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

Last year, during the deadliest summer in Texas history, black people bore the brunt of the heat. Stories like the deaths of a 5-day-old black baby and a 66-year-old black postal worker from heat illness led to national outrageThe brutal summer only fueled a fire that the state’s grid manager, the Electric Reliability Council of Texas, had spent years trying to put out.

After a 2021 winter storm exposed how unprepared the state was for severe weather, Texas scrambled to find ways to ensure it would have enough electricity to handle a disaster.

Their solution: new fossil-fuel power plants.

But while the state claims that these new power plants meet demand caused by adverse weather conditions and population growth, a new ERCOT Forecast says that as the state’s energy demand will double in the next six years, most of the demand will come from excessive consumption of water and energy data centers for supercomputers for artificial intelligence and cryptographic processing.

In essence, that means the state is building polluting plants that have historically decimated black communities, in part for industries that experts say are increasing economic inequality and discrimination against African Americans.

Despite analyses showing that clean energy sources such as wind and solar are largely more reliable and less expensive to produce than energy from fossil fuels, the state decided to subsidise them after last summer. New gas-fired power plants worth $10 billion.

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

Initial documents reviewed by Capital B show that the trend of placing these facilities in communities of color could continue. Companies that applied for funding and said about half (45%) of the new plants will be in communities with a higher-than-average black population.

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

To know more: A gas storage facility and a new oil pipeline are upending life in this black community

While Texas has recently established itself as the country’s up-and-coming Renewable Energy Capital of the United StatesThese moves represent a step backwards for the state and for the climate.

Climate change and the intensification of winters and summers are largely caused by the burning of fossil fuels. And Texas’s response is to align itself with industries that have been shown to harm black communities, experts say.

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

“Cryptocurrencies are a brilliant new way to lose money. The analysis that has been done suggests that, if anything, they have worked to increase inequality,” he added. “It’s worrying that it’s creating an environmental problem on top of all that.”

Artificial intelligence and crypto-mining consume a lot of energy and water because of 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, work in bursts, they generate enormous amounts of heat that require constant cooling and demand electricity.

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

The Get Rich Quick Mentality

It’s not all Texas’ fault that the new nation infatuation with these energy-intensive uses of the Internet is driving energy demand. The energy required to run a single AI search, for example, is between 10 and 30 times greater than the energy required to run a traditional Google search. However, its constant focus on attracting business over almost every other consideration can be attributed to the state.

Texas residents and experts say that, in many ways, the state’s energy woes are caused by a get-rich-quick mentality that prioritizes attractive commercial activities over the resulting strain on the power grid, water supplies and rapidly growing population.

But the state’s plight exemplifies the crossroads the nation faces as it seeks to strengthen its electric grid: one that can support its most vulnerable populations, such as Black communities living near fossil-fuel power plants, or align itself with industries that further exacerbate problems.

Entergy CEO and Chairman Eliecer Viamontes cited that statewide desire as a reason for his company’s decision to build new fossil-fuel power plants in Texas. His company is one of two that have filed plans to open new gas-fired power plants in a predominantly black and Latino Houston suburb, where some neighborhoods already face cancer risks from air pollution 46 times higher than federal limits.

“We need to think about how it aligns with what the leadership of the state of Texas is pushing for, which is that we need to be the number one state for business, the number one state for economic growth,” Viamontes said. She saidWithout the new plants, he said, “there is a risk of losing economic growth in the region.”

But economic growth for whom, Austin asks. The rise of cryptofinance in particular, a tool initially marketed as a way to reduce economic inequality, shows that mindset may be working directly against improving life in black communities.

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

“We’ve been incredibly uninformed because our local leaders haven’t made it a priority to talk to us about what’s happening,” said Kimberlee Walter, an activist in a Texas community that’s home to a crypto-finance company that received $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.”

Meanwhile, in recent years, polls have found that blacks are more likely than white people to invest in cryptocurrency and more likely to mistakenly believe that the industry is regulated and safe. Black cryptocurrency investors are also more likely than white cryptocurrency investors to say they have borrowed money to make their investments.

Cryptocurrencies have also increased costs for those who aren’t even invested in the currency. In Texas, they’ve already increased electricity costs for non-mining Texans by $1.8 billion annually, or 4.7%, according to conservative estimates from consulting firm Wood Mackenzie.

A large portion of these crypto-mining operations have opened just outside the Dallas metropolitan area, which is among the fastest-growing places for blacks and is already home to 1.2 million blacks. At least one of the proposed new fossil-fuel power plants in an above-average black community would be built exclusively to power a crypto-mining supercomputer.

A natural gas power plant lights up the sky next to a 90 percent black neighborhood in Beaumont, Texas. (Adam Mahoney/Capital B)

As natural gas production increases nationwide, energy companies and government agencies are “not adequately addressing the history of devastation that oil and gas have had in the Gulf South and on communities of color,” said Robert Bullard, the father of environmental justice.

While clean energy is growing, Texas has a problem getting it to households. The growth of renewable energy requires expensive construction of transmission lines to move power from urban consumers to rural areas where wind and solar farms are located. But some residents believe the cost and infrastructure construction are worth it.

“The truth is that gas 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 Texas’ fossil-fuel-funded politicians deny it.”

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