Texas pauses new data centre permits as ERCOT's interconnection queue reaches 474 GW, over five times peak demand.
Macro & Markets ·
Texas has paused issuing new data center permits after ERCOT's interconnection queue reached 474 gigawatts—more than five times the state's record peak demand. The freeze reflects mounting pressures from speculative project proposals, local community resistance, and constraints on grid infrastructure capacity that have prompted regulators to reassess the pace of new facility approvals.
The backlog underscores a tension in Texas's position as a magnet for energy-intensive computing. While the state's deregulated ERCOT grid and low-cost power have attracted major Bitcoin mining operations and, increasingly, AI data center developers—including efforts by firms like Hut 8, which priced $4.25 billion in non-recourse notes for a 352-megawatt Texas AI project—the influx of capacity requests has outpaced grid planners' ability to accommodate them. AI workloads differ fundamentally from Bitcoin mining in their demand profiles; unlike miners that can curtail load during peak periods, AI inference requires continuous power, complicating forecasting and resource allocation.
It remains unclear how long the permit pause will last, what threshold of grid upgrades or demand reduction would trigger a resumption, or whether the freeze will reshape investment timelines for the major projects already in the pipeline. The action signals that even Texas's business-friendly regulatory environment has limits when infrastructure and community concerns converge at scale.