Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez have introduced legislation proposing a national moratorium on new data center projects. The bill aims to pause construction until Congress establishes federal regulations concerning electricity costs, environmental impact, and community approval processes. While Democratic control of Congress increases the likelihood of the bill advancing, the Republican-held White House remains a potential obstacle through a presidential veto.
Market reaction to the proposal and broader concerns over data center spending caused significant volatility in the technology sector. The Nasdaq index fell 6.36% on Thursday, while Nvidia shares dropped 9%. Broadcom saw a 10% decline, and the iShares Semiconductor ETF experienced a 12% drop, marking its worst performance since March 2020. Additionally, South Korean chipmaker SK Hynix shares fell 7.74% in Seoul.
Local initiatives are already moving to restrict data center development. Voters in Trenton, Ohio, approved a ban on data centers exceeding 25 megawatts with 80% support. Meanwhile, Texas Governor-elect Gina Hinojosa has pledged to implement a statewide moratorium. Goldman Sachs analysts anticipate construction delays in states including Georgia and Texas, while Senator Martin Heinrich has proposed the GRID Savings Act to address grid cost distribution.
Internal divisions within the Democratic party regarding a blanket freeze on data centers are becoming apparent. Amidst the regulatory uncertainty, OpenAI has committed to covering the full costs of power and infrastructure for its own facilities. The industry now faces a dual challenge as it monitors both potential federal legislative action and the increasing trend of local government bans on data center expansion.
