Shell Bets on BTC Mining with New BTC Mining Initiative
December 19, 2022

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Shell, the worldwide oil giant, is now making a big push into the Bitcoin (BTC) mining industry. Based on several recent announcements, Shell is betting that Bitcoin mining will make a profitable vertical to target.

Shell will start offering its lubricant and cooling solutions to BTC miners. Additionally, Shell has signed a two-year sponsorship agreement for the Miami Beach Bitcoin conference and Bitcoin Magazine.

This is a major legitimizing factor for the BTC network, as Shell is one of the largest oil and gas companies in the world. Both of these sponsorships are part of a plan to bring BTC mining to the foreground and make Shell a thought leader in the space.

Improving the Efficiency of Bitcoin Mining

The competitive advantage Shell offers potential mining clients is similar to what they’re already providing data centers. Coolant improves the efficiency of these facilities and saves costs. Part of the due diligence Shell performed before entering this new vertical was looking at how essential heat recovery is to the operations.

Shell Lubricants, also known as Pennzoil-Quaker State Company, uses its gas-to-liquids (GTL) technology to produce lubricants like the Shell Immersion Cooling Fluid S5 X to assist with liquid cooling of data servers. These data centers are estimated to consume about 1% of global energy.

The US immersion cooling lead at Shell Lubricants, Darin Gonzalez, says the cooling solutions lower energy costs using “high cooling efficiency, flow behavior, and excellent thermodynamic properties.” Experts at Shell believe their cooling solutions have the potential to decrease the costs and carbon emissions associated with Bitcoin by up to 48%.

Shell entering the Bitcoin mining space is a big win for Bitcoin. Both Bitcoin Magazine and Bitcoin Miami Conference are the gems of the hyperbitcoinization movement. The sponsorship agreement will have Shell attending conferences and presenting on different methods that can be used to improve Bitcoin mining with their coolants.

Shell has clarified that at this time, Shell Lubricants is not invested in any cryptocurrency, and this agreement is not a partnership, but a sponsorship. Bitcoin Magazine CEO David Bailey still sees this as a major advancement for the space, and says “We’re confident they will be welcomed with open arms at the Bitcoin Conference.”

A Route into Renewable Energies

Shell’s goals with Bitcoin mining can be split into three potential benefits:

  1. Monetize a new and exciting vertical.
  2. Give customers alternatives that reduce their carbon footprint.
  3. Build more connections with renewable energy producers.

The first and second may seem obvious, but the third aspect may need more context. In the current economic climate, oil and gas are in short supply and countries are reluctant to let Bitcoin miners burn it on what many politicians still denigrate as a Ponzi scheme.

This is leading to restrictions on what sources of energy are used on Bitcoin mining. Some countries are already restricting Bitcoin miners to renewable energy uses. In fact, Kazakhstan recently announced that miners can only purchase electricity from the public grid if there is a surplus available. It is also now expected that when Europe does finally permit or approve Bitcoin mining, it will be on the condition that only renewable energy is used.

Additionally, Bitcoin mining is a novel way to finance the expansion of renewable energy networks. In the initial stages of building out a renewable energy grid for a region or country, there is often limited local demand for high-priced energy. Because of this, it takes longer to scale the renewable network and bring down the cost per unit of electricity.

With access to the Bitcoin network, there is already infinite energy demand. As long as Bitcoin can be mined for a lower cost than the mining rewards, miners will be happy to buy energy from burgeoning energy networks. In this way, Shell will be able to help the development of renewable energy networks, which is a positive for the world and for their PR.

It has also been shown that Bitcoin mining could provide a solution for leaked methane, with the potential to decrease CO2 emissions by 2045.

This is Just the Beginning

Of course, this is just the initial foray oil and gas companies are making into the Bitcoin mining space. What starts with “selling shovels” to Bitcoin miners could end up with Shell operating mining rigs themselves and having a competitive advantage with first access to cooling technology that lowers the per-Bitcoin energy cost.

Additionally, Shell is not the only oil giant looking at Bitcoin mining as a potential profit center. Duke Energy Corporation has begun to serve Bitcoin miners, and as the second-largest energy company in the United States, this is a sign of where the industry is headed.

Duke Energy is conducting demand response programs that help them isolate miners and serve them differently based on the fluctuating demand and price of energy at certain times of the day or year. Demand response helps the grid by bringing flexibility to the network. Bitcoin miners are unique in that they can run 24/7 at the same rate, and then be switched off in times of high demand.

Secure Digital Markets Supports This Opportunity

Shell viewing the heat exchange process for ASIC mining as an opportunity for partnerships and cross-selling of more established industries is a great sign for Bitcoin. Even with the price so low right now, other companies like Exxon Mobil, Equinor, La Geo, and Conocophillips are also exploring the space.

It’s clear that the opportunity for miners has far from disappeared. There is just more of a push to lower costs and bolster profitability, which is where Shell has the most potential to do good.

Miners are also bolstering profitability by purchasing more mining rigs in this downturn. Secure Digital Markets offers lending services to miners at competitive rates. Our lending partner is a large UK-based, fully regulated family office with robust risk controls. Recently, we executed a deal where we lent $1.5M for twelve months at a rate of 6.5% to a client, and were able to facilitate the loan in a matter of days.

Interested in learning how SDM can help during these volatile times? Book a free consultation today.

Secure Digital Markets (SDM) is a digital asset brokerage operating on a global scale providing OTC cryptocurrency spot trading and crypto-backed lending services to institutional, high net-worth, and corporate clients across 60+ international markets. We offer a custom pathway to digital asset liquidity and off-exchange transactions. SDM streamlines the acquisition, storage, and liquidation of digital assets in a secure and compliant manner.

Our clients use our services to unlock liquidity and take advantage of current opportunities in the market. Visit our website today to learn more about our services and how SDM can help you to maximize your digital assets.

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