Bernstein cuts bitcoin miner targets after Texas election raises AI data center risks
Texas election raises new risks for AI data center plans
Democrat Gina Hinojosa defeated Republican incumbent Greg Abbott in the Texas governor election on Tuesday. Hinojosa wants to halt new data center approvals until Texas sets rules to protect residents from higher electricity and water costs.
Bitcoin miners, which are companies that use large amounts of electricity to mine bitcoin, had moved into artificial intelligence, or AI, data centers in recent years. Many of those plans rely on Texas. Bernstein now expects approvals to take longer and has cut price targets on seven miners by about 35% to 54%.
Key numbers from analyst reports
- Bernstein cut Cipher Mining to $15 from $23, IREN to $55 from $100, and TeraWulf to $20 from $36.
- Bernstein cut Core Scientific to $19 from $32, Riot Platforms to $18 from $35, MARA Holdings to $10 from $17, and CleanSpark to $11 from $24.
- Goldman Sachs estimates Texas accounts for roughly 25% of planned U.S. data center capacity.
- Goldman Sachs estimates states likely to tighten data center rules account for about 45% of planned U.S. capacity.
- SemiAnalysis data cited by analyst Neil Sethi puts Texas at nearly 30% of data center capacity expected to come online in 2028.
What Bernstein says about Texas exposure
Bernstein senior analyst Gautam Chhugani said more than half of the power capacity held or planned by the miners his firm covers is in Texas. He wrote that he expects a data center pause to continue and potential legislation to remain in gridlock.
I REN, Riot Platforms and Cipher Mining have the most Texas exposure among companies Bernstein covers, according to the report. Bernstein also said all three have approved power capacity measured in gigawatts, a large unit of electrical power, and that such capacity may be scarce and valuable if new connections become harder to secure.
Bernstein said it now values AI colocation, meaning renting data center space and power to AI customers, at 12 times one-year forward earnings before interest, tax and depreciation for 2030 estimates. The firm cited tighter financing markets and Texas uncertainty for the lower valuation.
How Morgan Stanley separates miners by position
Morgan Stanley, in a note led by Stephen Byrd, said Cipher Mining, MARA Holdings and Galaxy Digital face greater uncertainty in Texas. It said it would review Cipher's Colchis site, Galaxy's Helios II project and MARA's expansion plans.
Morgan Stanley said TeraWulf, Hut 8 and Applied Digital are better placed. It said TeraWulf has little exposure to Texas rule changes. It said Hut 8 could benefit if developers move projects to Louisiana.
For Riot, Morgan Stanley said existing grid connections at Corsicana and Rockdale could become more valuable. It also said plans to build more capacity at those sites could run into trouble.
What is confirmed and what remains an analyst view
The election result and the price target changes are reported facts from the source. The size of Texas's share of planned capacity comes from estimates by Goldman Sachs and SemiAnalysis, not from a single official count in the source.
Goldman Sachs economists expect temporary pauses on new data centers in Texas, Georgia and Michigan while lawmakers consider tighter rules. They do not expect the restrictions to last long because data centers are not a top priority for most voters, according to the report.
Goldman Sachs strategist Rich Privorotsky said AI stocks had already been heavily sold before the election. Pershing Square said in a November 2 shareholder letter that Microsoft, Meta, Amazon and Google are expected to spend about $740 billion on capital projects this year, up from about $140 billion in 2023, and that the figure could exceed $1 trillion in 2027.
Why approved power matters for miners moving into AI
The report says miners spent two years trying to turn cheap power and large industrial sites into AI hosting businesses. If new projects face delays, companies that already have approved power and signed AI hosting contracts may have an advantage. Companies that still need future grid connections could face delays.
Tech stocks fell at first as results came in, with Nasdaq-100 futures down about 1.5% overnight before recovering Wednesday morning, according to the report. Analysts cited in the report do not expect construction to stop completely. They expect slower approvals and higher building costs.
Original CoinDesk report
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