fuel a Bitcoin mining operation.

In a recent note to clients, a group of Bernstein analysts led by Jean Ann Salisbury explored this strategy off the beaten track

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The basin could produce a "surprising 25 bcfd of wet gas up to 2025, which will be primarily treated as a by-product based on the price of oil and perhaps even flared! What can producers do with this free gas? Bloomberg quotes analysts in his report.

That's right, the basin could produce about 25 billion cubic feet of natural gas a day and most of it will be wasted by flaring, a process by which oil producers are wasting unwanted gas. In fact, Forbes reports that some producers have been forced to cap their shale production because they have already reached the legal limit for flaring.

Of course, the shale producers would prefer to sell the gas, but a shortage of pipelines took that option off the table.

According to Bernstein's plan, shale producers would capture the excess natural gas and use it to produce electricity, which would then be used to power an on-site Bitcoin mining operation. .

Unfortunately, analysts have discovered that the transaction would likely lose money in the near term and that the Bitcoin price should rise to nearly $ 19,000 on average over the next 15 years years to make the company profitable.

"If we take into account this growing difficulty, we will only earn money if the 15-year average price is $ 18,788," the analysts conclude, concluding that "the ephemeral thinking of to become a billionaire Permian-bitcoin will remain, for the moment, a dream. "

However, even at this high break-even point, the business could be worth it.

Cryptocurrency hedge fund Pantera Capital recently issued a rare buy recommendation for Bitcoin, predicting that the flagship cryptocurrency. will reach $ 20,000 before the end of the year.

Meanwhile, Fundstrat Global Advisors – Wall Street's first strategy firm to cover cryptocurrencies – predicts that the Bitcoin price will reach $ 25,000 over the same period.

Image from Shutterstock to photo

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