Sanders Seeks Data Center Freeze; Congress Weighs Options Amid Stock Slump

Following the Democratic takeover of Congress, Senator Bernie Sanders has called for a nationwide halt to new data center projects. On Thursday, the Nasdaq dropped 6.36% into correction territory amid concerns that data center development could decelerate.

Nvidia shares lost 9% as investors assessed potential risks to data center spending. Still, the bill could be derailed by a presidential veto, and the Democratic Party itself is divided over the issue.

Could a Presidential Veto Stop the Data Center Moratorium?

Earlier this year, Sanders and Representative Alexandria Ocasio-Cortez introduced the bill. It would halt all new US data center construction until Congress establishes rules for energy costs, environmental impacts, and community approval.

Democratic control of Congress boosts the bill’s prospects. However, the White House remains in Republican hands.

Democrats only assume control when lawmakers are sworn in on January 3.

Meanwhile, internal party divisions are already surfacing.

“Even among Democrats, a blanket freeze is contested.”

This was said by Nadine Smith, president and CEO of the racial justice group Color of Change, according to TechCrunch.

Might Local Bans Come Before Federal Action?

In Trenton, Ohio, voters approved a prohibition on data centers exceeding 25 megawatts, with 80% support in unofficial returns.

Texas Governor-elect Gina Hinojosa, who defeated Greg Abbott, has vowed to issue a statewide data center moratorium, Reuters reported.

TechCrunch reports that Goldman Sachs anticipates delays in data center construction in states like Georgia and Texas.

Separately, a more limited federal option is on the table. Senator Martin Heinrich of New Mexico has proposed the GRID Savings Act, which would prevent grid costs from being borne by local communities.

On Thursday, OpenAI committed to paying all power and infrastructure expenses at its own facilities.

The chip stock sell-off, as reported by CNBC, pushed Broadcom down 10% and dragged the Nasdaq more than 10% below last month’s high.

The iShares Semiconductor ETF tumbled more than 12%, its sharpest one-day loss since March 2020.

In Seoul on Thursday, shares of South Korean chipmaker SK Hynix fell 7.74% as traders evaluated tighter AI regulations.

The true test for AI investment is whether restrictions come from Congress or from local governments that are already enacting bans.