*

MARA to fuel 25 megawatts of mining operations with excess

natural gas

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CEO Fred Thiel says AI demand makes it hard for bitcoin

miners

to compete for electricity

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MARA's process captures gas that would have been flared,

generating carbon credits

(Adds details about partnership company in paragraph 4,

shortens headline)

By Laila Kearney

NEW YORK, Oct 8 (Reuters) - MARA Holdings Inc. ( MARA ),

the world's largest publicly traded bitcoin miner, has begun

producing power in the U.S. shale patch as part of a pilot

project to fuel 25 megawatts of its mining operations with

excess natural gas, the company told Reuters on Tuesday.

The move comes as intensifying competition for electricity

between Big Tech's AI data centers has led the crypto industry,

which is among the country's largest single-source power

consumers, to shift business strategies and either market to AI

or find ways around the power fight.

"The AI guys are prepared to pay almost any price for energy

because of their demand, so it makes it very hard for bitcoin

miners to be able to compete," said MARA Chief Executive Officer

Fred Thiel.

Bringing cryptomining to the raw power supply allows MARA to

circumvent some of the competition, Thiel said, and avoid

increasingly expensive power prices from regional grids. This is

also the first time MARA will own its power generation, which is

rare for any miner. The project is in partnership with NGON

Solutions, which focuses on capturing and converting the natural

gas.

Energy-intensive mining for cryptocurrencies like bitcoin

has come under public scrutiny in recent years for its carbon

footprint, leading to restrictions on the businesses in places

like New York and prompting a federal proposal to tax the

industry's power use.

"We want to avoid putting additional load on the grid,"

Thiel said. Most U.S. cryptomining, which federal agencies

estimate account for as much as 2.3% of total U.S. electricity

consumption, buy power from the grid to run their mining rigs.

Generating power for cryptomining in areas where it would be

logistically unfeasible for AI data centers, including remote

shale basins and wind farms, would also provide a financial

benefit for energy producers lacking pipelines or transmission

lines needed to sell their supplies into established markets,

Thiel said.

"We can bring energy markets to where the energy is," Thiel

said of MARA, which has set up mining operations in wind farms

to capture cheap excess power.

As part of the pilot, which was kicked off last month but

not previously reported, MARA purchases natural gas at the

wellhead from independent oil producers in Texas and North

Dakota. It converts the feedstock, which likely would have

otherwise been burned off in a process known as flaring, into

power to run its nearby miniature data centers.

Shale producers in North Dakota and Texas frequently flare

natural gas that is released as a byproduct of drilling for

crude oil.

Because MARA's process captures gas that was slated to be

burned or vented into the atmosphere as methane, a powerful

global warming gas, MARA will also be able to generate carbon

credits, said the company's director of ESG Brad Tomm.

MARA's systems are mobile, with small power generators that

can be hitched to the back of a pickup truck and data centers in

container vessels that can be moved around by a semi-trailer.

Several smaller cryptominers have similarly run mobile

operations directly from the shale basins, but this is the first

time a publicly-traded miner is believed to have done so.

Initially, the sites will be used exclusively for mining,

but they have the potential to be replicated for high

performance computing, which is required for technology like

generative AI. Whether that shift to HPC happens will depend

partly on the technology industry's ability to monetize

generative artificial intelligence, Thiel said.