Texas Data Center Moratorium Risk: Riot (RIOT) and CenterPoint (CNP)

A Texas data center moratorium is back on the table after the November 3, 2026 midterms. Bloomberg reported on November 4 that Democrats won both chambers of Congress and the Texas governorship, and the governor-elect wants an immediate pause on data center development. Texas's existing approval freeze could run into 2027, which may weigh on companies with projects in Texas. [1][2][3]

Governor-elect Gina Hinojosa, who takes office on January 19, 2027, campaigned for an immediate data center moratorium. [3] The same night, more than 30 local measures restricting data centers passed nationwide. [4]

On November 4, companies building data centers in Texas fell sharply: Cipher Digital (CIFR) dropped 19.95%, IREN (IREN) 11.24% and Hut 8 (HUT) 23.23%. [5][6][7] Bloomberg reported that large cloud companies rose as traders bet Democrats would slow AI spending. [8]

How data center landlords and Texas permits work

Many AI companies lease server buildings from data center landlords. The landlord secures land, permits and a grid connection, builds the facility and rents out space and power capacity to cloud companies or AI labs.

A new Texas data center needs a permit from the state environmental agency (TCEQ) and a connection to the ERCOT-run grid. Governor Abbott has already temporarily frozen TCEQ data center permits and grid connections, tied to an ERCOT audit. [9] Wells Fargo estimates that about 27% of planned US data center capacity is in Texas. [10]

Wires utilities build the lines and substations that deliver power. When a large customer connects, they collect demand charges on the capacity it takes and add the new assets to a regulated rate base that earns an allowed return.

From a permit freeze to leases and grid investment

First, the freeze could be read as temporary, likely to lift after the audit. With a governor-elect calling for a moratorium, that can no longer be assumed.

Second, new Texas permits and energization dates may slip, and new Texas sites get harder to lease.

Third, landlords recognize rent later and find unsigned letters of intent harder to convert into leases, while wires utilities energize large loads later, delaying demand charges and rate-base growth. Already-energized capacity outside Texas may benefit by comparison.

Companies that may be affected

Riot Platforms (RIOT)

Riot still earns most of its money mining bitcoin: FY2025 revenue was $647 million, $576 million of it from mining. [11] It is becoming a data center landlord, entirely in Texas. [12]

Two Rockdale leases, with AMD and a frontier AI lab, are expected to produce average annual revenue of about $520 million and NOI of $416 million to $462 million at full deployment. [12] The AI lab's Phase 1 (96 MW) is due in December 2027 and Phase 2 (95 MW) in June 2028. [12] For the 1 GW Corsicana site, Riot has only a non-binding letter of intent with one tenant. [12]

By a rough estimate, the $520 million is about 44.6% of Riot's pro forma revenue. Executed leases are more likely to be grandfathered; the bigger variable is Corsicana. At Rockdale's rent of about $2.4 million per MW per year, 1 GW would be worth more than $2 billion a year. The effect may show up in future rent and in whether Corsicana gets signed.

Riot shares rose 18.41% on November 3 and another 9.63% on November 4, when it reported third-quarter EPS of $0.01 against a consensus loss of $0.34. [5][13]

CenterPoint Energy (CNP)

CenterPoint is Houston's wires utility. It has 14 GW of eligible large load, 65% above its 21 GW system peak, and each GW brings about $6 million a month in demand charges. [12] Fully energized, that is about $1 billion a year, about 10.3% of its $9.8 billion revenue. [11]

Its 10-year capital plan is $70.7 billion, targeting rate-base growth above 14% a year through 2030; about 2 GW of load withdrew during the ERCOT audit. [12] The remaining 4 GW awaits ERCOT's April 2027 allocation. [12] The new governor will also appoint Public Utility Commission of Texas commissioners.

By a rough estimate, a 12-month slip on those 4 GW defers about $290 million a year of cash flow, and EPS growth could slide from the mid-to-high end of 7%-9% toward the low end. CenterPoint has not disclosed the data center share of the 14 GW; if most is petrochemical load, this estimate is too high.

CenterPoint shares fell 3.50% on November 4, while the utilities ETF XLU rose 0.44%. [5]

What to watch

January 2027: the Texas Legislature convenes on January 12 and Hinojosa is inaugurated on January 19. Watch whether her transition team or first executive orders extend the TCEQ permit pause or the grid-connection freeze beyond the audit.

February 2027 fourth-quarter calls: whether Riot's Corsicana letter of intent is still unsigned and Rockdale capex slows; whether CenterPoint trims the 14 GW energization timeline or the $70.7 billion plan.

April 2027: whether ERCOT's final allocation gives CenterPoint's territory less than the 4 GW pending.

Three developments would break this chain: the governor-elect or the Republican-controlled legislature explicitly grandfathers projects with signed interconnection agreements; Riot signs Corsicana, or a similar-size Texas lease is signed, before the end of Q1 2027; or CenterPoint confirms most of the 14 GW is petrochemical or industrial load, or reaffirms rate-base growth above 14% after the inauguration.

This only helps you find transmission chains that may be overlooked. It is not a stock recommendation.

Sources

[1] Bloomberg · 2026-11-04 · Democrats won sweeping victories in the midterm elections · https://www.bloomberg.com/news/videos/2026-11-04/economic-frustrations-flip-gop-strongholds-blue-video

[2] Bloomberg · 2026-11-04 · Democrats win governor races in Georgia, Texas · https://www.bloomberg.com/news/articles/2026-11-04/democrats-win-governor-races-in-georgia-texas-after-gop-implosion

[3] Bloomberg · 2026-11-04 · US midterm blue wave puts AI data centers in spotlight · https://www.bloomberg.com/news/videos/2026-11-04/us-midterm-blue-wave-puts-ai-data-centers-in-spotlight-video

[4] Engadget · 2026-11-04 · Americans overwhelmingly voted against data centers in the midterms · https://www.engadget.com/2306534/americans-overwhelmingly-voted-against-data-centers-in-the-midterms/

[5] Drillr price_volume_history · 2026-11-03 to 2026-11-04 · RIOT, CIFR, IREN, HUT, CNP and XLU daily prices

[6] Benzinga · 2026-11-04 · Cipher stock plummets after Democrats' midterm wins · https://www.benzinga.com/trading-ideas/movers/26/11/62883818/cipher-stock-plummets-after-democrats-midterm-wins

[7] Benzinga · 2026-11-04 · IREN stock slides as midterm results raise regulatory fears · https://www.benzinga.com/trading-ideas/movers/26/11/62878653/iren-stock-slides-as-midterm-results-raise-regulatory-fears

[8] Bloomberg · 2026-11-04 · Big tech stocks soar as traders bet Democrats will slow AI spend · https://www.bloomberg.com/news/articles/2026-11-04/big-tech-stocks-soar-as-traders-bet-democrats-will-slow-ai-spend

[9] Bloomberg · 2026-10-29 · Texas data center boom collides with backlash ahead of midterms · https://www.bloomberg.com/news/articles/2026-10-29/texas-data-center-boom-collides-with-backlash-ahead-of-midterms

[10] Scripps News · 2026-11-04 · Wells Fargo estimates 27% of planned US data center capacity is in Texas · https://www.scrippsnews.com/politics/america-votes/voters-elected-governors-to-curb-data-centers-lowering-bills-for-gas-and-groceries-is-harder

[11] Drillr company_segment and company_snapshot · FY2025 · RIOT, CNP

[12] Drillr earning_call_summary · 2026-07-28, 2026-08-10, 2026-10-27 · RIOT Q2 2026; CNP Q2 and Q3 2026 earnings calls

[13] Benzinga · 2026-11-04 · Riot stock surges on surprising Q3 results · https://www.benzinga.com/trading-ideas/movers/26/11/62871135/riot-stock-surges-on-surprising-q3-results