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Flared-Gas Bitcoin Miner Crusoe Energy Raises $350M Series C

·4-min read

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Crusoe Energy, the company that pioneered bitcoin (BTC) mining by using wasted natural gas as a power source, raised $505 million in a new funding round to expand its operations throughout the U.S. and internationally.

The Denver-based miner raised $350 million in a Series C equity offering led by climate technology venture capital firm G2 Venture Partners, according to a statement. Crusoe also closed credit facilities, expandable to up to $155 million, with SVB Capital, Sparkfund and Generate Capital.

“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,” said Chase Lochmiller, CEO and co-founder of Crusoe Energy.

The company will use the new funds to expand its “Digital Flare Mitigation” technology across the U.S. and internationally, as well as launch a new cloud computing platform, called CrusoeCloud, where energy-intensive High-Performance Computing (HPC) systems will be powered by flare gas and renewable energy sources. CrusoeCloud will be launched publicly later this year, Lochmiller said.

Crusoe, which recently was recognized for its “innovative” solution to generating energy by the World Bank’s Global Gas Flaring Reduction Initiative report, has several mobile sites across the U.S.

Crusoe’s customers include Devon Energy (DVN), Kraken Oil & Gas, Canadian oil firm Enerplus (ERF) and others. Notably, Crusoe is reportedly working on a pilot project with Exxon (XOM) to use flared gas at the energy giant’s North Dakota oil wells to power bitcoin mining operations.

In the flaring process, excess natural gas is burned off into the atmosphere as part of oil drilling operations; it has become standard industry practice because of the lack of transportation infrastructure. The process is under environmental scrutiny, however, and U.S. President Joe Biden has pledged to cut methane emissions from oil and gas operations.

ESG push

Using flared gas to mine digital assets has emerged as a popular trend among both the crypto mining and energy industries.

The process helps energy companies reduce their flaring footprint, as a plan to reach net-zero emissions by 2050 laid out by the International Energy Agency (IEA) would require all non-emergency flaring to be eliminated globally by 2030. Meanwhile, crypto miners and data centers, which use tremendous amounts of energy, are able to source cheap and sustainable energy for their operations.

“If you’re utilizing energy that’s going to just go into waste anyway, you might as well use it,” Valkyrie Chief Investment Officer Steven McClurg told CoinDesk. Adding that he is “a big fan” of using flared natural gas, when asked if this source of energy is among the best sustainable energy used by miners.

Valkyrie launched a bitcoin miners exchange-traded fund earlier this year, which invests 80% of its net assets in miners that derive a minimum of 50% of their profit from bitcoin mining and primarily use renewable energy.

‘Clear leader’

The funding comes at a time when capital markets for crypto miners have somewhat dried up and miners are getting creative in raising capital for their growth, including leveraging their existing mining rigs and mined bitcoins to secure debt.

“This capital will enable Crusoe to deploy Digital Flare Mitigation at greater scale, to use its solution to accelerate renewable energy deployment, and to continue innovating its industry-leading technology," said Ben Kortlang, partner at G2 Venture. “After a deep dive into flare mitigation and modular data center technologies, we concluded that Crusoe is the clear leader in scale, operational excellence, talent, vision and proven commitment to environmental standards.”

Read more: Bitcoin Miner Crusoe Mostly Not Affected by North Dakota Oil Site Explosion

Crusoe raised $128 million in Series B financing in April last year, led by Valor Equity Partners.

The new raise would be among one of the largest funding rounds for a privately held crypto mining company. In February, Compute North, a provider of sustainable infrastructure for cryptocurrency mining, closed a $385 million round that includes an $85 million Series C fundraise and $300 million debt financing. Another private miner, GEM Mining raised $200 million in institutional capital in December.

Meanwhile, among publicly traded miners, Riot Blockchain (RIOT) filed a prospectus in April for the ongoing sale of up to $500 million in shares, otherwise known as an “at-the-market” (ATM) offering.

A laundry list of investors joined Crusoe’s Series C.

Returning investors include Valor Equity Partners, Polychain Capital, Bain Capital Ventures, Winklevoss Capital and more.

Meanwhile, new investors include Inclusive Capital Partners, Tao Capital, Castle Island Ventures and actor Robert Downey Jr.’s FootPrint Coalition Ventures, among others.