Morgan Stanley analyst Stephen Byrd made a counterintuitive judgment on August 24: Governors in several U.S. states are slowing down or even halting data center construction, and the biggest beneficiary of this is Bitcoin mining companies—because their facilities are already plugged into the grid.
He specifically mentioned Cipher, Hut 8, Galaxy Digital, MARA Holdings, and Riot Platforms. This judgment may sound convoluted, but it's actually quite simple: when new electricity cannot come in, the old electricity becomes more expensive.
What Is Happening Across the U.S.?
Over the past month, opposition to data centers has transformed from sporadic NIMBY incidents into an organized political movement.
A Gallup survey in August showed that 71% of Americans oppose having data centers built in their local areas. Over 500 towns across the U.S. have imposed restrictions on data center construction, some local officials have received death threats over permitting issues, and there have even been instances of gunfire, with some councils shutting down public comment periods altogether.
State-level actions are even more stringent. New York Governor Kathy Hochul proposed a one-year moratorium on data center construction. Pennsylvania Governor Josh Shapiro signed an executive order imposing strict limits on new data center builds.
Texas Governor Greg Abbott, who went from warmly welcoming to pausing approvals within three months, almost admonished these companies by saying they failed to garner community support and brought the backlash upon themselves.
Virginia became the first state in the U.S. to tax data centers based on their power consumption, expecting to generate $600 million next year; Loudoun County in the state already has over 250 data centers and is now also restricting new builds.
The cost is quantifiable. In the first three months of this year, at least 75 data center projects totaling around $130 billion were shelved or delayed due to local opposition.
The White House and governors are at odds on this matter. Trump said in an interview on August 23 that communities rejecting data centers are making a mistake because they bring a significant amount of jobs and wealth. However, he does not have approval authority.
Why Has Being "Already Plugged Into the Grid" Suddenly Become Valuable?
To understand Morgan Stanley's judgment, one must first know where the real challenge lies in building a data center.
The challenge is not building the infrastructure, but powering it up. A large AI data center can easily consume several hundred megawatts of electricity, requiring the utility company to lay new power lines, expand capacity, and go through a lengthy approval process that can take several years. Now, this process has been stalled by politics—the Texas Public Utility Commission has even set a deadline to reexamine all data centers' and crypto mining farms' grid connection applications by December 10 and submit a report by December 17.
So, what do Bitcoin mining enterprises have in hand? Over the past decade, their main activity has been to scout around the world for cheap electricity and then connect their facilities. These power access contracts, substation facilities, and grid connection permits are all readily available, already approved, and cannot be vetoed by any vote.
In the era when data centers could be easily established, this was nothing special. But in the current era where construction is hindered, this has become one of the scarcest commodities in the United States.
The Miners Have Already Started to Pivot
This is not a new story; it has just been accelerated by politics.
Over the past three quarters, publicly traded mining companies have collectively reduced their mining power by 21%—not because they are quitting but to free up electricity for AI usage. On August 11, Anthropic and Riot Platforms signed a $9.1 billion mining power agreement.
The market has long priced in this shift.
According to CoinShares' data, mining companies that undertake AI and high-performance computing contracts have an enterprise value multiple of 12.3, while those solely mining Bitcoin have a multiple of only 5.9. With the same electricity, same facilities, and the same operations team, connecting to an AI contract values the company at more than double.
Behind this is the harsh reality that the pure mining business is indeed tough. When CoinShares released its report, Bitcoin had dropped by 45% in eight months, and the hash price (the money miners can earn per unit of mining power) had plummeted.
To survive, publicly traded mining companies have already sold approximately 28,000 Bitcoins this year, equivalent to $1.78 billion; MARA Holdings has also pledged 18,750 Bitcoins to secure two loans totaling $600 million.
There Are Two Problems with This Equation
Firstly, on the list that needs reevaluation in Texas, it is stated as "data centers and crypto mining farms." Mining farms have not been individually exempted. The cherished grid connection permits of mining companies might be completely stalled until the report on December 17.
The target of the rebound is the "power-hungry large data center," not the one called a data center — this was demonstrated in Alabama: local residents failed to stop a large-scale Bitcoin mining data center, relying on a loophole in the state's zoning laws, not because it wasn't annoying.
Secondly, Bitcoin has just bounced back. On August 24, it approached $80,000, hitting a multi-year high and rising 21% in a week. CoinShares has calculated that if Bitcoin returns to its all-time high of $126,000, the hash price could reach around $59 per PH/s, making mining economically viable again.
Looking back then, whether handing over electricity to AI is a transformation or a fire sale, the answer may change.
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