Texas Governor Greg Abbott has ordered a statewide review of data center projects seeking to connect to the Electric Reliability Council of Texas grid, pausing a process that could determine which large electricity users receive access to future power capacity. The move places proposed Bitcoin mining and AI data center expansions under closer scrutiny, while leaving already approved and operating facilities largely unaffected, according to a Bernstein note to clients.
Abbott directed the Public Utility Commission of Texas and ERCOT, the operator of the state’s main power grid, to examine projects in the interconnection queue. ERCOT subsequently paused its “Batch Zero” review, the first planned classification round for large-load projects awaiting grid connections.
The pause comes as developers compete for a rapidly growing share of Texas electricity supply. Bernstein said data center requests represent about 90% of ERCOT’s 474-gigawatt interconnection queue, a figure far beyond the amount of capacity the grid can currently serve.
Queue position no longer guarantees grid access
The audit changes the value of holding a place in ERCOT’s interconnection queue. A queue position has often been treated as an early step toward securing electricity for a future site, but the state review could force developers to provide more detailed information before their projects move forward.
The supplied details indicate developers may need to disclose annual water use, state tax incentives and proposed measures to limit local noise. Texas officials are also focused on whether large private projects will finance the transmission lines and other equipment required for their own connection, rather than shifting those costs onto households and other electricity customers.
That approach would make power procurement a more demanding part of data center development. A company may have land, equipment orders and prospective customers, yet still face delays if its planned electricity supply has not received final approval. For Bitcoin miners, whose operations depend on access to competitively priced power, an uncertain connection timetable can complicate expansion plans and capital spending.
Bernstein expects the review to slow some companies with Texas projects still awaiting grid approval. It said operating sites and contracts already being executed should be insulated because they rely on capacity that ERCOT has already approved.
Existing Texas operations gain relative advantage
The distinction between approved power and proposed power gives established operators a clearer advantage over developers whose growth plans remain tied to the queue. Bernstein identified Cipher Digital, CleanSpark and Core Scientific as companies with greater exposure to the review because their near-term expansion plans depend on additional Texas grid connectivity.
Riot Platforms and IREN were described as better positioned because both already have substantial operational infrastructure with ERCOT-approved capacity. Existing approvals do not remove the broader challenge of sourcing power for future growth, but they give those companies a more immediate base from which to run mining operations or pursue high-performance computing and AI hosting contracts.
Terawulf has less direct exposure to the Texas decision, Bernstein said, because its power portfolio is spread across Kentucky, Maryland and New York. Geographic diversification can reduce the impact of a policy change in a single power market, particularly when data center developers are increasingly competing for limited generation, transmission and interconnection capacity.
Bernstein assigned “Outperform” ratings to Cipher Digital, CleanSpark, IREN, Core Scientific, Riot Platforms and Terawulf. Marathon Digital, which trades under MARA, received a “Market-perform” rating, according to the firm.
Record demand sharpens Texas scrutiny
Texas regulators are acting against a backdrop of rising electricity demand from population growth, industrial projects and power-hungry computing facilities. The supplied figures put statewide energy use at a record 91.1 gigawatts on July 22 and cite a forecast that total system load could reach 175 gigawatts by 2032.
Whether those forecasts are ultimately met will depend on new generation, transmission construction and the ability of ERCOT to connect large users without undermining reliability during periods of extreme heat or cold. Data centers differ from many conventional commercial customers because they can require hundreds of megawatts of electricity at a single location, sometimes around the clock.
Bernstein’s analysis frames the issue as one extending beyond Bitcoin mining. The same constrained power market now underpins AI infrastructure, cloud computing and high-performance computing projects. Developers in those sectors have increasingly sought sites with available electricity rather than simply low land prices or favorable tax terms.
The firm cited more than 8 gigawatts of power capacity contracted by miners across over 20 deals during the past two years, with an aggregate value exceeding $160 billion. Bernstein also referred to a planned 30-gigawatt power portfolio linked to the expanding market for AI-related infrastructure.
A slower path for speculative projects
The ERCOT review is likely to separate projects with approved infrastructure, financing and defined electricity needs from proposals that entered the queue before securing a complete development plan. That could reduce congestion in a queue dominated by data center requests, though it may also delay viable projects while regulators assess them.
For publicly traded mining companies, the immediate question is less about the performance of existing fleets than the credibility of announced growth pipelines. Firms with running sites, approved capacity and access to several regional power markets have more flexibility if Texas takes months to complete the review.
Companies dependent on unapproved Texas connections face a tougher planning environment. They may need to revise construction schedules, secure alternative sites, negotiate new power arrangements or wait for ERCOT and the Public Utility Commission to determine how much of the proposed demand can be connected without placing additional strain on the grid.
For deeper insight into mining economics and regulation, explore our full guide on how Bitcoin mining really works.
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