Climate experts warn that repurposing waste gas is not a solution, but rather a Band-Aid applied to a gaping wound.

Chase Lochmiller and Cully Cavness, newly reunited prep school friends from Denver, travelled out to the snow-covered plains of Wyoming in January 2019 to bring a piece of computer culture to the American heartland. They linked up a prototype of their idea, a machine that harnesses "waste gas" from oil rigs to fuel cryptocurrency mining, trembling in -20F (-29C) temperatures.

Cryptocurrencies, particularly bitcoin, the most widely used decentralised digital currency, are known for their high carbon footprint (bitcoin mining alone consumes about half as much electricity in a year as all of the UK). As a result, Lochmiller and Cavness found themselves cooperating with oil firms to recycle a waste, predominantly methane, that is traditionally vented or burned off in flares.

Waste from a single bitcoin transaction is 'equivalent to trashing two iPhones'

"We flipped the switch and immediately watched all the bitcoin mining servers turn green, and you could see the flare visibly diminish," explained Lochmiller, a self-described "city boy" who had never set foot in an oilfield.

"It was almost like a Frankenstein moment: 'Oh my god, it's alive!'"

Their innovation is part of a small but growing wave of technology businesses that are approaching the oil and gas industry as a potential source of revenue for the bitcoin boom. Lochmiller and Cavness, who founded Crusoe Energy, see their solution as a marriage of two problems that may "solve" themselves: the waste of gas flaring, which adds to the climate disaster, and the growing demand for cheaper energy as cryptocurrency gains popularity.

However, climate experts warn that this is a "false solution" as long as oil and gas extraction continues. The world's foremost authority on climate science says that only a major reduction in glasshouse gas emissions would help escape a global catastrophe; simply finding new applications for "waste gas" will not address the critical need to reduce fossil fuel consumption. If anything, academics warn, oil firms may feel compelled to increase their drilling.

"At the end of the day, they're still burning natural gas," said Arvind Ravikumar, a methane expert in the University of Texas at Austin who called flare mitigation and related technology a "scam."

Lochmiller and Cavness, on the other hand, assert that their work enables the industry to produce oil in the most environmentally friendly manner possible, so purchasing time or "stretching the runway" for the energy transition.

Their company has attracted high-profile investors such as Bain and Winklevoss Capital, raising $125 million in April for their second round of investment. They intend to add 100 bitcoin mining data centres by early 2022, bringing the total to 65.

Crusoe's technique is dubbed "digital flare mitigation." They establish fleets of data centres adjacent to remote oil rigs in shipping container-like constructions. Oil producers are thus compensated for waste gas that they would not otherwise utilise because burning it is less expensive than transporting it to market. Crusoe can then use the waste to fuel on-site energy-intensive computing processes.

Because there is no centralised "bank" that holds cryptocurrency, the data centres consume vast amounts of energy. Rather than that, new coins are minted by solving complicated equations that take a great deal of computational power to verify. The currency is then recorded on a decentralised ledger known as the blockchain, which requires significant resources to maintain.

The new technology comes amid a "great mining migration" ongoing in the United States following China's September crypto mining ban. And with a revived global focus on reducing the highly potent glasshouse gas methane, which is the principal "waste gas" produced by flaring, the concept is especially fashionable.

Oil-loving regulators, political leaders, business associations, and financial services titans have taken notice. Commissioner Jim Wright of the Texas Railroad Commission, the state agency responsible for oil and gas regulation, told the Guardian that modular mitigation systems similar to Crusoe's are "very enticing." Senator Ted Cruz of Texas is also a fan.

Meanwhile, North Dakota legislators on both sides of the aisle enacted a bill this year that provides a tax credit to oil producers who use onsite flare mitigation. Crusoe, based in Williston, North Dakota - the Bakken shale's epicentre — worked directly with legislators to get the bill passed.

Paasha Mahdavi, a political science professor at the University of California, Santa Barbara who co-authored a 2020 article on methane mitigation methods, believes that new technology that prevent flaring at the source would appear to cut emissions.

However, he stated that in actuality, operations aimed at capturing previously flared or vented gas have resulted in an overall rise in gas production. After all, they generate new demand.

"It's like if you had a leaking gasoline pipeline and, rather than repairing it, you plugged in a Humvee next to the leak and left the engine running indefinitely with the A/C blasting," Mahdavi explained.

Cavness, the chief executive of Crusoe Energy who goes by the Twitter handle "Electron Cowboy," grew up fantasising about joining the family business. He'd secure an internship with Shell and follow in his father's and grandfather's footsteps by carving out a career in the oil and gas business.

Cavness eventually enrolled in Middlebury College, a prestigious liberal arts institution in Vermont known as the alma mater of the global climate campaign and 350.org founders, as well as the birthplace of the university fossil fuel divestment movement.

"The entire conversation was about climate," Cavness explained, saying that he felt forced to downplay his oil and gas heritage.

Cavness' job was disturbing his conscience after he fell down the climate rabbit hole at Middlebury and spent a year after graduation studying the "morality of energy." He'd been losing sleep over the unimaginable amount of gas being squandered by the sector. According to the International Energy Agency (IEA), 142 billion cubic metres of gas were flared in 2020 - enough energy to power 49 million homes.

When Cavness and Lochmiller reunited in 2018 during an 18-hour hiking trip in the Rocky Mountains, they devised a plan: Lochmiller, an MIT graduate based in San Francisco, had recently left a position as a partner at a cryptocurrency investment firm, while Cavness was with a separate oil and gas investment firm. Together, they would bring their respective worlds of bitcoin and big oil together.

Unsurprisingly, the sector finds the bitcoin flaring option extremely enticing. Crusoe's data centres are built at no cost to producers, who gain money on gas they would not have earned otherwise.

Cavness noted earlier this year at Hart Energy's Developing Unconventional Gas virtual conference for the Bakken and Rockies regions, "that it's practically a free gift to the oil firm."

Cavness and Lochmiller assert that they are at the cutting edge of climate research. However, detractors caution that their company fits squarely inside Silicon Valley's techno-optimistic milieu, where the pursuit of novel solutions can blind even the most climate-savvy entrepreneurs.

Climate experts caution that Crusoe's view, as well as his proposed "cure," are based on a skewed interpretation of the facts. Even the most pessimistic projections indicate that oil and gas extraction must cease immediately to avoid the worst effects of the climate crisis, including avoidable human deaths. Despite Crusoe's climate-conscious branding, Lochmiller affirmed that the company continues to promote exploration and drilling.

Cavness believes that fossil fuels will continue to exist even after his now-infant daughter gets old or reaches the end of her life. If the oil business is "necessary to sustain life on the globe," Cavness argues, why not drill in the most environmentally friendly manner possible?

While the Crusoe executives claim their digital flare migration technology is providing time for the development of new renewable energy sources, some think their plan is more akin to bandaging a bleeding wound. Nine out of ten climate experts who responded to requests for comment, including leading methane researchers, political scientists, and climate analysts, stated that expanding oil and gas exploration and new drilling – even if equipped with methane mitigation technologies – is incompatible with a future in which global warming is limited in accordance with global climate pledges.

The lone dissenting voice in this group, a scholar and co-founder of a glasshouse gas monitoring company, stated that continuing exploration and drilling can "probably" be done in an environmentally friendly manner.

It's as if you plugged a Humvee next to the leak and left it running indefinitely with the A/C blasting.

Climate specialists are more divided on the issue of allowing cryptocurrency companies to consume renewable energy. Three out of ten climate scientists contacted by the Guardian expressed interest in one aspect of Crusoe's approach.

Similar to waste gas operations, the company is developing a network of data centres that will be powered by wind farms and will take advantage of excess energy created when demand exceeds supply. According to the business, Crusoe's capacity to pay for that energy will enable renewable developers to underwrite additional fleets.

However, not everyone is optimistic. Heather Price, an atmospheric chemist and professor at North Seattle College, is concerned that flare mitigation technology is being used as a greenwashing method to portray fossil fuels in a favourable light.

"I have no faith that this usage of flares for cryptography will be a one-time occurrence," she stated. "Neither the fossil fuel business nor cryptocurrency companies deserve a 'cookie' for this move."

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