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Democratic Victories Shake Texas Data Centre Landscape
A wave of Democratic candidates secured victories in state and congressional contests across the United States on Tuesday, with Texas emerging as a significant focal point. Known for its burgeoning data centre development and as the headquarters of SpaceX, the state witnessed several winners campaigning against the expansion of such infrastructure. The election outcomes have left certain sectors of the tech industry seeking clarity and explanations.
In the aftermath of the elections, proponents of data centres have taken to social media to express optimism regarding the future of these facilities, albeit not necessarily within Texas or even on Earth. They propose a shift in focus towards the construction of data centres in space. Elon Musk, who invested over $400 million of his wealth in support of Republican candidates who ultimately lost their midterm elections, has been a prominent advocate of this initiative. “Space data centres seem rather appealing at this moment,” Musk tweeted on Wednesday morning, following the Democrats’ sweeping wins in both the House of Representatives and the Senate.
Jordan Lasker, the individual behind the popular tech account Crémieux on social media, also weighed in, stating, “Space data centres are an incredible idea, and anyone sceptical about them has not sufficiently considered the electoral results from last night.” Throughout the day, Musk’s employees, tech investors, AI researchers, venture capitalists, and sector enthusiasts joined the chorus advocating for space-based data centres. Soham Mehta, a researcher at the tech-optimist think tank Foundation for American Innovation, suggested that underwater data centres should also be considered.
Emerging Technologies in Data Centre Development
In June, China launched the world’s first underwater data centre, demonstrating the potential of innovative approaches to data storage and processing. Several companies are already exploring the possibility of placing computational capabilities in orbit. Notably, Google has deployed a satellite containing “data centre-class TPU”, while SpaceX aims to launch “thousands of AI satellites starting in late 2027”. Blue Origin has also joined the movement, having sought permission from the Federal Communications Commission (FCC) to deploy 50,000 satellites that would form an “orbital data centre system”.
Furthermore, a few startups are working on creating data centres in space, with Starcloud claiming to have placed “the first Nvidia H100 GPU in orbit” by November 2025. Despite the technical feasibility, the realities of space-based data centres are complex. These facilities are significantly more expensive than their terrestrial counterparts, are unable to achieve hyper-scale operations, and remain vulnerable to the unpredictability associated with satellite launches.
Concerns raised by tech industry stakeholders regarding Texas data centres are not entirely unfounded. Experts suggest that the recent change in political leadership could lead to tangible shifts in the sector, albeit with certain limitations. While Democrats will control the Texas House of Representatives, Republicans maintain control of the state Senate. Robert Paterson, an environmental planning professor at the University of Texas at Austin, notes that this division may hinder immediate efforts for change.
Potential Legislative Changes on the Horizon
Adrian Shelley, director of the Texas office of Public Citizen, a consumer advocacy organisation, suggests that the legislature is likely to be the venue for discussing impactful policies, such as reallocating resources from state agencies. However, he adds that the governor could implement more immediate changes through executive orders or by requesting the resignation of politically appointed officials within state agencies.
These oversight bodies, including the Texas Commission on Environmental Quality, the Public Utility Commission, and the Texas Water Development Board, have the authority to impose penalties for violations of state legislation or, in extreme cases, revoke permits for projects like data centres. Nonetheless, Paterson points out that Texas promoters enjoy particularly strong “vested rights,” which protect the conditions of their projects from the moment their permits are granted, even if construction has yet to commence.
In the medium term, a potential restructuring of the Texas data centre sector could involve granting greater authority to counties. Paterson highlights that nearly half of the state’s data centres are located in unincorporated areas, placing them beyond the jurisdiction of municipal zoning laws. Unlike other states, Texas counties possess relatively limited law enforcement capabilities. According to the state’s Dillon Rule, counties only possess powers that are “specifically granted by the state.” Therefore, while they have authority over matters such as access and egress on county roads or construction in floodplains, they lack the zoning authority necessary to closely regulate projects like data centres.
Future Prospects for Data Centres in Texas
Paterson suggests that, theoretically, the new Attorney General could adjust the terms of the state’s biennial manual, which outlines the limits of county authority. He also contends that, even within a divided legislature, given that opposition to data centres transcends party lines, state legislators could propose viable legislation that grants counties “limited zoning authority over data centres.”
As Shelley observes, considering that data centres were a decisive factor in this “blue wave,” the upcoming legislative session promises to be intriguing. “I would suggest that the data centre sector has not shown much interest in collaborating with state legislators or local leaders, and I am curious to see if that changes.” If collaboration does not materialise, the low Earth orbit remains an alternative.
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