Bernstein said a state-ordered audit of Texas data center projects will throttle speculative development and increase the scarcity value of approved power capacity, boosting existing bitcoin miners and AI operators.
On Monday, Texas Governor Greg Abbott directed the Public Utility Commission of Texas (PUCT) and grid operator ERCOT to audit all data center projects currently in the state's interconnection queue.
The order prompted ERCOT to pause its "Batch Zero" process, a review of the first group of large electricity users that was scheduled to release classification results this month. Data center requests currently make up roughly 90% of ERCOT’s 474 GW interconnect queue.
In a note to clients on Tuesday, Bernstein analysts noted that while the regulatory review will likely create delays for select developers with pipeline assets pending grid approval, existing operations remain intact.
"Within our coverage and broadly miners, all contracts under execution are for approved capacity and are not impacted by the audit," the analysts wrote.
Bernstein noted Cipher Digital (CIFR), CleanSpark (CLSK), and Core Scientific (CORZ) as the firms with greater exposure to the order, since their near-term expansion plans depend on Texas grid connectivity.
Meanwhile, the report said Terawulf (WULF) benefits from its "geographically diversified power portfolio" across Kentucky, Maryland, and New York. Riot Platforms (RIOT) and IREN (IREN) also benefit from having a large operational footprint already approved by ERCOT, Bernstein said.
"We believe with increasing political opposition to new data center projects and fresh capacity being throttled by moratoriums/state directives, the approved MWs become more valuable," the report said. "If MWs are scarce, it makes sense to earn more per MW."
Still, Bernstein gave "Outperform" ratings to CIFR, CLSK, IREN, CORZ, RIOT, and WULF, while giving MARA a "Market-perform" rating.
"Emerging AI Infra stocks remain well positioned to solve ‘time to compute’ given their planned 30GW power portfolio and operating ability to deliver ‘warm powered shells’ in time," Bernstein analysts said. "Over the past two years, miners have contracted 8 GW of power capacity to hyperscalers, neoclouds, and AI-chip manufacturers across 20+ deals worth over $160 billion."
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