FILE PHOTO: A natural gas flare on an oil well pad burns as the sun sets outside Watford City, North Dakota January 21, 2016. REUTERS/Andrew Cullen/File Photo
NEW YORK (Reuters) - MARA Holdings Inc., the world's largest publicly traded bitcoin miner, has begun producing power in the U.S. shale patch as part of a pilot program to fuel 25 megawatts of its mining operations with excess natural gas, the company told Reuters on Tuesday.
The move comes as intensifying competition for electricity between Big Tech's AI data centers has led the crypto industry, which is among the country's largest single-source power consumers, to shift business strategies and either market to AI or find ways around the power fight.
"The AI guys are prepared to pay almost any price for energy because of their demand, so it makes it very hard for bitcoin miners to be able to compete," said MARA Chief Executive Officer Fred Thiel.
Bringing cryptomining to the raw power supply allows MARA to circumvent some of the competition, Thiel said, and avoid increasingly expensive power prices from regional grids. This is also the first time MARA will own its power generation, which is rare for any miner.
Energy-intensive mining for cryptocurrencies like bitcoin has come under public scrutiny in recent years for its carbon footprint, leading to restrictions on the businesses in places like New York and prompting a federal proposal to tax the industry's power use.
"We want to avoid putting additional load on the grid," Thiel said. Most U.S. cryptomining, which federal agencies estimate account for as much as 2.3% of total U.S. electricity consumption, buy power from the grid to run their mining rigs.
Generating power for cryptomining in areas where it would be logistically unfeasible for AI data centers, including remote shale basins and wind farms, would also provide a financial benefit for energy producers lacking pipelines or transmission lines needed to sell their supplies into established markets, Thiel said.
"We can bring energy markets to where the energy is," Thiel said of MARA, which has set up mining operations in wind farms to capture cheap excess power.
As part of the pilot, which was kicked off last month but not previously reported, MARA purchases natural gas at the wellhead from independent oil producers in Texas and North Dakota. It converts the feedstock, which likely would have otherwise been burned off in a process known as flaring, into power to run its nearby miniature data centers.
Shale producers in North Dakota and Texas frequently flare natural gas that is released as a byproduct of drilling for crude oil.
Because MARA's process captures gas that was slated to be burned or vented into the atmosphere as methane, a powerful global warming gas, MARA will also be able to generate carbon credits, said the company's director of ESG Brad Tomm.
MARA's systems are mobile, with small power generators that can be hitched to the back of a pickup truck and data centers in container vessels that can be moved around by a semi-trailer.
Several smaller cryptominers have similarly run mobile operations directly from the shale basins, but this is the first time a publicly-traded miner is believed to have done so.
Initially, the sites will be used exclusively for mining, but they have the potential to be replicated for high performance computing, which is required for technology like generative AI. Whether that shift to HPC happens will depend partly on the technology industry's ability to monetize generative artificial intelligence, Thiel said.
(Reporting by Laila Kearney; Editing by Chizu Nomiyama)
