Bernstein: Texas data center audit to increase bitcoin mining and AI site values

Bernstein stated that a state-ordered audit of Texas data center projects will reduce speculative development and enhance the scarcity value of approved power capacity, benefiting existing bitcoin miners and AI operators. Texas Governor Greg Abbott has directed the Public Utility Commission of Texas (PUCT) and grid operator ERCOT to audit all data center projects in the state's interconnection queue. This order has led ERCOT to pause its 'Batch Zero' process, which reviews large electricity users and was set to release results this month. Data center requests account for approximately 90% of ERCOT's 474 GW interconnect queue. Bernstein analysts indicated that while the regulatory review may delay some developers awaiting grid approval, existing operations remain unaffected. They highlighted Cipher Digital (CIFR), CleanSpark (CLSK), and Core Scientific (CORZ) as firms most exposed to the order, as their expansion plans rely on Texas grid connectivity. In contrast, Terawulf (WULF) benefits from a diversified power portfolio across Kentucky, Maryland, and New York. Riot Platforms (RIOT) and IREN (IREN) also have a significant operational footprint approved by ERCOT. Bernstein believes that increasing political opposition to new data center projects will make approved megawatts (MWs) more valuable. They maintained 'Outperform' ratings for CIFR, CLSK, IREN, CORZ, RIOT, and WULF, while rating MARA as 'Market-perform'. The report noted that miners have contracted 8 GW of power capacity in over 20 deals worth over 160 billion dollars.

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