As part of its aim to reduce pollution, Exxon is mining bitcoin in North Dakota.

According to sources aware of the development, ExxonMobil, the United States' largest oil and gas company, is developing a bitcoin mining facility in North Dakota.

Exxon has been working with Crusoe Energy Systems, a Denver-based business, for over a year, according to persons who asked not to be identified because the project's details are private.

Crusoe's invention aids oil corporations in converting squandered energy, such as flare gas, into a usable resource.

Exxon is diverting natural gas that would otherwise be consumed into generators, which turn the gas into energy used to power shipping containers full of thousands of bitcoin miners, similar to ConocoPhillips' mining program in North Dakota's Bakken region. Exxon started the project in late January 2021 and expanded it in July of that year.

Eric Obrock, who is a 10-year veteran at the company, stated on his profile on LinkedIn that from February 2019 to January 2022, he “proposed and led the first successful commercial and technical demonstration of using Bitcoin Proof-of-Work mining as a viable alternative to natural gas flaring in the oil patch.”

Exxon hasn't made any public statements about this recent development.

On his LinkedIn profile, Obrock's title is NGL industry outlook advisor, which refers to the natural gas liquids market. Obrock made it known to CNBC via LinkedIn that he's been informed he can't speak to the media about the situation. A request for comment from Exxon was not returned.

Exxon's bitcoin initiative isn't really about making money using bitcoin. Instead, as part of an industry-wide effort to satisfy increasing environmental criteria, the corporation has vowed to reduce emissions.

Exxon joined other oil firms in early March in pledging to the World Bank's "Zero Routine Flaring by 2030" project, which was launched in 2015.

As opposed to continuing flaring, the type of crypto mining agreement it's pursuing with Crusoe reduces CO2-equivalent emissions by roughly 63 percent.

Bloomberg originally reported Exxon's bitcoin mining operations in North Dakota, saying the firm is contemplating similar projects in Alaska, Nigeria's Qua Iboe Terminal, Argentina's Vaca Muerta shale sector, Guyana, and Germany.

Bitcoin mining in the Bakken

What happens when drilling operations unexpectedly hit a natural gas formation, which Exxon and Conoco are tackling, has been an issue for years.

For oil, it may be trucked to a remote location, gas supply necessitates the use of a pipeline.

Producers can sell a drilling site straight quickly if it is near a pipeline. Drillers, on the other hand, frequently burn off gas if the pipe is full or if the gas is 20 miles distant. That's why you see flames rising from oil fields all the time.

Drillers are not only endangering the environment, but they are also wasting money.

Bitcoin mining, for example, requires simply an internet connection and can be done from any location. Miners are also motivated to find the cheapest power sources because energy is their key variable expense.

Cully Cavness, president of Crusoe, whose supporters include one of Tesla's major investors, Valor Equity Partners, said “This is just a great way to bring that demand to the wasted energy and solve two problems at once”...“Solve the energy appetite of bitcoin and solve the stranded energy, flare gas problem for the energy industry”

Crusoe has 150 employees, according to Cavness, and collaborates with Equinor ASA of Norway, Enerplus of Canada, and Devon Energy of Oklahoma City.

Crusoe can run 20 portable engines, according to permits from North Dakota's Division of Air Quality, with 11 presently in service at well sites around the state. At the Jorgenson Deep Creek Site, two of the engines are running at wells operated by XTO Energy, Exxon's oil and gas fracking division. The Bakken is home to the majority of Crusoe's 80 data centers, Cavness said.

He said, “We’re really moving the needle on flared volumes.” Also adding that “More than 10 million cubic feet of gas per day that would be flared is not flared because we’ve deployed our systems”

Crusoe was acknowledged by the World Bank in its most recent Global Gas Flaring Reduction Partnership report as providing a novel solution to flaring.

The methane problem resolved

With the rise of hydraulic fracturing or fracking, the Bakken formation has become a major source of additional oil production in the United States in recent decades.

Since 1989, Craig Thorstenson has worked in the Division of Air Quality's permitting program in North Dakota. North Dakota has long been an oil state, he said, but the Bakken's boom propelled it to second place in the country before slipping to third last year.

The change "was quite a shock for us," said Thorstenson, who was born and bred in Bismarck, the state capital. Residential housing was unable to meet demand.

Thorstenson said “We were having a population boom”...“People coming in, wanting to get jobs. People living in the Walmart parking lots.”

Increased drilling means more gas was squandered, affecting the whole Williston Basin, which spans parts of Montana, the Dakotas, and Canada. Crusoe put a lot of money into the area for this reason.

Cavness said, “At points in not-that-distant history, the basin was flaring almost up to a fifth of the gas that was being produced there.”

According to Thorstenson, the amount of natural gas squandered is finally heading down. North Dakota's Department of Natural Resources indicated in a March report that 93 percent to 94 percent of natural gas is currently captured. In 2014, the commission set a target of 74 percent capture.

Drillers have traditionally used flaring to dispose of extra gas because it is less harmful to the environment than venting, which emits methane straight into the atmosphere and causes greenhouse effects that are 84 to 86 times stronger than CO2 over a 20-year period.

Because of wind and other factors, some methane escapes even when flaring is used.

According to Adam Ortolf, who runs business development in the United States for Upstream Data, a company producing and supplying portable mining solutions for oil and gas facilities, on-site bitcoin mining can have a big impact because 100 percent of the methane is combusted and none of it leaks or vents into the air.

He said, “Nobody will run it through a generator unless they can make money, because generators cost money to acquire and maintain.”

“So unless it’s economically sustainable, producers won’t internally combust the gas.” He added.

Crusoe's technologies are designed to make drilling profitable for drillers. The company transports its equipment onto the oil pad, allowing it to convert natural gas that would otherwise be squandered into energy, which is then used to run computing at the drill site.

Cavness stated “When we put it through our generator, we get up to 99.9% combustion of that methane”...“Not only are we using the otherwise wasted energy, we’re also significantly reducing methane emissions.”

Cavness believes that methane is the low-hanging fruit from the United Nations' recent global climate meeting in Glasgow, Scotland.

He said, “That’s the thing we want to solve as an energy industry”