San Jose, Calif., partnership with crypto company Helium was a flop

San Jose, California, made headlines a year ago when it announced plans to increase high-speed internet access for low-income families through a partnership with cryptocurrency company Helium.

As part of the six-month pilot program, the city obtained 20 of Helium’s wireless hotspots. Using devices like GPS trackers and air-quality sensors connected to these wireless hotspots, the city planned to mine Helium’s proprietary cryptocurrency, HNT, and use the proceeds to cover the internet bills of 1,300 low-income households.

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In the end, the pilot was able to fund internet access for just 86 households at $120 a year.

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San Jose was the first city to partner with Helium — a company which aimed to build a “People’s Network” through the installation of hotspots in people’s homes and businesses which can connect to small devices such as GPS trackers, environmental sensors and cameras.

Despite deploying more than 500,000 hotspots globally, Helium’s supposed “People’s Network” has failed to create much revenue. A report last week in Forbes showed that the vast majority of proceeds from crypto mining operations have gone back to Helium’s executives.

While Helium representatives told Forbes their business is just getting started and denied doing anything wrong, the company’s partnership with San Jose is over.

“After evaluating the initial results and potential of the model, we decided to discontinue the pilot in August of this year, while instead doubling down on a device refurbishment pilot that has proven a more green, scalable source of funding for low-income residents to access the internet,” said Clay Garner, San Jose’s chief innovation officer of the city of San Jose and director of the Mayor’s Office of Technology and Innovation.

The city expected to earn about $156,000 from its cryptocurrency mining, but in reality, produced only the equivalent of $10,320. The Helium hotspots, costing $500 each, were purchased for the city by the California Emerging Technology Fund.

Garner said the experiment did not cost the city more than it earned, and noted the Helium project was just one of several initiatives the city has attempted to address the cost barrier for digital inclusion.

The underwhelming results were a consequence of volatility in the cryptocurrency market, and less-than-expected growth in data traffic on the Helium network, Garner said.

“As we aimed to use the funds to cover an immediate community need within a defined pilot period, we were unwilling to ‘hold’ indefinitely or speculate on future price increases,” he said.

The 20 hotspots have been collected and are now in storage.

While Helium’s partnership with San Jose is prominently displayed on the company’s website, there are no plans for further collaboration.

“The partnership is fully concluded,” said Garner.