Oil and gas company Allied Energy has signed a definitive agreement with Enerhash USA and River Energy Group to develop flare gas-powered crypto mines.

The initial development for this project will be at Allied’s Thiel Well in Texas. This will include a 1MW site in its first phase, to grow to 3MW by the end of 2023. According to the companies, the Thiel Well site will serve as a ‘base model’ for the planned 20MW flare-gas project across Texas. In the MoU, the companies set aspirations for mining capacity as high as 100MW.

Enerhash is an energy technology and digital infrastructure development company. The company currently offers a modular mining solution in a 270 square feet (25 sqm) container, known as a Databox, each of which provides 0.41MW capacity.

Allied Energy reworks existing oil and gas wells to increase their efficiency using hydraulic fracturing (fracking) among other techniques. The company entered into a joint venture with River Energy Group, known as ‘Allied-River,’ in September 2022. According to the companies, this venture was for the purpose of ‘locating, securing and allocating stranded natural gas and flared natural gas resources for development into resilient and dependable stand-alone microgrids.’

The joint venture and Enerhash previously had a Memorandum of Understanding (MoU) to work together on the feasibility of developing solutions for stranded and flare gas resources to power Bitcoin mines and High-Performance Computing (HPC) data centers. The recently announced definitive agreement is based on the MoU, with only a few minor changes.

"We could not be more excited to grow this relationship with Enerhash as they are a proven global leader in this industry. We are extremely confident that we have the right partners to succeed in this sector and bring value to our shareholders,” said Allied CEO George Monteith.

“Our shared goal is to have the Thiel Well site operational by late Q1 or early Q2 of this year and then expand based on what we learn from our experiences and data collection. As stated previously, this 1MW project is the first phase of a 20MW development project. This is the goal that all parties are committed to achieving."

Allied acquired the Thiel Well site in July 2022. At the time, the site was not operating due to a leak in the flow line and high repair costs.

Flare-gas power is often touted as a more sustainable method of power generation as it puts wasted natural gas resources to use. Burning gas in a generator is supposedly more efficient and releases less unburnt methane. This being said, the method increases the profitability of fossil fuel extraction, a fundamentally un-renewable power source.