Senator Bernie Sanders is demanding a nationwide moratorium on data center construction following the Democrats' victory in the congressional elections. The Nasdaq fell 6.36% and entered correction territory amid fears of a possible slowdown in data center construction.
Nvidia shares declined 9% as investors assess the risks of reduced data center spending. A presidential veto could halt the bill.
Data center moratorium and the prospect of a veto
Sanders and Congresswoman Alexandria Ocasio-Cortez introduced this bill earlier this year. The document proposes suspending the launch of new data centers in the US until Congress adopts rules on electricity payment, environmental protection, and the necessary approval from local residents.
Control of Congress is shifting to the Democrats, which increases the chances of the initiative being approved. The Republican Party so far retains the White House. The Democrats will officially begin work only after being sworn in on January 3.
Disagreement is already visible within the party. "Even among Democrats, a full moratorium is controversial," believes Nadine Smith, president and CEO of Color of Change, an organization fighting for racial justice.
Regional authorities are moving ahead of the federal center
Residents of the city of Trenton in Ohio voted to ban the construction of large data centers with a capacity of more than 25 megawatts. According to preliminary counts, 80% of the local audience supported this measure.
In addition, Texas's new governor, Gina Hinojosa, who defeated Greg Abbott in the election, intends to introduce similar restrictions at the level of the entire region.
Meanwhile, Goldman Sachs forecasts delays in the implementation of construction projects in Texas and Georgia.
In parallel, parliament is advancing the GRID Savings Act, authored by New Mexico Senator Martin Heinrich. The document is intended to exempt citizens from paying bills for power grid modernization. Meanwhile, the creator of the ChatGPT chatbot, OpenAI, has promised to pay all electricity and infrastructure bills itself at its own and leased facilities.
The decline in the technology sector hit global exchanges
A large-scale sell-off of semiconductor developers' shares reduced chipmaker Broadcom's value by 10%. The Nasdaq fell more than 10% from its peak value last month.
At the same time, the iShares Semiconductor exchange-traded fund lost over 12% in value, showing its worst daily performance since spring 2020.
Shares of the South Korean giant SK Hynix fell 7.74% in Seoul trading on Thursday, as investors fear any factors slowing the artificial intelligence sector.
The main factor for the industry remains the question of whether a strict moratorium will be adopted at the federal level or whether construction restrictions will continue to proceed through local authority decisions.
Cryptalist analysis: The market reacted to the political risk long before the bill became a reality — the Nasdaq and the semiconductor sector are already pricing in a scenario of slower capital expenditure on AI infrastructure. The most vulnerable are companies whose revenue directly depends on the pace of data center commissioning, while the very fact of a presidential veto and resistance within the Democratic Party significantly reduce the likelihood of a strict federal moratorium. Cryptalist assesses the current correction as an emotional reaction to political rhetoric rather than a reflection of a fundamental break in demand for computing.