Bernstein Says Texas Grid Audit Unlikely to Hurt BTC Miners
Key Takeaways
- •Texas Governor Greg Abbott ordered an audit of all data centers seeking to connect to the state’s grid through the Public Utility Commission of Texas and ERCOT.
- •Bernstein said most Bitcoin miners in Texas already have approved electric capacity, reducing the likely impact of the moratorium on their operations.
- •The analysts said the new restrictions could limit speculative data center projects and make sites with existing development history more valuable.
- •Cipher Digital, Core Scientific and CleanSpark were identified as having the greatest potential exposure to public opposition during ERCOT approval processes.
- •IREN and Riot Platforms were highlighted as having Texas operations that are fully approved by ERCOT.
Bitcoin miners operating in Texas are not expected to be materially affected by a moratorium on approval of data center projects connected to the state’s grid operator, Bernstein analysts said Tuesday.
On Monday, Texas Governor Greg Abbott directed the Public Utility Commission of Texas and the Electric Reliability Council of Texas (ERCOT) to audit all data centers seeking to connect to the state’s power grid. The length of the audit was not specified. The move comes amid growing public backlash over the pace of data center construction across Texas, The Texas Tribune reported.
Bernstein analysts told clients on Tuesday that most Bitcoin (BTC) miners in Texas are under contract for approved electric capacity, which they said makes those operations unlikely to be affected by the moratorium.
“However, we believe, this audit throttles speculative data center pipeline and makes genuine sites with development history more valuable,” the research team led by Gautam Chhugani said in a note. “Bitcoin mining sites are favorably placed with the longest gestation, self-funding infra and local community management,” they said.
The analysts said the local operations of Cipher Digital (CIFR), Core Scientific (CORZ) and CleanSpark (CLSK) could face the most exposure to future public opposition to data center expansion, particularly during ERCOT’s approval process to convert pipeline assets into grid-connected power capacity. That process matters for miners because access to approved megawatts, rather than just proposed capacity, is what determines whether projects can move from development into operation.
“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,” they said, highlighting the Texas mining operations of IREN (IREN), which is fully ERCOT grid approved, as are the operations of Riot Platforms (RIOT).
CIFR shares were down more than 7% in Tuesday’s premarket trading, according to Yahoo Finance data. Earlier Tuesday, the miner reported second-quarter results and posted a loss of $0.65 per diluted share, wider than the $0.12 per diluted share loss it reported a year earlier.
Related: Bitcoin may find bear market bottom in August: 10x Research