Union Jack Oil Starts Bitcoin Mining from Natural Gas

Shares of Union Jack Oil (LON: UJO), a British oil and gas company, rose nearly 20 per cent in pre-market trading after the announcement that it intends to monetise natural gas production through Bitcoin mining.

In a statement on 7 August, the company revealed that it will use gas from its West Newton site in East Yorkshire to generate electricity for cryptocurrency mining operations.

Monetising natural gas with Bitcoin

In addition to diversifying revenue sources, David Bramhill, executive chairman of Union Jack Oil, said the company's Bitcoin mining efforts could soon lead to a full-fledged treasury strategy in Bitcoin.

"Together with our joint venture partners, we are pleased to offer a positive update on the possible development of a gas monetisation and Bitcoin mining concept in West Newton. We continue to believe that this asset has significant value that could eventually deliver significant volumes of low-emission natural gas into the UK domestic market,' the statement read.

As part of the early stages of the plan, Union Jack, Rathlin Energy and joint venture partner Reabold Resources have signed a non-binding letter of intent (LOI) with 360 Energy, a Texas-based natural gas monetisation specialist. The agreement calls for collaboration to install gas-fired power generation facilities and Bitcoin mining hardware at the mining site.

According to the company, the gas to power the power generation hardware will come from the West Newton A and B wells. Once the gas reaches the on-site data centre, the generation facilities and mining rigs will begin operating with 360 Energy's In-Field Computing (IFC) system. This system will convert the raw gas into usable electricity, which will then be used to power the cryptocurrency mining machines.

In a statement, Bramhill suggested that this approach can be used to unlock value from the wells more quickly than originally planned. This is important because the company will not have to wait for the full development of the deposit, which can take years. If the model proves successful, Bramhill said the company could use it to monetise other discoveries in the vicinity.

Bitcoin mining difficulty nears all-time high

Union Jack's decision to enter the Bitcoin mining business comes at a time when mining difficulty is inching closer to a new all-time high. According to Cloverpool data, the difficulty is set to reach a new record high of more than 130 trillion on 9 August.

In recent months, the pace of growth in the difficulty of mining has slowed. Since the beginning of the year, difficulty has increased by only 16 per cent, according to Blockware. If this trend continues, 2025 will be the year with the slowest difficulty growth in Bitcoin's 15-year history.

Blockware attributed the slowdown to several factors, including obsolescence of mining hardware, infrastructure limitations, and the fact that some data centre operators are moving away from Bitcoin mining to focus on other areas, such as artificial intelligence. Blockware also suggested that reduced difficulty growth could be positive for already active miners, as it would mean less competition for the 450 BTC being mined each day.