OT:Political Backlash re: Data Centers

Investment Analysis Clubs Macro Economic Trends and Risks
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GOP governor back tracks on data centers. Too little, too late?

https://www.washingtonpost.com/nation/2026/08/11/rural-texas-data-center-opposition-is-scrambling-conservative-orthodoxy/

Texas conservatives love free markets, the energy industry, development and small government. But in scores of deep-red Texas communities such as Leon County, longtime Republican voters are setting aside those principles to battle an onslaught of data center projects that pro-business GOP leaders initially welcomed.

Opposition to data centers has been notably bipartisan in communities across the country. But the fierce pushback from conservatives in Texas has required no help from liberal groups, and it has been felt everywhere from the state GOP’s new party platform to the campaigns of Lt. Gov. Dan Patrick and Gov. Greg Abbott, Republicans who now support varying degrees of increased data center regulation.’

At the GOP convention in June, the platform included a new plank that would require data centers to disclose and finance infrastructure needs without shifting costs to residents; prioritize the use of reclaimed water; and protect aquifers and the state’s electrical grid.

New Mexico is next door to Texas with a Democrat governor that welcomed a data center construction in my county.

New Mexico has forged a partnership with a new high-tech Texas company that aims to build a multibillion-dollar artificial intelligence data hub and advanced manufacturing center in a Doña Ana County border town.

The Democrats are now “surprised” at:
“What we are seeing in Doña Ana County — the lack of transparency, the lack of accountability, the red carpet that’s been rolled out for these corporations, despite the voices of the community members who have demanded input since well before the commission vote in September of 2025 — has been a level of betrayal that our constituents will never forget,” Rubio said.

So now:

A bit late to close the barn door.

I think some incumbent representatives in Texas & New Mexico will be forced into early retirement this November.

The above has been occurring in other states. Many data centers have been built and are under construction. But will this backlash hinder further expansion?

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I think we are still relatively early days on data center build outs. The amount of cancellations, delays, new scopes and other related fits and starts are a giant indicator of such.

The evolution of “data center” will also evolve through incremental and significant step changes based on technology maturity in the coming years.

These general statements are a thesis to contextualize a bigger picture than these anecdotal news pieces that are shouting for your attention.

Many prior news pieces along with thought leadership articles points to a multitiered AI approach where:

  • The cutting/bleeding edge will be least efficient(for practical results) but most effective for capability/capacity in the frontier models

  • The execution edge will be gradually more and more saturated at the point of use (through to mobile devices and imbedded processes - invisible) to mobile devices which are carried by humans or autonomous.

  • Proprietary (internal/company/coalition) models will demonstrate BOTH more capability/capacity as well as form the edge related ecosystems for their intended purposes.

I expect CONTINUED public/political backlash against these projects. Meanwhile, the three tenets above will continue to develop visibly and invisibly for YEARS to come.

As an investor, this is quite a challenging problem. Cutting edge hardware, software and technology systems will offer high margins at the expense of enormous short lived CAPEX. I expect we will continue to see this effort distilled down to fewer and fewer winners. NVDA and partners.

  • For companies, we will have semi-opaque views into their efforts as some will choose to market their vision, strategy and progress to same every quarter. Many will labor in the background fearing for effective results read through to EBITDA. Some will celebrate the same without mentioning AI at all. “Wondrous leverage improvements based on our strategies”.

    Further, vendors and ecosystem partners will derive significant revenue (at the expense of the host company - and passed along to consumers) by offering enablements as part of ongoing support agreements.

  • Consumers and partners will see increasing subscription and monthly feature fees for new capabilities. Many of these features will be carried along with model upgrades or push installations and back charged to whatever platform the equipment exists upon.

    Google Health
    Samsung smart things
    Tesla FSD, etc.
    Apple icloud
    Microsoft office
    etc.
    etc.

Did you know that Google and Amazon own more than 50% of Anthropic float? There are stakes in several other funds, but these have high fees. I was not able to determine the float or company share percentages for them, either.

Eventually we will find the intersection of capacity under roof world wide (like any other specialized warehouse space) with capability, efficiency, pricing and availability. - a commodity for each tier in the system.

I imagine a conversation at quarterly calls for a company like Nebius in 2029:

We had an uptick in interest last quarter for AAA infrastructure locations. At 93% utilization, we see continued cost pressure among frontier model users

For our AA capacities, we remain fully booked at 98%. Remember, we reserve 2% of our available space for retrofits, installs, changeovers and new integrations. On another positive note, we downgraded 11% of our available capacity to A space this quarter, resulting in a significant expansion in our distillation and edge-backbone services and resulting in constant terms leverage improvement of 16%

Finally, our A space is now best in our region and booked at 90%. We are exploring aggressive onboarding sweeteners to raise this occupancy even higher, anticipating a 20% reduction in vacancies by next quarter and 94% occupancy by year end.

This feels very similar to commercial real estate (Data Center occupancy and grading) and the type of commentary one might previously find in a REIT investor update.

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Likely to last until the election.

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I thought about starting a thread titled “OMG, Texas discovers regulation”, but this came first.

Hard to know whether this is the election posturing or whether they’ve actually found out that there is a groundswell from the left, right, and center about data centers, pollution, water consumption, and electricity prices.

I’ve not thought much of Texas politicians (and probably won’t going forward) but it’s fun to see them grapple with real world problems that so often accompany big business, population growth, and the other things that come along with civilization.

Now if we can just convince them to care about people’s health; maybe expand health care (Texas ranks #1 in “most uninsured”), lower-middle in lifespan, Top 15 in air pollution, Top 10 in worst air quality, bottom 15 in public education, bottom 10 in higher education - but hey, how about that Longhorns’ Football, eh?

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A couple of things worth noting before bashing on Texas. It’s the largest producer of oil and gas in the US, which does make areas more susceptible to air quality issues. Also, the geographical region and climate tends to also cause part of the problem.

As to lifespans, oil and gas work can be fairly dangerous and tough work. The risk of fatalities is 7x greater than the average job. As to higher education, Texas draw in a lot of immigrants and physical laborers that have higher rates of lower attained education levels than in other parts of the country. Native Texans are right on par with the rest of the country in terms of education attainment.

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A few more things worth noting before defending Texas, yeehaw!

Texas has some of the loosest oil and gas regulations in the US. Their anything goes regulatory environment plays a huge role in their air quality issues. In keeping with the topic of this thread, will Texas alter it’s business loving regulatory environment to address citizen concerns? History tells us that dog won’t hunt.

Truth is, Texas has one of the lower accident-related death rates in the country. Well butter my bu++ and call me a biscuit! Who’d a thunk it, given all the bull riding, bronco busting, and sheep shenanigans down there. Not surprisingly, their lower lifespan is attributed mostly to chronic diseases.

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Immigrants ain’t learnin’ in Texas. Other parts of the country also deal with lots of immigrants who come to the US with low levels of education. The chart included in your link spins a yarn 'bout Texas education.

In Texas, as compared to the US, fewer immigrants have a HS diploma, fewer immigrants attend some college, fewer immigrants receive a Bachelor’s, and fewer immigrants complete a post-grad degree. The only logical conclusion that can be drawn from the geniuses at the Dallas Fed is that Texas isn’t very good at helping immigrants attain higher levels of education.

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That or it’s not PhD and Masters candidates crossing the river to work in the oil and gas fields

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I am strongly in favor of letting Texas build gigantic ai centers in their cities and towns all over the state. The localized heat effects, Data Centers, Urban Heat, and AI Growth combined with the already cool summer breeze South heat wave to bring dozens of records into next week will make Texas a summer paradise in coming years.

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