The email is completely fake:
Scam emails demand Bitcoin, threaten blackmail | Consumer Advice
Avoid Scams - Bitcoin
Never reply to such spam or scam messages, if the address they sent from is even valid, it typically belongs to someone else and at best this will tell the spam/scammer that your address is active and available to send more junk mail to.
The permanent failure was due to the fact the mailbox used to send the scam messages was disabled by the email provider, since all the major email providers cooperate by automatically reporting these to each other and getting them shut down long before most individual users typically manage to report them manually.
If you found your copy pf this scam message in your Junk or Spam email folder, leave it there. That means your email provider already determined it was a spam/scam, but to be safe they always forward a copy to you in case their automated detection systems had a hiccup and incorrectly identified a message you truly want as spam. Your action of moving the message out of the Junk/Spam folder tells their systems that this action was incorrect, which means you're just providing invalid information and doing nothing to help.
For this same reason, using the Oulook.com 'Mark as Junk' selection or similar Junk or Spam selections for an Inbox message in other email apps not only typically moves the message to your Junk folder, but it also automatically reports this 'bad' message to your email provider, which is far faster and simpler than looking up some obscure 3rd-party website or address to submit it by hand. In fact, since the in-app Mark as Junk or similar methods also include the full (hidden) email message headers your provider needs to properly identify the true source and path the message took to get into your mailbox, there's really no better way for the typical consumer to do this.
All other manual methods used to report, especially those to national organizations like the US FTC are really just 'catch-all', feel good repositories that collect these as a way to tell how prevalent the problem is, they really do nothing to solve the true problem or shut down the mailboxes being abused by the spammers.
Rob