Crypto Mining Is Creating an Environmental Crisis for Black Texas Communities

Bitcoin is more than just a shiny new way to lose money. It’s also fueling Texas’ energy struggles as the state prepares for another year of record-breaking heat. And Black communities are caught in the crosswires of climate change, those booming data centers, and the power plants needed to meet both demands.

Last year, during Texas’ deadliest summer in history, Black people bore the brunt of the heat. Stories like the deaths of a 5-day-old Black child and a 66-year-old Black postal worker due to heat illnesses led to national outrage. The brutal summer only fueled the fire that the state’s electric grid operator, the Electric Reliability Council of Texas, had spent years trying to put out.

After a 2021 winter storm laid bare how unprepared the state was for severe weather, Texas had been on the prowl for ways to ensure that it was producing enough electricity during times of disaster.

Their solution: new fossil fuel power plants.

But while the state says these new power plants meet the demand caused by severe weather and population growth, a new ERCOT forecast says that as the state’s power demand doubles over the next six years, most of the demand will come from water and energy-guzzling data centers for artificial intelligence supercomputers and crypto processing.

Essentially, it means the state is building polluting plants, which have historically decimated Black communities, in part for industries that experts say are increasing economic inequality and discrimination for Black Americans.

Despite analyses showing that clean energy sources like wind and solar are largely more reliable and cheaper to produce there than energy from fossil fuels, in the aftermath of last summer, the state decided to subsidize $10 billion worth of new gas power plants.

Across the country, low-income Black people are exposed to the most pollution from power plants and have the highest risk of death from such pollution. In Texas, more than 75% of the state’s gas power plants are in areas where the population has an above-average share of people of color, according to a Capital B analysis of EPA data.

Early documents examined by Capital B show that the trend of placing these facilities in communities of color may continue. Of the companies that applied for the funding and stated where they’d build new plants, about half, or 45%, are in communities with above-average Black populations.

“They’re trying to use these ‘volatile’ climate events, the freeze and the heat, as justification for all these new gas plants,” Brittney Stredic told Capital B last year. She has been part of a coalition of community members fighting a new gas plant and pipeline in her Houston neighborhood for several years. “But we don’t need it.”

While Texas recently cemented itself as the up-and-coming renewable energy capital of the U.S., these moves signal a setback for the state — and the climate.

Climate change and the intensifying nature of winter and summer are caused mainly by burning fossil fuels. And Texas’ answer is aligning with industries that have been proven to harm Black communities, experts say.

“There are so many downsides to crypto, but unfortunately, the industry has a lot of money, and have recently been using their money to get favorable policies in Washington, D.C., and places like Texas,” said Algernon Austin, the director for Race and Economic Justice at the Center for Economic and Policy Research. Austin has spent years researching how the speculative get-rich-quick-scheme has targeted the country’s most vulnerable.

“Cryptocurrencies are a shiny new way to lose money. Analyses that have been done suggest that, if anything, it’s worked to increase inequality,” he added. “It’s worrying that it is creating a problem environmentally on top of all of this.”

Artificial intelligence and crypto-mining are immensely energy and water-intensive due to the power required to process complex algorithms and transactions. As these supercomputers, which are often three times the size of the average U.S. home, chug away, they generate enormous amounts of heat that necessitate continuous cooling — and demand for electricity.

Texas already consumes more energy than any other state, and the pollution from that consumption is palpable. Despite making up 9% of the nation’s population, the state is responsible for 13% of all pollution from power plants and 15% of all the pollution related to natural gas plants.

The Get-Rich-Quick Mentality

It’s not all Texas’ fault that the nation’s new infatuation with these energy-intensive internet uses is driving the energy need. The energy it takes to run a single AI search, for example, is between 10 and 30 times the power requirement to run a traditional Google search. However, its constant goal of luring in business over nearly every other consideration can be credited to the state.

Texas residents and experts say that, in many ways, the state’s energy problems are driven by a get-rich-quick mentality that prioritizes enticing business over the resulting strain on the grid, water sources, and the quickly growing population.

But the state’s predicament exemplifies the crossroads that the nation is at as it attempts to strengthen its electric grids: one that can either support the most vulnerable populations, like the Black communities living next to fossil fuel power plants, or align with industries that further exacerbate the problems.

Entergy CEO and President Eliecer Viamontes cited this statewide desire as the motive behind his company’s decision to build new fossil fuel power plants in Texas. His company is one of two that has filed intentions to open new gas power plants in a predominantly Black and Latino suburb of Houston, where some neighborhoods already face cancer risks from air pollution 46 times higher than federal limits.

“We’ve got to think of how it aligns with what Texas state leadership is pushing for, which is we’ve got to be the number one state for business, number one state for economic growth,” Viamontes said. Without the new plants, he said, “There’s the risk of losing economic growth in the region.”

But economic growth for who, Austin wonders. The growth in crypto-finance in particular, a tool initially sold to lower economic inequality, shows that the mindset may work directly against improving life in Black communities.

As the state’s residents were baked by triple-digit heat in August, the grid operator gave millions of dollars to Bitcoin mining and data center companies to stop using so much energy. It’s a tactic Texas may have to utilize again for several of the following summers. (To keep air conditioners running, that summer, the state also obtained an emergency order from the U.S. Energy Department, allowing power plants to exceed pollution limits to produce more energy. It led to communities of color facing the dual-choking threat of heat and air pollution.)

“We have been incredibly misinformed because our local leaders have not made it a priority to speak with us about what is happening,” said Kimberlee Walter, an activist in a Texas community home to a crypto-finance company that was paid $32 million last summer to use less energy. “These companies are wasting precious resources, driving up our energy bills and destabilizing an already very unstable grid.”

All the while, over the past few years, surveys have found that Black people are more likely than white people to invest in cryptocurrencies and more likely to incorrectly believe that the industry is regulated and safe. Black crypto investors are also likelier than white crypto investors to say they have borrowed money to make their investments.

Crypto has also increased costs for those not even invested in the currency. In Texas, it has already raised electricity costs for non-mining Texans by $1.8 billion per year, or 4.7%, according to conservative estimates from consulting firm Wood Mackenzie.

A large share of these crypto-mines have opened just outside the Dallas metro area, which is among the fastest-growing places for Black people and where 1.2 million Black people already live. At least one of the new proposed fossil fuel power plants in an above-average Black community would be built solely to power a crypto-mining supercomputer.

With the increase of natural gas production nationwide, energy companies and government agencies aren’t “adequately dealing with the history of the devastation that oil and gas has had in the Gulf South and on communities of color,” said Robert Bullard, the father of environmental justice.

Although clean energy is growing, Texas does have a problem getting it to households. The growth of renewables requires a costly build-out of transmission lines to move the power to urban consumers from the rural areas where wind and solar farms are situated. However, some residents believe it is worth the cost and infrastructure build-out.

“The truth is that gas has failed us when we needed it most,” the state’s Sierra Club chapter wrote after the subsidies for new plants were announced. “We need to reduce demand on the grid by making buildings more energy efficient, and we need to invest more in local and distributed energy systems like rooftop solar and battery storage. Our climate has changed, no matter how much fossil fuel-funded Texas politicians deny it.”