Democratic control of Congress pauses US data center approvals

Following the US midterm elections, the Democratic majority in the House of Representatives announced a pause on approving new data centers, prioritizing the completion of existing projects. This decision has prompted Elon Musk to consider accelerating plans for space-based data centers, specifically the 'Suncatcher' project, which utilizes solar power in orbit. Google has also launched a similar experiment with a chip in space, though experts like Professor Ulrich Walter note significant technical challenges, including satellite collision risks and the high cost of specialized solar panel fluids. The discussion contrasts this with China's approach of submerging data centers in the sea for cooling. Meta President Dina Powell-McCormick stated at the Wall Street Journal tech conference that Democratic wins will make it harder for companies to build data centers, arguing that the industry has failed to adequately explain the benefits of these investments. Meta currently operates facilities in 23 states, with five planned projects of one gigawatt or more, including one in Texas. To mitigate political risk, Meta employs a strategy of paying for its own electricity and directing tax surpluses to teachers and first responders. Analysts expect a 'lame duck' period where President Trump can veto legislation, but state-level democratic control will force renegotiation of data center terms. Approximately half of planned data centers are now in limbo, potentially halting up to $250 billion in investment, or 25-30% of total planned capex. The market initially rallied, with Microsoft, Google, Amazon, and Meta stocks rising up to 10%, as investors anticipated reduced capital expenditure. However, the Nasdaq subsequently lost $2.5 trillion after gaining $1 trillion post-election, driven by fears that moderated data center buildouts would reduce chip demand, pressuring margins for Nvidia, AMD, Intel, and Broadcom. Experts note that data centers typically require two years for approval before construction begins, meaning projects slated for 2027 and until mid-2028 are likely safe from immediate political interference.