A Colorado company that turns flared natural gas at remote oil and gas wells into cryptocurrency has acquired a competitor in the business and expanded its reach in U.S. oilfields.
Denver-based Crusoe Energy LLC bought the cryptocurrency-generating assets of Great American Mining, a North Dakota company, and is adding its employees and customer base to Crusoe’s growing business.
“We value the relationships established by Great American Mining with oil and gas producers in the Bakken oil fields, and look forward to developing these relationships to enhance and expand operations wherever flaring may be a challenge,” said Chase Lochmiller, Crusoe co-founder and CEO, in a deal announcement. “Given Crusoe’s industry leading operational efficiency, scale and technology, we believe we can materially improve the overall performance of GAM’s existing asset base to create value and deliver even better results for clients.”
Crusoe Energy, formed in 2019, pioneered building systems that capture natural gas being flared at an oil well and burning it to generate electricity that powers cryptocurrency-generating computers onsite.
Its deal to buy Great American Mining expands the company’s geographical reach and its relationships with oil producers.
Terms of the deal were not disclosed.
It comes four months after Crusoe raised $350 million from investors to fuel the business’ expansion, a funding round that valued Crusoe at $1.75 billion.
Crusoe earlier this year bought a Denver manufacturer that built many of its flare-gas mining systems.
Acquiring Great American Mining adds 24 employees to Crusoe who will work at the Denver headquarters and at a former GAM research and development site in Ponchatoula, Louisiana, that’s also being acquired.
Like Crusoe, Great American Mining built systems that turned natural gas that would normally be flared into a source of energy powering cryptocurrency-mining computers operating onsite.
The company considered the technology an important alternative to flaring stranded natural gas into the atmosphere in places where oil and gas wells don’t have access to gas takeaway pipelines, said Todd Garland, GAM’s founder and CEO.
He sees selling to Crusoe, which pioneered the industry, as a way to achieve a larger scale.
“They are the clear leader in the space and I believe Crusoe is best positioned to take our combined business to the next level,” Garland said in an acquisition announcement.
Crusoe now employs 300 people and operates in six states.
The acquisition adds 4,000 cryptocurrency-mining computer systems, which consume more than 10 megawatts of electrical power as they generate virtual money, Crusoe said.
Such specialized computers are typically worth thousands of dollars each, so the value of the acquired mining assets alone would be millions of dollars.
The added currency-mining operations expand Crusoe’s operating capacity by about 9%, the company said. Crusoe now owns about 125 flare-gas-powered data centers operating in U.S. oil fields.
They collectively combust about 20 million cubic feet per day of natural gas that would otherwise be flared, the company said.
Crusoe says its flare-gas-powered systems destroy the emissions more efficiently than typical flares while also making money.
The privately-held company doesn’t disclose how much cryptocurrency its operations generate. Nor does it disclose the revenue split, if any, that goes to the oil and gas operators whose wells host Crusoe’s centers.
The added GAM systems are in the Bakken oil-producing region of North Dakota and Montana.
Unlike Colorado and New Mexico, which are oil-producing states that strictly limit oil and gas producers’ ability to flare, flaring is common in the Bakken region, like it is in the giant Permian Basin of West Texas, where wells can often be miles from natural gas takeaway systems.
That creates a larger market for a company like Crusoe.
Without gas takeaway pipelines available, oil and gas producers find cryptocurrency mining a way to turn wasted natural gas into something of value while also cutting emissions.
Crusoe’s acquisition of Great America Mining comes after a difficult period in the cryptocurrency industry.
Values of major currencies have steeply declined, pressuring companies that have rushed into the business.
Crusoe’s founders say the business was built from the start to survive periods of lower cryptocurrency value.
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