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Data Center Backlash Brings Thousands Of Projects To A Screeching Halt

Data Center Backlash Brings Thousands Of Projects To A Screeching Halt

Seattle City Council/Wikimedia Commons

Sean Moran
August 23, 2026 1:22 PM ET

Americans’ growing opposition to the prevalence of data centers has led many politicians to limit or pause their increase altogether.

Lawmakers in New York and Texas, for example, have effected stoppages of data center projects, while other states, such as Pennsylvania, have issued more restrictions on data center construction. Americans’ support for data centers has generally plummeted, as critics have linked them to higher utility bills — reflecting extraordinary water and energy usage — being experienced by local communities.

Texas Republican Gov. Greg Abbott issued a sprawling data center moratorium in early August as residents soured on data centers. Abbott claimed his moratorium would protect Texans.

“My directive has halted up to 1,800 data center projects. I established guidelines & guardrails to protect Texas communities,” he wrote in a Wednesday post to social media, adding that data centers must not take water from communities, tax the Texas energy grid, or otherwise disrupt communities.

Abbott’s moratorium drew a range of responses from the private and public sectors.

“What Governor Abbott is doing is working. The Governor established clear guidelines: Data centers must invest their own money, provide their own power, reuse their own water, ensure that the power grid is gaining power— not losing power because of their operations — and must not disturb neighborhoods,” Andrew Mahaleris, Abbott’s press secretary, told the Daily Caller News Foundation in a statement. “Data centers across the state have announced their full compliance with those standards, which provide guardrails that protect our communities.”

“This is really unfortunate – I thought TX would be the last hold out against this ignorant thinking, and continue to be a place to build! Require them to bring their own power, and it’s a net positive all around,” Brian Armstrong, the co-founder and CEO of the digital currency exchange Coinbase, posted Thursday in response to Abbott.

Coinbase reincorporated from Delaware to Texas in November 2025, with Armstrong stating that “Texas has a strong culture of celebrating builders who are growing our economy, creating prosperity for all. They’ve also embraced crypto.”

“I saw Texas the other day is sort of against data centers. I think it’s a mistake. I think they are tremendously important for the economics. This is, for Texas to say ‘no’ to data centers, is a mistake — in the sense that it could be bigger than oil. Data centers could be bigger than oil,” President Donald Trump, after learning of the governor’s moratorium, said in a Punchbowl News interview published Aug. 7.

Texas’s data center moratorium will likely cut the state’s electricity demand in half, according to the U.S. Energy Information Agency. Notably, the Lone Star State’s power grid experienced significant power outages in 2021 as a result of Winter Storm Uri, which killed more than 240 people, POLITICO’s E&E News reported.

Many large data centers likewise failed reliability tests, which raised the risk of power outages, Reuters reported. Data centers often cut their connection to the grid when facing electrical fluctuations to protect its computer chips. This, however, often leads to surges involving excess electricity, the outlet noted.

Abbott also said the Texas energy grid was projected to add “five times the amount of power that we have available” thanks to data centers, The Center Square reported.

“This simply is not going to work,” he remarked.

Abbott added that the Texas Public Utility Commission (PUC) “requested every data center either currently operating or seeking to operate in Texas to give data to the state about how much power they are currently using and how much they would be using. The PUC got less than a 10% response.”

The Data Coalition, a trade group for data center companies, said its members remain committed to “ensuring data centers are true partners in every Texas community where we operate, protecting residential ratepayers, strengthening grid reliability, and promoting responsible water stewardship,” according to The Center Square.

Oracle, one of the larger AI developers in the Lone Star State, said it is committed to “ensuring data centers are true partners in every Texas community where we operate, protecting residential ratepayers, strengthening grid reliability, and promoting responsible water stewardship.”

New York became the first state to block construction for any data center project — reportedly at least 12 — which produces more than 50 megawatts, according to TechCrunch.

Democratic Pennsylvania Gov. Josh Shapiro likewise signed an executive order requiring AI companies to obtain state permits, pay for the electricity cost, hire and train local workers, and protect the environment, according to a Tuesday press release.

“My message to data center developers is clear: if you can’t agree to our strict requirements and get the community where you want to build to say ‘yes,’ you’re not going to have the Commonwealth’s support either,” Shapiro said in a statement about his order. “These are some of the biggest companies in the world – they can afford to be good neighbors, follow the rules, and do this right.”

More than 530 American counties and localities have banned or limited the construction of data centers, according to a report by the climate news outlet Heatmap.

Americans of all political persuasions disapprove of data centers, multiple polls have found. Many politicians previously championed data centers before experiencing the opposition of constituents.

An estimated 75% of American registered voters either strongly or somewhat disapprove of data center construction near their neighborhoods, while only 15% strongly or somewhat approve them, according to a Heatmap survey conducted in August by Embold Research.

 “It’s a faster and deeper shift in American public opinion than I would have once thought possible on any issue,” Robinson Meyer, the founding executive editor of Heatmap, wrote.

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