One of the joint venture partners in the West Newton site, said ‘regulatory uncertainty’ had hampered progress
Plans to put a Bitcoin mining operation at a Holderness gas drilling site are being considered by the business partners behind ambitions to expand production there. Reabold Resources – the investment company behind the West Newton gas site – and Union Jack Oil say accumulating the cryptocurrency could help them open up more wells at the location, which has faced criticism from environmental campaigners.
The partners have joined forces with Texas company 360 Energy, which specialises in monetising oil and gas drilling sites by introducing generators, data centres and Bitcoin mining servers. Reabold says the move could help generate cashflow to support production and that comes after its joint venture company – Rathlin Energy – last year said it required more funding to meet commitments under its licence to explore and drill in the Holderness area.
Rathlin is looking at putting gas-powered generators and crypto mining equipment – which requires huge amounts of energy – at the West Newton A and West Newton B sites. The kit would be fuelled by natural gas extracted by existing wells at those sites.
A letter of intent (LOI) has been signed with 360 Energy paving the way for the US firm to work with Rathlin on the scope and designs for the project. Pending planning approvals, 360 will then help Rathlin set up the “in-field computing” technology which converts natural gas into electricity on-site.
Reabold thinks the West Newton site is worth an estimated $179m (£133m) if it is fully developed. They say Rathlin has estimated the Bitcoin mining “could deliver very attractive returns”.
Sachin Oza, co-CEO of Reabold Resources, said: “We are delighted to announce this initial step as an additional element of value creation from the West Newton field. Generating early revenue from the existing well stock also moves the West Newton project further forward in unlocking the full value of this significant natural gas resource.
“We believe that the creation and accumulation of new Bitcoin through mining operations offers a significantly enhanced, sustainable return, and one which is superior to simple cash purchases and accumulation of Bitcoin on the balance sheet, popularly referred to as a Bitcoin treasury strategy. The accumulation of mined Bitcoin, taking advantage of Rathlin’s access to extremely low cost energy, is both a precursor and supplement to the unlocking of the substantial low-cost natural gas at West Newton, which we believe will play an invaluable role in UK energy security in the years ahead.
“In addition, the UK government’s AI Opportunities Action Plan, announced in January this year, set out new measures that will create dedicated AI Growth Zones. We believe that AI/data centres will be a key growth area of the UK economy in the coming years, and that West Newton’s onshore setting and low operating costs also render it ideal for powering co-located data centres at the existing well sites from domestically produced gas.”
David Bramhill, executive chairman of Union Jack, said: “Alongside our joint venture partners, we are delighted to offer a positive update on the possible development of a gas monetisation and Bitcoin mining concept at West Newton. We continue to believe that this asset holds material value which could eventually deliver significant volumes of onshore low-carbon sales gas into the UK’s important domestic natural gas market.
“West Newton is estimated to contain gross recoverable 2C gas resources of almost 200 billion cubic feet, according to an independent assessment undertaken by RPS in 2022. Regulatory uncertainty has unduly hampered progress and planning challenges have tarnished somewhat the perception of a number of commercially attractive onshore projects, such as West Newton, however, we are seeing some “green shoots” appearing on the horizon in this respect.
“Onshore developers and producers have been forced to ‘think outside the box’ in order to make progress and deliver growth. The board of Union Jack believes this proposed concept to produce Bitcoin through mining operations is innovative, offers strong scope for a sustainable return and could lead to the company introducing a new Bitcoin Treasury strategy, on success.”