Texas regulators approved a new set of requirements Thursday to keep data centers and crypto-mining facilities operating, a move tech companies say could cost them billions of dollars.
The state Public Utility Commission voted 5-0 to require data centers and other “large computational loads” overseen by the Electric Reliability Council of Texas to stay online during temporary disturbances on the grid.
Under the new rules, data centers could be ordered to disconnect from ERCOT — which handles about 90 percent of the state’s power demand — if they trip offline during power disruptions. Grid experts and ERCOT officials say data centers and crypto miners that can’t “ride through” temporary power blips could lead to a cascade of facilities and generators going offline.
“Without these requirements, events involving [large computational load] loss would increase in magnitude, potentially leading to system frequency and voltage instability,” ERCOT said in an impact statement, according to a PUC staff memo.
Frequency refers to the number of complete cycles electric currents undergo within one second. An abrupt frequency change could lead to localized power outages and, potentially, even gridwide issues, according to electricity experts.
Temporary grid disruptions are common, caused by everything from lightning hitting a transmission line to equipment malfunctions.
Data centers and crypto miners have a low threshold for electricity disturbances, which could fry their equipment or cause their entire facilities to lose power. To prevent that, data centers and similar developments are outfitted with infrastructure that takes them off the power grid within milliseconds of detecting a blip and switch to backup generators.
But because these facilities consume so much power — in some cases more than 1,000 megawatts — one large data center tripping offline could create a ripple in the grid’s supply-demand balance. That ripple could cause other data centers nearby to trip offline, causing a cascading effect that might eventually lead electric substations and generators to come offline.
And as more massive data centers come online, the risk to the grid grows, said Ricardo de Azevedo, chief technology officer at ON.energy, which provides backup power to data centers that can ride through blips on the grid.
“Now, there are gigawatt campuses going up in West Texas mainly, and a lot of them. If 2.6 GW trips at the same time in West Texas, it can take down the whole region,” de Azevedo said. “And there’s many more gigawatts than that in [ERCOT’s interconnection] queue. So if a blip happens and all those loads suddenly disappear, it would cause a blackout.”
One GW is equal to 1,000 MW. That is enough electricity to power about 250,000 homes at times of peak demand in ERCOT’s region.
All data centers and crypto miners that received ERCOT’s approval to energize on or after Nov. 15, 2025, will have to comply with the newly approved rules.
Crypto miners and data center developers, however, argue that issues stemming from ride-through capabilities during grid disturbances could be solved in other ways.
Jessi Goostree, executive director of the Texas Blockchain Council, said ERCOT could have studied if Texas’ planned $33 billion transmission build-out, the addition of new generators to the grid and new power market offerings could help address the situation.
Instead, she said her members will be paying anywhere from $500,000 to $1 million per megawatt of power they use to comply with the new ride-through rules. For some of her members, it could cost hundreds of millions of dollars.
“We definitely understand and support the principle behind the rule to provide reliability for residential Texans. We are residential Texans too, so we support that,” Goostree said in an interview. “But it’s going to really create more hurdles for our members than we believe is necessary.”
Data centers and other large industrial power users have also argued that ERCOT and the PUC don’t have the regulatory authority to regulate retail power users of any size. Litigation could be filed over the new PUC requirements.
The Data Center Coalition did not immediately respond Thursday to a request for comment.
Katie Coleman, outside counsel for Texas Industrial Energy Consumers, said in an interview Thursday that the organization’s members won’t be affected by the new requirements. But she said the rules set a “dangerous precedent.”
“If they do impose requirements that substantively affect our members, we would plan to sue and challenge that,” Coleman said. “We can’t have ERCOT having requirements on LNG facilities or semiconductor [fabrication plants] — they don’t have the expertise to do that.”
R. Floyd Walker, senior council of market analysis at the PUC, wrote in a memo to PUC commissioners that imposing regulations on data center infrastructure is different than regulating data centers themselves.
“For example, regulations for home wiring directly impact homeowners but they cannot be reasonably described as regulating homeowners,” Walker wrote. “There is no debate that voltage and frequency excursions on the transmission network create reliability concerns, which increase with the interconnection of each new large computational load.”
