Texas Bitcoin miner Giga partners with Argentina’s Phoenix Global

Argentina's Mendoza province is famous for its vineyards and full-bodied Malbec. But the popular wine region at the foot of the Andes is also home to the world's second-largest shale gas reserves, known as Muerta Muerta, which means “dead cow.”

For two Texas-based Bitcoin miners, oil deposits provide a dream resource: wasted energy.

Brent Whitehead and Matt Lowestrow, both Texas A&M University graduates, have been mining Bitcoin in East Texas oil fields since 2019. That's when they founded Giga Energy with the goal of extracting flared natural gas and turning it into electricity to operate a Bitcoin mine. , is notorious for being power-hungry.

On Tuesday, Giga announced its first expansion into Argentina, following expansions across the United States and into Shanghai. The company is partnering with Mendoza-based oil and gas company Phoenix Global Resources and IT services company Exa Tech to launch a 2-megawatt Bitcoin mine atop Vaca Muerta.

Giga's system places a shipping container full of thousands of Bitcoin miners in an oil well, diverts natural gas into a generator, and converts the gas into electricity that is used to power the miners. The process reduces CO2-equivalent emissions by about 63% compared to continuing to flare, or burn, unused gas, according to a study by Denver-based Crusoe Energy Systems. It also turns wasted energy into a valuable asset for oil producers.

“By recovering stranded natural gas to power modular data centers for energy-intensive computing, Giga will actively contribute to reducing global methane emissions,” Whitehead said in an interview with CNBC. I'm doing it,” he said. Whitehead comes from a long line of “wildcats,” a term used to describe people engaged in high-risk prospecting.

At the small pilot site in Argentina, Exa Tech is responsible for ground operations, Phoenix Global is supplying the gas and Giga is supplying the equipment.

Bitcoin mining is especially lucrative when there is a bull market for cryptocurrencies, and the current market conditions are particularly favorable for construction. Bitcoin has soared 170% in the past six months, reaching multiple all-time highs in recent days, driven in part by optimism surrounding the launch of a spot Bitcoin ETF in the United States.

This boom is helping push up the stock prices of publicly traded Bitcoin miners. In the last year, Riot Platform has more than quadrupled in value. CleanSpark skyrocketed more than 5x in 2023 and is up another 112% this year. Crypto mining soared over 600% last year and is set to increase by 27% in 2024.

Lohstroh told CNBC that Giga has generated more than $10 million in revenue so far this quarter. The company is not alone in seeing opportunity in Argentina, which ranks 12th on the list of world's top methane emitters, according to World Bank data.

Crusoe helps oil companies like ExxonMobil convert flared gas into useful resources, In June, we supported the startup of a Bitcoin mine in Vaca Muerta as part of our ongoing efforts to reduce the energy waste and environmental impact of natural gas flaring.

Giga's mines are intentionally starting small and are not yet aimed at making a profit. Before expanding their business, the company first wants to make sure they can successfully import all the necessary equipment. The mine has been in testing since December, and Lowestrow estimates that $200,000 to $250,000 worth of bitcoins have been mined at the site.

Giga estimates that the mine will reduce CO2 emissions by approximately 180,000 tonnes per year at upstream facilities. The site is also designed to sell surplus power to Argentina's power grid, both to generate revenue and to reduce operational redundancies.

In a country where residents have long faced economic uncertainty and wild currency fluctuations, it's a relief that Bitcoin isn't being sold hard.

Official government figures show annual inflation will reach 211% in 2023, the highest level in 32 years, further eroding the country's purchasing power. Currently, two out of five Argentines live in poverty.

Ethereum co-creator Vitalik Buterin previously told CNBC that there are far more use cases for cryptocurrencies in Argentina than in many other parts of the world, and that he has found coffee shops that accept Bitcoin and Ethereum. Ta.

”“When I visited Argentina at the end of 2021, a lot of people were using cryptocurrencies, a lot of people loved cryptocurrencies,” Buterin lamented, adding, “I was literally unrecognized in San Francisco. “I was more likely to be recognized on the streets of Buenos Aires than on the streets of Buenos Aires.”

Argentina's President Javier Millay told the World Economic Forum in January that “shock therapy” was the only way to deal with the serious crisis facing his country. One of his tactics was to devalue the country's currency by his 50% to control inflation. Milley, who took office in December, supports Bitcoin and has proposed dollarizing the economy, abolishing the central bank and privatizing the pension system.

“We started this before Milley took office,” Lowestrow said. “I think it's very interesting that we're all aligned and bringing this equipment online in this region. Because it has been done.”

Federico Blom, director of business development at Exa Tech, said Argentina has “basically banned imports” as a way to protect its currency. This could be a headwind for the expansion of Bitcoin mining operations.

Still, Blom said they've seen “a lot of support, a lot of hype, a lot of interest” in what they're offering.