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NextFin News - CoreWeave Inc. sent a letter to Texas Governor-elect Gina Hinojosa on November 7, seeking to work with her incoming administration on data center projects in the state — a conciliatory move that came two days after the AI cloud provider's shares plunged nearly 10% on fears that Hinojosa's promised moratorium on new data center construction could choke off growth in the country's fastest-expanding power market. The two-page letter, signed by co-founder and Chief Executive Officer Michael Intrator, explicitly endorses the governor-elect's three principles — that communities should have a voice, households should not pay for new infrastructure, and development should protect local water and power — while pressing for a crucial carve-out: "currently permitted data center projects will be allowed to be completed." The tension between those two sentences is the whole story. CoreWeave is not fighting the new political reality in Texas; it is trying to lock in the projects already in the pipeline before the rules change.
The Letter: Cooperation With a Carve-Out
The letter names six Texas locations where CoreWeave says it operates active facilities: Austin, Denton, Dickens County, Plano, Richardson and Round Rock. It also lays out the company's scale in the state and nationally: CoreWeave operated 51 data centers with more than 1.5 gigawatts of active power as of June 30, and held about 4.2 gigawatts of contracted power capacity as of August 11. By simple arithmetic, roughly 2.7 gigawatts — about 64% of the contracted figure — was not yet active.
That gap between contracted and active power is where the regulatory risk sits. A moratorium on new approvals does not touch the 1.5 gigawatts already humming. It threatens the 2.7 gigawatts still waiting to be built — the capacity CoreWeave has already signed contracts for, financed, and in some cases begun constructing.
"You have made clear that data center growth must work for Texans," Intrator wrote. "We strongly support those principles." The letter goes further, offering to work with Hinojosa's transition team "on the responsible completion of permitted projects and on clear, durable standards for future development." On the two issues that have drawn the most public anger — grid costs and water — CoreWeave makes specific pledges: when it connects a new facility, it funds the required substations and transmission upgrades itself, "so the costs of our growth are not passed along to neighboring households"; and new capacity "will also use closed-loop liquid cooling systems by design," with day-to-day water use "comparable to, or lower than, a commercial office building of similar size."
Why Texas Matters: More Than a Quarter of U.S. Planned Capacity
The stakes extend far beyond one company. Texas accounts for more than 25% of planned U.S. data center capacity by 2030, according to the law firm King & Spalding, and Wells Fargo estimates the state holds 27% of planned U.S. data center gigawatts. JLL projects Texas could overtake Northern Virginia as the world's largest data center market by 2030, with 6.5 gigawatts already under construction in the state and sector occupancy at 99%.
The reason is power. The Electric Reliability Council of Texas, which runs the state's grid, reports a queue of roughly 22.6 gigawatts of large-load interconnection requests. If just 10% of that queue materializes by 2030, ERCOT's all-time peak demand would rise 26%; if 20% arrives, the grid would face loads never contemplated in Texas energy planning. The U.S. Energy Information Administration expects large flexible loads on the ERCOT grid to consume 54 billion kilowatt-hours in 2025, up almost 60% from 2024 and about 10% of total forecast consumption.
CoreWeave is embedded deep in that buildout. Galaxy Digital's Helios campus in West Texas — the first phase of which is under a long-term lease with CoreWeave, with initial power delivery expected in early 2026 — has won ERCOT approval for more than 1.6 gigawatts of capacity. OpenAI, Oracle and SoftBank's Stargate project anchors a flagship site in Abilene, with nearly 7 gigawatts of planned capacity. CoreWeave is also collaborating with Poolside on "Horizon," a West Texas AI data center powered by Permian Basin natural gas.
The Political Shift: A Wild West Declared Closed
Hinojosa, a Democrat, defeated Republican incumbent Greg Abbott on November 3, becoming the first Democrat to win the Texas governorship in more than 30 years. She takes office on January 19, 2027; the 90th Texas Legislature convenes January 12. Until then, Abbott retains control of the data center directives he imposed by executive order — and whether he modifies them in the interim is the first thing to watch.
During the campaign, Hinojosa called for an immediate moratorium on data center approvals until the Legislature can establish protections: transparency, local input, licensed labor, and safeguards for water and electric resources. Her "Texans First Data Center Priorities" would require American union jobs, bar non-disclosure agreements that conceal water and energy usage, force developers to prove households won't pay more for electricity or water, end subsidies, void water contracts that threaten a community's supply, and — most critically — give local communities the right to vote on data center projects.
"Data centers are coming in and doing as they please – they are guzzling up all our water, guzzling up all our electricity – and the people have no say. They have no power. That is the Wild West of data centers that Greg Abbott has created in Texas. People need relief."
The political tailwind behind her is measurable. Exit polling after the election found that 56% of voters said AI and data centers were a "crucial or major factor" in their vote for Congress, and roughly 76% said they would oppose the construction of a new data center in their community. Democrats also won gubernatorial seats in Nevada, Georgia and Ohio on similar platforms. Voters rejected data center projects in 40 out of 41 local ballot initiatives across 10 states. This is not a Texas anomaly; it is a coordinated political realignment around data center siting.
Market Reaction: Selloff, Then Partial Recovery
Investors reacted immediately. On election night, CoreWeave shares fell approximately 7% in after-hours trading. The next day, they dropped 9.8% as the broader market sold off — the Dow Jones Industrial Average slid 1,833 points, or 3.4%, and the Nasdaq Composite fell 5.5%, entering correction territory. The selloff spread across AI infrastructure: Nebius Group and Oracle each declined roughly 4% in overnight trade, Cipher Digital fell 21% intraday, Applied Digital dropped 8.8%, and power producers Vistra and Constellation Energy fell 15.4% and 9.2% respectively.
By Friday, the panic had moderated. CoreWeave closed at $46.40, up $2.74, or 6.28%, on volume of 59.2 million shares, according to market data. The stock remains deeply beaten down: it trades well below its 50-day average of $75.56 and is down roughly two-thirds from its 52-week high of $138.25, with a market capitalization of about $25.6 billion.
Analysts drew a sharp line between near-term and medium-term exposure. Nomura said projects planned for 2028 face the greatest risk of permitting delays, while much of the capacity expected online in 2027 is already under construction — limiting the near-term effect. David Sacks, speaking on the All-In podcast on November 7, put it more bluntly: "My base case is that the projects that are fully permitted will get done in 2027, but I don't think there's going to be major new projects in this new regime for a long time... I get really worried about 2028." His reasoning was political rather than technical: with both parties running attack ads against any politician who approved a data center, "what is your incentive to stamp approval on anything?"
The Second-Order Problem: It Is Not Just Texas
The first-order effect of a Texas moratorium is obvious: fewer gigawatts get built in Texas. The second-order effect is what should worry the market. Texas became the data center capital of the United States precisely because it offered the one thing every other state withheld — fast, predictable permitting in a deregulated power market. If Texas loses that edge, developers do not simply move to the next cheapest site. They face a national landscape in which Nevada, Georgia, Ohio and now Texas have all elected officials on pledges to slow data center construction.
That changes the discount rate investors apply to every data center growth story. A project delayed two years is not a project that earns two years later; it is a project whose internal rate of return collapses because financing costs, equipment commitments and utility expenses accrue while the project sits on ice. At some point, as one industry analysis noted, existing projects could stop being financially viable altogether.
There is also a supply-chain consequence. CoreWeave's letter reveals that 64% of its contracted power is not yet active. That means the company's revenue growth over the next 18 to 24 months depends on converting contracted capacity into operating capacity. If permitting slows that conversion, the backlog that Wall Street has been valuing — CoreWeave reported $55.6 billion in revenue backlog in its most recent quarter, nearly double the prior quarter — becomes an asset that earns nothing until regulators sign off.
The Counter-Thesis: This Is Priced-In Panic, Not a Structural Break
The strongest case against the bearish read is straightforward: no statewide moratorium exists yet, and Hinojosa herself has signaled that currently permitted projects will be allowed to proceed. CoreWeave's letter explicitly welcomes that clarification as "a clear starting point for working together." The company has already accommodated the new political demands — closed-loop cooling, self-funded grid interconnections, no cost pass-through to households. If the incoming administration's actual policy is "responsible growth with community input" rather than a blanket ban, then CoreWeave has positioned itself as the model citizen, not the target.
Raul Martynek, chief executive of Dallas-based developer DataBank, framed the moment as cyclical rather than structural: "The governor is addressing what you're seeing in the country with pushback on data centers, and the fact that it is election season may have something to do with this because, from an issue perspective, it's top of mind for voters." Election-season rhetoric, in this view, moderates once the votes are counted and the capex and jobs arrive.
That argument has force, but it underestimates the incentive problem Sacks identified. Even if Hinojosa's formal policy exempts permitted projects, the officials who must sign permits — county commissioners, city councils, utility boards — now operate in an environment where approval is politically toxic. A policy that is permissive on paper can be restrictive in practice, one permit at a time. The falsifying signal is concrete: if CoreWeave reports on November 10 that its Texas conversion rate — contracted gigawatts turning into active gigawatts — remains on schedule, and if ERCOT's large-load queue shows no material withdrawals in its next quarterly update, then the structural-break thesis is wrong and the selloff was a cyclical overreaction.
What to Watch
Three catalysts will determine whether this is a buying opportunity or the start of a multi-year permitting winter.
Short term (days): CoreWeave reports third-quarter results on Tuesday, November 10. Management commentary on Texas project timelines, and any update to the $55.6 billion backlog, will set the tone. The stock's ability to hold above the $43–$44 level — its recent low — matters technically.
Medium term (weeks to months): Watch whether Governor Abbott modifies his data center directives before leaving office, and whether Hinojosa's transition team engages constructively with the industry. The Data Center Coalition has already signaled willingness to cooperate: "DCC looks forward to working with state leadership along with local officials, stakeholders, and Texas communities to continue building trust and supporting responsible data center growth." The tone of that engagement — cooperative or adversarial — will telegraph the regulatory path.
Long term (2027 and beyond): The 90th Legislature convenes January 12, 2027, and Hinojosa is inaugurated January 19. The actual text of her data center bill — whether it preserves a permitted-project safe harbor or imposes local veto power retroactively — will determine whether 2027 is a transition year or the year the pipeline stalls. Beyond that, ERCOT's queue data will show whether developers are withdrawing projects or merely waiting.
Base case: permitted projects proceed through 2027, but new approvals slow sharply in 2028, compressing the growth timeline for operators with the most Texas exposure. Upside case: Hinojosa's "responsible growth" framework proves industry-friendly, CoreWeave's concessions become the template, and the selloff reverses as permitting clarity returns. Downside case: local veto power and water-contract voids stall the 2.7 gigawatts of contracted-but-inactive capacity, forcing CoreWeave and peers to write down the value of delayed projects.
CoreWeave's letter is a study in adaptation: it endorses the regulator's principles, pledges to internalize its own costs, and asks only that projects already approved be allowed to finish. The question is whether that is enough — because in a political environment where approving a data center is a career-ending vote, the safest permit is the one never signed.
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