Cipher, Hut 8 Plunge as Texas Election Raises Data Center Risks
Shares of data center developers with major Texas projects tumbled on November 4 after Democrat Gina Hinojosa won the governor’s race, bringing the prospect of a prolonged halt to new approvals in a key market for artificial intelligence infrastructure.
Cipher Digital (NASDAQ: CIFR) fell 17.24% to $6.72 and Hut 8 (NASDAQ: HUT) dropped 16.87% to $52.99 in morning trading. Core Scientific (NASDAQ: CORZ) declined 11.03% to $12.67, while IREN slid 9.30% to $22.18.
Riot Platforms (NASDAQ: RIOT) bucked the declines, gaining 12.12% to $15.72 after announcing a 15-year lease with an unidentified AI developer for its Corsicana campus in Texas and selling over 10,000 BTC during the third quarter to finance the AI expansion.
Hinojosa’s victory on November 3 makes her the first Democrat elected Texas governor in more than three decades. Her campaign platform calls for an immediate moratorium on data centers until lawmakers enact protections for communities, and for ending the industry’s tax incentives.
Developers were already facing a suspension of approvals under outgoing Republican Governor Greg Abbott, Bloomberg reported. Texas accounts for nearly 30% of US data center capacity scheduled to come online in 2028, the report said, citing SemiAnalysis, making the duration and scope of any restrictions significant for the national buildout.
The companies caught in Wednesday’s selloff have substantial exposure to the state, although their projects are at different stages of construction and approval.
Cipher’s Texas portfolio includes Barber Lake near Colorado City and Black Pearl near Wink. In a November 2 business update, it said Black Pearl had begun generating high-performance computing lease revenue, while additional data halls at Black Pearl and Barber Lake were scheduled to come online through year-end.
Hut 8’s Beacon Point campus in Nueces County has one gigawatt of utility capacity. The company said in July that two leases covering 704 megawatts of IT capacity brought the campus’s initial-term contract value to $19.6 billion. IREN’s Texas sites include Childress and two Sweetwater developments.
Existing power rights may distinguish some projects from developments still seeking approvals. Core Scientific disclosed in September that its existing 297 megawatts at Denton were outside ERCOT’s Batch Zero allocation process. Its Pecos and Hunt projects had conditional classifications under that process.
The extent of any new restrictions remains unsettled. Jefferies analysts cited by Bloomberg said tighter rules on grid costs, water and tax incentives were more likely to raise development expenses and requirements than materially restrict Texas’s project pipeline.
Riot’s rally offered a contrast to the sector’s declines. Its Corsicana agreement provides for about $1.8 billion in average annual rent, with the first 400 megawatts targeted for delivery in September 2027.
