TeraWulf CEO Paul Prager called the new moratorium on data center construction in New York State a "fortunate decision" for the company. However, the market clearly disagreed: WULF shares lost nearly 7% on the same day, closing at $19.41.
The reason for such a sharp investor reaction was a directive from Governor Kathy Hochul, which suspended the issuance of permits for the construction of new large-scale data centers across the state. This is the first time in New York's history that such a moratorium has been introduced.
Why New York froze data center development
The Governor signed an order that halts the issuance of permits for the construction of new hyperscale data centers if they have not yet passed the final approval stage. During the moratorium, authorities will prepare a comprehensive environmental impact statement (GEIS) to study the impact of such facilities on energy consumption, water resources, and air quality.
Hochul specifically emphasized the high energy costs and water consumption of the industry. As part of the new policy, the state also intends to repeal sales tax exemptions for large data centers. "Data center development threatens to increase utility bills, deplete natural resources, and create uncertainty for New Yorkers," the Governor stated, justifying her intervention.
Why the views of TeraWulf management and investors diverged
TeraWulf operates the Lake Mariner campus in New York and is building a second facility, Lake Hawkeye. The company is gradually diversifying from Bitcoin mining towards projects involving artificial intelligence and high-performance computing (HPC).
According to Prager, 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 considering on-site power generation. This approach fully aligns with the Governor's priorities for new energy capacity," the CEO noted.
However, despite these assurances, investors were clearly spooked by the uncertainty. WULF shares fell 7.08% at the close of trading on July 14. For now, the Governor and the market are interpreting the same order differently. How the document will actually affect the construction of TeraWulf's gas pipeline in New York will only become clear as the review progresses.
Expert opinion: The market reaction is a classic example of uncertainty aversion. Even if TeraWulf's projects are de facto protected, any regulatory noise in the current macroeconomic environment weighs on the stocks of companies associated with energy-intensive technologies. Investors need time to digest the risks and separate real threats from temporary political statements.