JACKSON COUNTY \u2014<\/strong> Tan pump jacks, 140-year-old oil field technology, bob up and down amid the purple sage in this rural corner of Colorado, lifting oil from deep below and also fueling a very 21st century frenzy: cryptocurrency mining.<\/p>\n The pump jack wells are tied to natural gas generators powering trailers filled with bitcoin mining computers, linking this remote valley to the global cryptocurrency market.<\/p>\n The marriage of old oil and gas and trendy cryptocurrency is one of convenience. Drillers focused on producing oil have to find something to do with the natural gas that also comes out of the well. Crypto miners are always looking for cheap electricity to power their energy-hungry computers.<\/p>\n A single bitcoin transaction consumes 1,449 kilowatt-hours \u2014 50 days worth of power for the average U.S. household, according to the Digiconomist Bitcoin Energy Consumption Index<\/a>.<\/p>\n In areas with a lot of oil production and few pipelines \u2014 such as Texas\u2019 Permian Basin and North Dakota\u2019s Bakken \u2014 twinning oil and gas operations and bitcoin mining has lured operators from wildcatters drilling a well or two to ExxonMobil.<\/p>\n The stakes in Colorado are different. The state is rich in pipelines to carry away oil and gas, but it also has a ban on flaring, the burning off of natural gas from wells. If an operator can\u2019t connect to a gas pipeline or find some other use for the gas \u2014 under state rules \u2014 the well must be shut down.<\/p>\n This has led to at least half a dozen operators bringing cryptocurrency mining operations to their well sites, according to the Colorado Oil and Gas Conservation Commission.<\/p>\n In July, the commission had a briefing session, in conjunction with the state Air Pollution Control Division, to explain to companies what regulations to follow and forms to file.\u00a0<\/p>\n The commission also surveyed local governments to see if any have crypto mining rules and asked whether they wanted to be informed when the commission is notified of or finds crypto mining occurring at a well in their jurisdiction.<\/p>\n \u201cIt is definitely on our radar,\u201d said Megan Castle, a COGCC spokeswoman.<\/p>\n Fourteen local governments replied to the survey. Thorton and four counties \u2014 Adams, Boulder, Larimer and Arapahoe \u2014 said that such oil and gas powered crypto mining would not be permitted, Castle said.<\/p>\n Adams County, however,is researching the issue. \u201cWe are looking at other states, talking with experts,\u201d said Jenni Hall, Adams County\u2019s director of community and economic development.\u00a0 Most of the county is close to natural gas pipelines, Hall said. It is only outlying areas worked by some small operators that have no pipeline access.<\/p>\n One of those small companies is Renegade Oil and Gas. In May, Renegade in partnership with Datahawk Energy, a Brighton-based crypto miner, added crypto mining equipment \u2014 a shiny silver metal box slightly larger than a port-a-potty \u2014 to a well near East 120th Avenue in unincorporated Adams County, east of Denver International Airport.<\/p>\n When a county oil and gas inspector discovered it operating, the county ordered it shut down and sued the company. Ed Ingve, Renegade\u2019s owner, had the crypto mining equipment moved to another site outside of Adams County.<\/p>\n \u201cIt was a total overreaction,\u201d Ingve said. \u201cAt this point the lawsuit is moot.\u201d\u00a0\u00a0<\/p>\n Christa Bruning, a spokeswoman for the county, said it does not comment on pending litigation.<\/p>\n \u201cAdams County threw us a curveball,\u201d Datahawk co-founder Jason Harms said. \u201cIf they come up with guidelines and regulations we\u2019d love to work with them. This isn\u2019t something new, it is being done all over the country.\u201d<\/p>\n By far the largest oil and gas crypto mining operation in Colorado is the one in Jackson County where the installations are the size of a small cabin or travel trailer instead of a port-a-potty.<\/p>\n The natural gas is supplied from wells run by Houston-based D90 Energy and the mining operation is done by Crusoe Energy, a Denver-based company specializing in using stranded natural gas to power crypto mining and cloud computing.<\/p>\n D90 operates 53 wells at 36 locations in Jackson County and has been struggling to find ways to use the produced gas. The oil is trucked away.<\/p>\n \u201cClearly, we have a dilemma with fields like this,\u201d Dan Silverman, D90\u2019s president, told an oil and gas commission hearing in March. \u201cThere is just no infrastructure within 60 miles of this basin.\u201d The company was before the commission to get a variance to flare while it gets its plan for the gas in place.<\/p>\n Six Crusoe units are operating on the site with the prospect of more being added, according to D90\u2019s presentation to the commission. \u201cThe first couple years you are going to see a lot more Crusoe modules out there,\u201d Silverman said.<\/p>\n Before adding any new wells, D90 has to find some use for the remaining natural gas coming from the existing wells. The company has plans to drill about seven wells a year for the next three or four years, Silverman said.<\/p>\n For Crusoe, the business model is to purchase the gas at below-market rates to run a module consisting of a generator that powers two large trailers packed with crypto mining computers.<\/p>\n The company, which was founded in 2018 and has raised $483 million in private funding<\/a>, operates about 100 data centers including ones in Montana and North Dakota, where it has partnered with ExxonMobil.<\/p>\n The oil and gas company only has to provide the gas, while Crusoe provides all the investment and infrastructure.<\/p>\n![\"\"](\"https:\/\/lede-admin.coloradosun.com\/wp-content\/uploads\/sites\/15\/2022\/08\/Adams-county-renegade-bitcoin-mining-11.jpg?w=710\")
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