“From Crypto Mining to Data Centers and Semiconductor Fabs”: Power-Strapped Texas Faces Mounting Warnings

Texas Power Demand Surges Amid Industrial Restructuring
Crypto Miners and AI Data Centers Add Strain to the Grid
Semiconductor Plants Emerging Across Texas Also Cited as Pressure Points

Power demand in the U.S. state of Texas is rising at a rapid pace. While large-scale cryptocurrency mining clusters are already consuming enormous amounts of electricity, demand for artificial intelligence data centers is also converging on Texas, further intensifying pressure on the power grid. Semiconductor production hubs operated by Samsung Electronics, Tesla and others in the state are also being cited as factors amplifying the risk.

Texas Power Grid on Alert

According to a report by economic media outlet ZeroHedge on April 21, the Electric Reliability Council of Texas (ERCOT) recently projected that peak electricity demand in Texas could reach 367,790MW by the early 2030s. That would be about 4.3 times the state’s all-time peak demand of 85,508MW recorded in August 2023. ERCOT is the independent system operator (ISO) that manages the Texas power grid and serves as the single grid operator responsible for roughly 90% of the state’s electricity demand.

ERCOT had already warned of a power crisis in its Capacity, Demand and Reserves report published last year. The report said Texas could face a power supply shortfall of up to 8.3% in 2027, with the deficit potentially jumping to 32.4% in the summer of 2029. The U.S. Energy Information Administration (EIA) issued a similar assessment. According to the Short-Term Energy Outlook (STEO) released by the EIA last year, electricity demand on the Texas grid is expected to reach about 425TWh between January and September this year. That represents a roughly 14% increase from the same period a year earlier and marks the fastest growth rate among major U.S. power grids.

Behind this problem lies the rapid industrial restructuring taking place across Texas. At present, Texas is regarded as a core hub with one of the highest concentrations of Bitcoin mining activity in both the United States and the global market. After China imposed a mining ban in 2021, major mining companies relocated to Texas in succession, forming a cluster of sorts. This is seen as the result of a combination of low electricity costs, a relatively relaxed regulatory environment, and ERCOT’s unique structure, which allows users to adjust consumption in response to fluctuations in power prices. The cluster is reportedly operating large-scale mining facilities totaling about 2.7GW within the ERCOT grid alone.

Surging Demand for AI Data Centers

More recently, AI data centers have also been entering the competition for electricity in Texas. As California and Virginia, once key data center construction hubs, face constraints in power, costs and regulation, Texas has emerged as a practical alternative for AI infrastructure expansion. Meta, for instance, recently decided to invest $10 billion in a data center under construction in El Paso, Texas. That is roughly six times the $1.5 billion it had committed last October. The data center, scheduled to begin operations in 2028, will have a power capacity of 1GW as a single facility.

Google also announced last November that it would build new data centers in Texas. The total investment amounts to $40 billion, the largest investment Google has ever made in a single U.S. state. The new data centers will be built in Armstrong County and Haskell County by 2027, while one of the Haskell County facilities will be accompanied by solar power generation facilities and a large-scale energy storage system (ESS). Google also plans to continue investing in its Midlothian and Red Oak data centers near Dallas, strengthening its cloud and AI processing capacity across Texas.

According to real estate services firm JLL (Jones Lang LaSalle Incorporated), Texas is expected to surpass Virginia by 2030 and become the world’s largest data center market. The problem is that data centers require electricity on a scale that existing industrial infrastructure struggles to absorb. ERCOT data show that the maximum power demand of data centers in Texas stood at about 8GW last year, accounting for a substantial share of the state’s total peak demand of 94GW. Pending grid interconnection requests in Texas amount to 29GW, and ERCOT expects related demand could rise to as much as 77GW by 2030.

Semiconductor Fabs Also Taking Root in Texas

Semiconductor production bases beginning to take root in Texas are also cited as factors adding strain to the power grid. Samsung Electronics is investing more than $45 billion in Taylor, Texas, to build an advanced foundry semiconductor fabrication plant. Michelle Glaze, director of communications and community affairs at Samsung Austin Semiconductor (SAS), Samsung Electronics’ U.S. subsidiary, said last year that the goal is to bring the plant online by the end of 2026. The Taylor plant received a temporary certificate of occupancy (TCO) from the city of Taylor in January for an 88,000-square-foot area and has begun limited on-site activities.

The Terafab project led by Tesla CEO Elon Musk is also based in Texas. Terafab is an integrated semiconductor complex being built in Austin, Texas, and is expected to produce low-power inference chips for Tesla’s autonomous vehicles and humanoid robot Optimus, as well as high-performance AI chips designed to operate in space environments. Musk’s stated goal is to secure 1TW of computing capacity per year through Terafab. That is close to 50 times the computing power produced globally in a year, estimated at about 20GW.

These semiconductor plants rank among the most electricity-intensive industrial facilities. A single advanced foundry plant typically consumes around 100MW to 150MW of electricity continuously, while a large campus with multiple production lines can consume more than 300MW to 500MW. That is comparable to the power consumption of a midsized city. Such large-scale power demand stems from the nature of semiconductor manufacturing. In semiconductor plants, EUV lithography equipment, plasma and vacuum systems, cleanrooms requiring ultra-precise temperature and humidity control, and chemical processing facilities operate around the clock without interruption. Unlike data centers and cryptocurrency mining facilities, semiconductor fabs cannot easily suspend operations even when grid conditions become unstable, due to risks of yield deterioration and losses. In effect, they represent “inelastic demand” that is difficult to curtail.