Stephen Barbour, a Lloydminster entrepreneur and the owner of a Bitcoin mining company called Upstream Data Inc., is powering his mining computers with vented methane gas converted into electricity. He pays heavy oil companies for the electricity used. He sells the skid product called a hashgen that comes with a gas power plant to oil companies to reduce their liability from methane emissions. If the well waters out and gas production falls off, the skid can easily be moved to another well site or pieces of hardware can be removed or redeployed to match the power load. This hashgen is set up on a site within the Lloydminster region. SUBMITTED PHOTO
Lloydminster entrepreneur Stephen Barbour is powering his junior Bitcoin mining company with methane gas emitted from heavy oil operations in the Lloydminster area.
He’s building his second and third skids that use excess or wasted methane to generate electricity to power application specific integrated circuit (ASIC) computer hardware that operates his Upstream Data Inc. Bitcoin mine.
“Mining is energy intensive so we need to find low cost sources of power,” said Barbour.
He says if you’re in Lloydminster or the heavy oil industry, what jumps to mind is natural gas that is often vented or flared into the atmosphere as wasted energy.
Barbour plans to pay oil companies for the electricity generated from their excess or wasted sources of natural gas, namely methane, to power remotely controlled hashing data centres for conducting Bitcoin mining.
He will sell skids and own and operate the mining computers.
Mining is all about completing complicated calculations with the hopes of being rewarded some cryptographic bitcoins.
He said his hashgen centre consists of a natural gas genset powering a hashing data centre housed within a portable shipping container.
The plant converts the gas into electrical power for planned 40, 75 and 110 kW configurations for mine hosting capabilities at low kW per month rates.
“We plumb it into this source of gas and that gas can be anywhere, on a single well battery or a multi-well pad or on a facility if you have pipeline infrastructure that’s bottlenecked or isolated,” said Barbour.
“If you have a source of gas that you are not getting a payout for or good revenue for, then this would be an option for that,” he said.
His proof of concept hashgen skid is currently operating on a horizontal multi-well pad in Alberta for a local oil producer.
“They benefit the most from this because they become compliant,” said Barbour.
Each hashgen can remove up to 1,000 cubic metres per day of vented methane emissions while generating revenue for the producer and Barbour.
Barbour was a former engineer for Husky who got into Bitcoin over a year ago knowing about the growing problem for oil companies with methane in regards to climate change and emissions.
“I am trying to solve their problem,” he said by selling the skids to them.
He said venting methane will become a much larger financial liability for oil companies starting around 2025 with possible carbon taxes applied.
Tougher new federal methane regulations on the oil and gas industry will be phased in between 2020 and 2023 along with ever restrictive regulations in Alberta and Saskatchewan.
Barbour is on a limited contract as a downhole tool designer for Lifting Solutions in Lloydminster, with some free time available to grow his Bitcoin mining business.
“I would consider myself to be in the startup phase,” he said, adding he also has a silent partner in electrical design who helped him build his prototype.
He hasn’t looked at venture capital yet because he prefers to show sales first.
“I have actually sold my first skid—I want to sell a couple more before I target that because when you go for funding they want equity, and I am looking for a better valuation,” he said.
His current business model calls for the oil company client to buy the skids, but that could change.
“I think it’s going to end up being a mix of a product where I’m selling it to them and offering them a service for it if they want me to, or they can manage it themselves,” he said.
He noted not many oil companies would want to also invest in his Bitcoin mine, so he will own the computer hardware and maintain it.
He said the oil company as a customer, gets to solve their problem with vented gas and eliminate their liability and become regulatory compliant while monetizing their gas.
That’s the incentive he says for skid sales.
Barbour is currently designing a 75 kW hashgen centre loaded with ASIC mining computers that can be shifted to other sites if the gas source drops off or fluctuates.
That can happen if the well suddenly waters out, for example and production plummets.
“I will never know how much gas is left, so the first thing I figure out with the oil companies is how much volume they can sustain or reliably give me,” said Barbour.
“If they fully loaded it with 75 kW and all of a sudden the gas drops off a bit and they can’t supply me that amount of power, then I will remove computers and redeploy theme somewhere else where I can use them.”
Barbour says its up to them if they want to run it under loaded, but they still get paid for every drop of gas they’re burning to generate electricity.
“If you invest in this asset, it’s still an asset that can be productive wherever you put it,” he said.
He said if skid sales take off, he might set up his own shop.