A new feature is popping up at U.S. oil patches in the Rockies and Great Plains — trailers filled with computers and generators set up to mine Bitcoin at oil well sites.
Bitcoin mining rigs take advantage of natural gas found in formations while drilling for oil. Oil can be trucked out from remote destinations, but getting gas to market requires a pipeline. “Stranded” natural gas that cannot be moved to market gets flared or burned off, creating carbon dioxide emissions, or gets vented as methane into the atmosphere.
With less than 10 large-scale North American Bitcoin mining companies powered by stranded natural gas in 2022, the trend is still in its early stages.
Enter EnergyFunders, the first-ever online investment marketplace to offer direct access to oil and gas well sites and off-grid mobile Bitcoin mining units powered by natural gas. The company, headquartered on San Antonio’s Westside on South Frio Street, offers accredited investors a high-return, low-risk way to invest via direct fractional ownership in oil wells and Bitcoin mines.
Geologist and serial entrepreneur Laura Pommer first launched an oil and gas exploration company in 2018 called Century Natural Resources to drill for oil and gas in Wyoming’s Powder River Basin. After joining EnergyFunders as its CEO in April 2021, Pommer’s new mission is offering access to investment classes typically unavailable to the everyday investor.
EnergyFunders is a wholly-owned subsidiary of EnergyFunders Ventures, Inc., publicly traded and listed on the Toronto Venture Exchange (TSXV) under “EFV.” They employ 15 people, with most working remotely. In January, EnergyFunders opened its latest energy and Bitcoin funds.
The Wildcat Pioneer Fund will invest in unproven, undrilled oil and gas wells. The company will rely on Pommer’s geologist expertise and independent third-party analysts to assess the geological, engineering, and financial risks. With proper due diligence, EnergyFunders believes this approach can offset the more significant risks of wildcatting, high-risk exploratory drilling for oil or natural gas in unproven or fully exploited areas with no historical production records or have been utterly exhausted as a site for oil and gas output.
The Bitcoin Discovery Fund will be the first-of-its-kind offering, allowing investors to own a portion of an off-grid Bitcoin mine. Proceeds from the Bitcoin EnergyFunders mines will be distributed to investors each month in proportion to their holdings. Investors can choose to receive monthly payouts in either U.S. currency or Bitcoin.
EnergyFunders’ digital platform offers transparency that isn’t typically seen in oil and gas investing. Owning a mutual fund usually means investing in a collection of securities or companies. Transparency helps to show investors how much risk is involved with buying stocks, which supports making more informed investment decisions.
“Because it’s nearly impossible to invest in oil wells directly, we offer investors direct access to wellhead economics, which are better than what’s typically associated with oil and gas portfolios,” Pommer said.
Established in 2013, Energy Funders has been focused on making it more accessible for investors to incorporate their holdings into a broader portfolio, eliminating many of the fees associated with promoted oil deals. The problems with traditional oil and gas investments are the fees and expenses related to promoted oil deals.
In private markets, billions of capital go toward buying what often turns out to be overpriced acreage to flipping undeveloped acreage to a higher bidder down the road. Meanwhile, investor dollars pass through multiple organizational layers before ever getting to the wellhead, accruing fees at asset management and operator levels. By the time investors realize the actual value of what they own, the management fees have already been paid, often revealing lackluster returns after the fact.
The U.S. Senate passed a measure in 2021 to strengthen methane emission regulations to cut flaring, which seems to be having the intended impact. Last year, North Dakota and Wyoming passed laws giving tax breaks to oil producers providing gas to cryptocurrency miners that would otherwise have been flared.
“Direct energy investing can offer some of the most lucrative tax deductions in the U.S. tax code,” Pommer said. “EnergyFunders’ oil and gas investments allow eligible investors to capitalize on these unique tax savings potential.”
Pommer believes its Bitcoin mines will enjoy substantial cost advantages from using natural gas directly from the wellhead to power mobile Bitcoin mining units. Bitcoin mining offers the opportunity to accumulate bitcoin at below-market prices rather than buying a fraction of a Bitcoin.
“We are thrilled to be the only player in the market offering crowdsourced ownership of Bitcoin mines directly to consumers,” Pommer said. “Now investors can accumulate Bitcoin at below-market prices through their ownership in our Bitcoin mines.”
Plans for 2022 include raising $100 million for new funds that will focus on oil and gas development and more bitcoin mining funds.
As global financial volatility and interest rates increase, Pommer is confident EnergyFunders can provide a “simple, turnkey way for accredited investors to rely on our expert risk mitigation strategies to potentially beat market returns and protect themselves from inflation.”
The featured photo is of EnergyFunders CEO Laura Pommer, courtesy photo.