Wyoming off-grid Bitcoin mining can meet industry needs – Wyoming Tribune

Kyle True of Casper is CFO of Diamond Coin, a company that invested in Bitcoin mining in 2021 by going “off-grid” and using flare gas resulting from oil drilling to power powerful computer miners.

Kyle True of Casper is CFO of Diamond Coin, a company that invested in Bitcoin mining in 2021 by going “off-grid” and using flare gas resulting from oil drilling to power powerful computer miners.
In the midst of policy debates over the role Bitcoin mining plays in electrical power production and the resulting environmental impact, a Wyoming entrepreneur is among those developing power alternatives by cutting the cord to the energy grid.
Kyle True of Casper is CFO of Diamond Coin, a company that invested in Bitcoin mining in 2021 by going “off-grid” and using flare gas resulting from oil drilling to power powerful computer miners.
His family came to Wyoming in the 1870s and became known in the state as leaders in oil exploration and production, ranching, banking, transportation and real estate. True graduated from the University of Wyoming with a petroleum engineering degree in 1992 and has a wide range of experience in his family’s businesses.
“It was during COVID, and I was snowed into a cabin with my college-aged kids in the middle of nowhere,” True said. “I was praying about how to make a living because oil prices had really gone insane. I was looking at different things and eventually came across Bitcoin.”
Bitcoin is a decentralized digital currency created in 2009 that is not controlled by any government or financial institution. Bitcoin transactions are recorded on a public ledger called the blockchain, which is maintained by a network of computers around the world. Each transaction is verified by multiple users on the network, making it secure and transparent.
True admitted he didn’t understand Bitcoin at first and talked to his friend and fellow Casper oilman Wayne Neumiller, who had started Bitcoin mining with a company called Highwire Energy Partners. Neumiller invited True and his team to one of Highwire’s off-grid mining locations to demonstrate how generating power using flare gas worked. There was talk about investment opportunities in Bitcoin mining.
“It was way too interesting,” True said. “I said, ‘I don’t want to be an investor. I want to be an operator.’ I learned a lot from Wayne, a really good guy.”
His company started by purchasing old and used Bitcoin miners and finding an oil well with flare gas.
“We learned how to do it,” True said. “We found out it was cheap, and it makes really good use of a Wyoming resource, flare gas, that’s not being used. So, we decided this is for us, we’re going to jump in.”
His experience in the oil field prepared him for going off-grid to mine Bitcoin, True said.
“We’re out on oil and gas leases,” True said. “We need not bother the operators and stay out of their way.”
True said the oil business was down when he started Bitcoin mining, and natural gas-powered generators were inexpensive to rent.
“That has changed, of course,” he said. “Generator prices have more than doubled. I’ve had to go out and get into the generator business and purchase and operate our own generators. So, we’re in the process of learning all about the generator business now.”
Diamond Coin has seven sites in Wyoming with Bitcoin mining platforms and is working with five different operators. He said putting stranded assets, like flare gas, to use in Bitcoin mining benefits operators by reducing waste and increasing profitability.
Using stranded assets also is beneficial to the environment, he added, because it helps reduce waste emissions such nitrogen oxides and sulfur oxides.
“Operators just can’t justify laying a natural gas pipeline to every well. We can come in at relatively low flare gas rates and consume them,” True said. “So, that’s a benefit to them.”
True said while a rate of 65 MCF is preferred for generating power for Bitcoin mining, 20 MCF a day is adequate, as long as there’s going to be stable supply for at least 18 months to justify setting up a platform.
Off-grid Bitcoin mining facility costs range from $100,000 to $350,000, depending on the size and system efficiency, he said. Modeling on a flat price environment, it can take up to 18 months to break even “and the profits go from there.” If a miner is able to successfully add a block to the blockchain, they will receive 6.25 bitcoins as a reward. The reward amount is cut in half nearly every four years, or every 210,000 blocks. As of April 10, Bitcoin traded at over $30,000, making 6.25 bitcoins closing in on $200,000.
“If the Bitcoin price goes down, it gets harder. If price goes up, it gets easier,” True said.
For smaller sites, True said there might be 20 to 30 miners for each facility. For the larger sites, there will be up to 100 miners. He said there are three ways to connect the Bitcoin miners to the internet and Bitcoin mining network.
“Sometimes we use a cellphone,” True said. “Sometimes Elon Musk comes (Starlink) and puts in a satellite dish for us. And sometimes we can hook into the operator’s Wi-Fi system. A data center needs a very high-speed connection to the internet to be useful. The Bitcoin mining facility does not. You don’t need much, as the connection speed is very low, and there is a low cost for connection.”
True’s experience illustrates the benefits of off-grid Bitcoin mining, said Steve Lupien, director of the University of Wyoming Center for Blockchain and Digital Innovation. Being off-grid reduces the impact of uncertain regulated electricity pricing and power grid accessibility issues.
“You’re on your own, and you’re only looking at the capital costs necessary to generate your power,” he said.
Using cheap, unregulated power is a benefit that Lupien believes will make off-grid Bitcoin mining a long-term option for the industry trying to control costs. While renewable energy sources such as solar, wind and hydro are other power sources for off-grid mining, using flare gas in Wyoming can be beneficial, he said.
“By using flare gas, you’re monetizing lost energy into something meaningful,” Lupien said.
He disagrees with those opposed to burning flare gas to power Bitcoin mining over carbon dioxide and other emission concerns, as letting flare gas escape into the atmosphere “is just as bad.”
As regulatory and electricity supply challenges become more cumbersome for Bitcoin miners, Lupien said more are moving to rural areas and looking for opportunities such as those found in Wyoming.
“I just think off-grid mining is a win-win for everyone, and I don’t see it diminishing anytime soon,” Lupien said.
True said he thinks there are many oil fields in Wyoming for expanding off-grid Bitcoin mining, and some gas fields, depending on the pipeline infrastructure.
“This could grow significantly,” True said. “But not every field, not every well, is right because nothing applies everywhere. Though there are dozens more locations that we’ve identified where we could be useful if the operator was open to us coming out and using their gas.”
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