Amidst the recent downtrend of gas prices, a Canadian oil and gas company decided to use its electricity generated from its own gas stations to power a Bitcoin mining facility instead of selling the natural resource in a bear market.

According to Globe Newswire, Iron Bridge Resources (IBR), a Canadian oil and gas company (IBR) is planning to enter the Bitcoin mining business by using gas to power for the operation. The company plans to launch its own subsidiary cryptocurrency mining and host operation called Iron Chain Technology (ICT). The new company will manage and operate the Bitcoin mining facilities located in Elmworth, Alberta at Canadian oil and gas field sites, using clean-burning natural gas to generate energy to feed to power-intensive cryptocurrency mining hardware.

Gas Prices Going Down

In recent months, Alberta’s benchmark AECO natural gas prices have been in free-fall generating substantial losses. AECO gas is worth around $1.43 per thousand cubic feet on a 12-month futures contract, and Iron Bridge often pays up to $1.30 per thousand cubic feet in processing and transportation fees. Iron Bridge CEO Rob Colcleugh revealed:

“It was driving me insane to be handing off – from pretty much October onwards – our gas for next to nothing.”

Rob Colcleugh

By burning the gas to power a bitcoin mining facility, the company could end up earning a lot more than selling the natural resource close to nothing. According to estimates by GMP FirstEnergy vice-chairman and co-head of energy sales and trading Trent Boehm, with a mining operation powered with gas, Iron Bridge Resources could earn up to $49 per thousand cubic feet. This would account for more than 30 times the price it currently receives.

Colcleugh said:

“With natural gas pipeline infrastructure constraints representing persistent pricing challenges, I support our management team’s efforts to find all means possible to improve the value received from our production streams. The economics are very variable based on the coins but the numbers suggest there’s an awful lot of room in here for prices to collapse and still have vastly better returns.”

Rob Colcleugh

Project Costs And Returns

The company is capable of producing enough natural gas to power a 45 MW cryptocurrency mining facility but it is already expanding its capabilities and it hopes to significantly increase its gas production very soon. Nevertheless, the costs of mining hardware and the risk entailed with producing such volatile assets leaves Iron Bridge in an exposed position. So, the project will have a relatively modest initial investment, which will be supported by the company’s ability to leverage its excess power generation and existing infrastructure.

The company is looking to reduce its costs by avoiding mining equipment with high levels of demand and opt for other options. The company already mines Bitcoin but wants to keep an eye out for other types of cryptocurrency that might be more profitable. Right after the company announcement, Iron Bridge shares had a faint pump of around 16% on the Toronto Stock Exchange, falling back once again to its previous levels. However, if the company succeeds in its mining venture, the price of the IBR shares could increase further.

Iron Bridge Resources might be the first oil and gas company using cryptocurrency mining as a clever workaround to protect against the current market downtrend. Judging by the way the gas market is playing out Iron Bridge will likely be leading the industries Vanguard into the lucrative world of cryptocurrency mining.