Stranded Gas & The Global Limits of Stone Ridge's Bitcoin Mining Success

From Argentina to Oman and the attempts to replicate America's most profitable mining innovation

Aug 01, 2025

Part 1 discussed the potential acquisition of Conoco Assets by Stone Ridge Energy. Part 2 dug deeper into the synergies of stranded natural gas and bitcoin mining business of Stone Ridge Energy. This post discusses how the implementation of that technology can be replicated overseas. Let’s recap.

Stone Ridge Energy, through its affiliate NYDIG, captures stranded natural gas, which is gas uneconomical to transport due to remote locations or lack of infrastructure, from its portfolio of over 17,000 natural gas wells, preventing wasteful flaring. To do so, it leverages proprietary DFM technology, acquired via Crusoe Energy’s operations in March 2025, to convert stranded gas into electricity on-site using modular power generation units, with a capacity of over 270 MW across 20+ sites in 7 U.S. states and Argentina.

The generated electricity powers modular data centers for bitcoin mining, an energy-intensive process, producing approximately 16.2 BTC daily, assuming 9 EH/s hashrate, 1.8% of a 500 EH/s network, and 900 BTC mined daily network-wide. At a bitcoin price of $120,000, daily revenue is 16.2 BTC × $120,000 = $1.944M, translating to annual revenue of about $709.56M, with potential for higher earnings if operations scale.

By using stranded gas instead of burning it like on Figure 1, which has no alternative market value, Stone Ridge achieves near-zero electricity costs, a significant advantage over traditional miners where electricity accounts for 50-70% of expenses, boosting profit margins. With over 10 GW of natural gas production capacity, Stone Ridge can expand DFM across its wells, potentially increasing mining capacity, say to 540 MW and yielding $2.13B annually at $120,000 per $BTC, amplifying revenue.

Figure 1. Gas Flaring and the bitcoins that will not be mined

Stone Ridge Energy’s success in monetizing stranded natural gas for bitcoin mining, as outlined in Part 1, leverages their vast portfolio of over 17,000 wells, proprietary Digital Flare Mitigation (DFM) technology, and financial expertise through NYDIG. While this model is profitable and environmentally beneficial, scaling it beyond their operations faces significant challenges. This section explores the limitations of replicating Stone Ridge’s approach and highlights overseas examples of similar efforts, addressing whether this strategy can be broadly adopted globally.

Limitations of Scaling Stranded Gas-to-Bitcoin Mining

Access to Stranded Gas at Scale. - It sounds like an oxymoron as Stone Ridge’s 17,000+ wells and 10 GW of production capacity provide a unique abundance of stranded gas. Most oil and gas companies lack comparable portfolios, as stranded gas is typically found in smaller, isolated volumes, making large-scale mining uneconomical without significant aggregation.

Technology Deployment. - Deploying DFM-like systems requires substantial upfront investment in modular data centers, gas-to-electricity generators, and mining hardware like Stone Ridge’s $270M for 270 MW of Crusoe’s equipment. Smaller firms may struggle to finance these costs. Plus, operating and maintaining gas generators and mining rigs in remote environments demands specialized expertise, which Stone Ridge accesses through NYDIG and Crusoe’s 135-person team. Even the know-how becomes paramount.

Regulatory Hurdles. - Regulations on gas flaring vary widely. In regions with lax rules, there’s less incentive to invest in gas capture for mining, reducing adoption. Critics argue that using stranded gas for mining incentivizes continued fossil fuel extraction, potentially conflicting with climate goals and attracting regulatory scrutiny, as noted by the United Nations University. In the U.S., states like New York have imposed moratoriums on fossil fuel-based mining, while others like Texas offer tax breaks, creating inconsistent regulatory landscapes.

Bitcoin Itself. - Mining profitability depends heavily on bitcoin prices, currently ~$120,000. A price drop as modeled on our previous post could render operations unviable, especially for companies without Stone Ridge’s diversified revenue streams to buffer losses. Even oil and gas market fluctuations add further risk, as declining gas volumes from maturing wells require miners to relocate frequently, increasing costs.

Competition and Market Saturation. - As more companies like Giga Energy or EZ Blockchain enter this space, competition for stranded gas and mining profits intensifies, potentially squeezing margins for new entrants without Stone Ridge’s scale or first-mover advantage. The presence of major oil companies like ExxonMobil and ConocoPhillips are already partnering with miners, reducing available stranded gas for smaller players.

Overseas Examples of Stranded Gas-to-Bitcoin Mining

Despite these limitations, several international efforts mirror Stone Ridge’s model, demonstrating its potential in specific contexts.

Table 1. - Overseas examples replicating what Stone Ridge Energy is doing in The Americas

Final Thoughts

How did we end up here? From analyzing Stone Ridge’s potential acquisition of Conoco’s Oklahoma assets to its stranded gas-to-bitcoin mining model, curiosity really pays off. Stone Ridge Energy bitcoin mining business faces significant barriers to replication due to limited access to large-scale stranded gas, high capital and technological requirements, regulatory inconsistencies, bitcoin price risks, competition, and logistical complexities.
Overseas examples like YPF Luz and Tecpetrol in Argentina, ExxonMobil’s global plans, Crusoe in Oman, and emerging Russian efforts show the model’s potential in gas-rich regions with supportive policies. However, these initiatives often lack Stone Ridge’s scale, integration, and financial resilience, underscoring their exceptional position. The global rise of this practice hints at a transformative trend, but can others truly match Stone Ridge’s alchemy or will unique constraints keep it a rare success and prove the saying that ,,the exception of the rule only confirms the rule”? Time will tell.

On To The Next One

FVR

References

Fabian Vera

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