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Winklevoss-backed flare-powered Bitcoin miner Crusoe Energy raises $505M

Crusoe Energy Systems Founders
Image credits: Crusoe Energy Systems

Crusoe Energy Systems, the startup turning greenhouse gas emissions from oil wells into crypto has landed $505M in an effort to support the scaling of its digital flare mitigation model. The funding was in form of $155M in credit facilities from SVB Capital, Generate Capital and Sparkfund as well as $350M in equity financing led by G2 Venture Partners.

Additional participants in the equity financing represented tech, energy, climate, and crypto sectors, including returning investors Valor Equity Partners, Lowercarbon Capital, Winklevoss Capital and Polychain Capital, just to mention a few. New investors included Robert Downey Jr.’s FootPrint Coalition Ventures, Inclusive Capital Partners and Castle Island Ventures among others.

Mining Bitcoin with gas flares

Crusoe Energy is on a mission to help the oil industry reduce the routine flaring of natural gas with a solution that not only benefits the environment & local communities but also the energy producers. The company is building modular data centres and installing them at oil well sites, using the natural gas from the wells to power the servers mining Bitcoin.

Remote oil wells aren’t often close to natural gas pipelines, consequently lacking the ability to sell the gas wells produce. Oil miners resort to burning it off with a flare at the well site. Since Bitcoin mining operations consume large amounts of electricity. Crusoe Energy generates the digital currency from electricity derived from natural gas that otherwise would become a climate-damaging agent.

Crusoe pays well owners for the natural gas, providing them with a new revenue stream. Crusoe Energy can also strike joint ventures to share the Bitcoin mining proceeds. This setup is being touted as a win-win situation. The miners use the excess natural gas, reducing methane emissions in the process while generating a profit.

Founded in 2018 by Chase Lochmiller and Cully Cavness, the Colorado-based startup has grown to currently operating 86 Digital Flare Mitigation data centres which have prevented an estimated 2.5B cubic feet of flaring, achieving up to 99.89% elimination of methane emissions.  The Company’s already deployed fleet of flare-eliminating data centres bears the capacity to reduce CO2 equivalent emissions estimated at 650,000 metric tons per year. This is comparable to removing approximately 140,000 cars from the road.

Some of Crusoe’s customers include Devon Energy (DVN), Kraken Oil & Gas, Canadian oil firm Enerplus (ERF). Importantly, Crusoe is reportedly working on a pilot project with Exxon to use flared gas at the energy titan’s North Dakota oil wells to power bitcoin mining operations. Ben Kortlang, a Partner at G2 Venture Partners commented, “Eliminating methane emissions from flaring is an immediately actionable and impactful step toward mitigating climate change.”

What will the funding be used for?

The funding will empower Crusoe to deploy large scale Bitcoin mining and cloud computing infrastructure without compromising its excellent balance sheet strength and credit quality. Additionally, it will propel the expansion of Digital Flare Mitigation across the US and worldwide.

The cash infusion will accelerate the launch of CrusoeCloud, Crusoe’s High-Performance Computing (HPC) cloud powered by carbon & methane reducing energy sources with market-leading pricing. Crusoe will also attract top-tier talent for many open roles as it scales its team from 157 employees today to more than an estimated 250 by year-end 2022.

Following this financing, G2VP will join Crusoe’s Board of Directors alongside Valor Equity Partners, Bain Capital Ventures and KCK Group. G2VP’s Ben Kortlang added, “This capital will enable Crusoe to deploy Digital Flare Mitigation at a greater scale, to use its solution to accelerate renewable energy deployment, and to continue innovating its industry-leading technology.”

“We are proud to partner with G2 Venture Partners. Their expertise working with high-growth companies in the energy, digital and climate technologies makes them a perfect fit for the next leg of Crusoe’s journey,” remarked Chase Lochmiller, co-founder and CEO of Crusoe Energy Systems. “The capital provided in this Series C financing unlocks Crusoe’s ability to execute on key elements of our vision, specifically it enables us to expand and diversify our energy sources, computing workloads and vertical integration.”

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