The Russian government is considering a new project to extract bitcoin (BTC) from associated petroleum gas.
Vasily Shpak, Deputy Minister of Industry and Trade of Russia, presented a proposal to the Central Bank and the Ministry of Digital Development of Russia on the use of domestic oilfield equipment for cryptocurrency mining.
According to Kommersant, the proposal was sent on September 7 and asked the government to express its opinion on the initiative, originally from local oil and gas companies.
The companies specifically suggested using associated gas to operate nearby data centers for bitcoin mining. This type of natural gas, called associated gas, is a byproduct of oil drilling, but due to the huge cost of proper gas infrastructure, it is often lost in flares when excess gas is simply flared.
The Russian government tried to limit the flaring of associated gas in order to reduce emissions, but was unable to achieve its goals due to the lack of the necessary infrastructure.
The letter says that the use of gas in bitcoin mining is likely to increase the efficiency of natural gas in thermal generation through “hybrid installations for the extraction of digital currency.”
According to Kommersant, the project involves “one of the largest oil companies in Russia,” which is struggling to scale up the crypto mining project due to regulatory uncertainty.
On the subject: it is too early to talk about the use of cryptocurrency for oil trading, Putin said.
It is said that only the third largest oil producer in Russia, Gazprom Neft, participated in such a project, generating 1.8 bitcoins in just one month last year. The company is primarily owned by the Russian government through the Federal Agency for State Property Management and Rosneftegaz.
Gazprom Neft did not immediately respond to Cointelegraph’s request for comment.
Entrepreneurs and politicians have highlighted bitcoin mining as a way to combat the wasteful practice of flaring associated gas. Last week, US Senator Ted Cruz recently stated that Bitcoin has “a tremendous opportunity […] to capture this gas, not waste it.”