TeraWulf CEO Paul Prager attempted to present New York's new moratorium on data center construction as a beneficial move for the company. However, the market responded harshly: WULF shares plummeted nearly 7% on the same day, closing at $19.41. Investors clearly did not share management's optimism.
The reason for such a sharp reaction was a directive from Governor Kathy Hochul, which suspended the issuance of permits for the construction of new large-scale data centers in the state. This is the first precedent of this magnitude in New York's history.
Why New York froze data center development
The Governor signed an order imposing a moratorium on the construction of hyperscale data centers. State authorities intend to conduct a comprehensive environmental assessment (GEIS) to study the impact of such facilities on energy consumption, water resources, and air quality. Special emphasis is placed on the colossal energy costs and water consumption of the industry. Moreover, plans include the repeal of tax incentives for large data centers across the state.
"New York has always been at the forefront of adopting new technologies," Hochul stated. "But now, data center development threatens to increase utility bills, deplete natural resources, and create uncertainty for residents. I am obliged to intervene and work proactively."
Why TeraWulf management and investor opinions diverged
TeraWulf operates the Lake Mariner campus in New York and is building a second facility, Lake Hawkeye. The company is gradually moving away from Bitcoin mining towards projects involving artificial intelligence and high-performance computing (HPC), following a general trend among miners.
Prager claims that the new rules give an advantage to projects with already secured permits and access to energy, rather than risky ventures. He emphasized that Lake Mariner is already operational, and expansions for Fluidstack and Google have fully completed the permitting process.
"Lake Hawkeye is a multi-year project, and we are currently considering on-site power supply arrangements. This approach fully aligns with the Governor's priorities for new energy capacity. This model benefits both New York and WULF," the CEO noted.
Despite these statements, as of July 14, WULF shares fell by 7.08% and closed at $19.41.
Currently, the Governor and investors interpret the same order differently. How the document will actually impact TeraWulf's gas pipeline construction in New York will become clearer as the review progresses.
Cryptalist Analysis: While TeraWulf management sees the moratorium as an opportunity for consolidation and strengthening its position, the market assesses the risks of uncertainty. Investors dislike it when regulatory "anchors" are thrown under even the most promising projects. Until the GEIS is completed, pressure on WULF shares is likely to persist, and any positive news from management will be met with a fair degree of skepticism.