Abbott's audit freezes Texas data center hookups, with 474 GW queued. Connected miners IREN and Riot gain a multi-year edge while new rivals wait on review.
Governor Greg Abbott has frozen new data center connections in Texas. On Aug. 3, he directed the Public Utility Commission of Texas and ERCOT to audit every project in the state's interconnection queue. Regulators will verify power demand, water usage, ownership structures, and compliance with grid rules before any new hookup moves forward. The directive specifically targets non-viable and speculative projects that threaten grid reliability. Projects that fail those checks will be denied grid access. The freeze applies to every data center project in the queue, not just new filings.
The queue holds 474 GW of requested capacity. The interconnection queue is the reservation line for grid access, and getting through it requires engineering studies and transmission upgrades. The entire U.S. grid has about 1,300 GW of installed generating capacity. Roughly 90% of the Texas queue is data center projects, so the state is fielding requests equal to more than a third of the nation's total power supply. Many of those projects have no firm financing or signed construction contracts, which is what the audit aims to sort out. The directive describes the queue as bloated with speculative applications.
Existing operators are the early winners. Iris Energy and Riot Platforms both run Bitcoin mining and data center sites in Texas with live connections. Both companies already have grid-connected capacity and established operations in the state. For a new 1 GW connection, the median national wait is about 50 months. Add a state audit on top and new competitors could face five years or more before they can switch on. The value of that infrastructure is rising because the audit makes new supply scarce for a long stretch. A half-decade delay for new entrants locks the current grid map in place.
Bernstein analysts assign "outperform" ratings to both stocks, with price targets of $100 for Iris Energy and $25 for Riot Platforms. Earlier Bernstein research argued that power-constrained environments create moats for established operators. An operator with a live substation and a signed power contract can take on AI clients now. A new entrant holding only a land option and a queue position cannot. That gap is what the Bernstein calls are built on. Both miners have been selling data center capacity to AI clients, a pitch that gains traction while new supply is stuck in review. The Bernstein ratings capture that shift.
A June directive had already required data centers to pay for their own interconnection infrastructure and look into on-site power generation. The new audit tightens that regime. The June order also applies to new crypto miners, making the cost of entry higher for anyone not yet connected. The combination of the June order and the new audit makes it harder to build a data center in Texas. For a broader view of how power constraints are shaping crypto miners, see our crypto market analysis.
AlphaScala's scoring puts RIOT at 61 out of 100, a moderate grade, and IREN at 30, on the weak side. Both stocks trade as crypto miners with power assets.
Texas drew the data center rush because of its deregulated power market and abundant natural gas, in a state that welcomes large construction. The application volume overwhelmed the system's ability to process it. The audit culls speculative projects and rewards those with real load and financing.
Operational risk remains. ERCOT's grid failed during the February 2021 winter storm, and connected operators are still exposed to weather-driven outages. The audit may clear the queue; it cannot guarantee the lights stay on.
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