Investors interested in buying auctioned blocks can use the US dollar-pegged stablecoin USDC to make contributions and pledges. Since there is no precedent for placing avoided oil and gas exploration credits, that method may cause companies to face cash flow problems.
Cryptocurrency companies can bid for areas of oil and gas exploration in the Democratic Republic of the Congo.
Western governments seeking to support additional oil production request the African country to raise its production, leading to that auction.
Didier Budimbu, the Hydrocarbons Minister, said the auction of exploration areas could allow them to build schools, offices, and roads. He explained that the priority of the Central African country was to exploit its natural resources to benefit its people.
The Congo focuses its oil and gas operations on exploration blocks, producing around 25,000 barrels daily.
The visit of US President Joe Biden to Saudi Arabia due to the Russia-Ukraine war led the Congo to produce a greater output. Corruption and environmental concerns have prevented the African nation from making further exploration.
However, the hydrocarbons minister says the country will continue auctioning off ecologically significant parcels of land in Virunga National Park.
A DAO May Allow Companies to Bid for an Exploration Block
The auction targets oil and natural gas leading companies, but Budimbu said they would accept bids from carbon credit and cryptocurrency companies.
Adam Neumann, the co-founder of Flowcarbon, is among the companies interested in the project. He said they aim to issue tokens to companies buying carbon credits, which can burn when they withdraw them. In July, they announced a delay in their launch due to the ongoing market conditions.
The developers issue carbon credits to leading companies seeking to reduce carbon emissions. They say that a carbon credit means a commitment that they will remove or prevent one ton of carbon from polluting the environment.
The block auction of the Congo has led Flowcarbon to find staff and resources to run a DAO to buy an auctioned block. Although they hope to raise USD 50 million, they have only raised just USD 2.57 million with USD 74,000 worth of pledges. The investors used the US dollar-pegged stablecoin USDC to make contributions and pledges.
There Might Be Liquidity Problems for the Companies Bidding for Land
There is no precedent for placing avoided oil and gas exploration credits on the market in the Congo. Analysts consider that developing that method may take around two years, while the companies involved face cash flow problems.
In 2021, KlimaDAO and the Toucan Protocol Association began tokenizing carbon credits, creating a supply and demand market with more transparent prices.
The Congo seeks to exploit cryptocurrencies to invest in oil and gas exploration blocks. The decentralized nature of assets facilitates processing contributions made by the interested companies.
Meanwhile, Bitcoin is trading at around USD 24,311 and has accumulated a 4.8% gain over the last week. While its daily trading volume is above USD 28.953 billion, its market capitalization is about USD 464.88 billion, according to CoinGecko.
By Alexander Salazar
