The 2026 US midterm elections could bring significant changes to America's artificial intelligence industry, particularly the rapid expansion of AI data centres. Following a major victory over Republicans, Democrats are preparing to challenge the construction of large data centres, arguing that these facilities put pressure on local communities by consuming substantial amounts of land, water and electricity without providing enough benefits to residents.
According to the Associated Press, Democrats have secured control of both chambers of Congress and won several Republican-held governor's offices, including those in Texas, Georgia and Ohio. These states are important markets for the data centre industry, and their new Democratic leadership could introduce greater scrutiny of projects that have expanded rapidly under the current administration.
Texas alone is expected to account for approximately a quarter of the data centre capacity planned across the US by 2030. Meanwhile, Atlanta has emerged as the country's busiest market for data centre construction, according to Reuters.
Texas and Georgia could become tougher markets for data centres
Two Democratic leaders attracting attention are Texas Governor-elect Gina Hinojosa and Georgia Governor-elect Keisha Lance Bottoms. Both made the expansion of data centres a prominent issue during their election campaigns, arguing that technology companies should not be allowed to place additional pressure on local resources without consulting affected communities.
Hinojosa defeated Republican Greg Abbott and has called for a temporary halt to new data centre construction until lawmakers establish stronger safeguards.
Speaking to CBS News' Face the Nation in October, she highlighted concerns about water availability and rising electricity costs in Texas. She also argued that residents should have a say in deciding whether large data centres are established in their neighbourhoods.
Bottoms has taken a similar position in Georgia, calling for a pause on new construction while the state evaluates the industry's impact.
In an interview with WRBL, she said, "We need to take a pause on new construction and reassess where we are."
She cited concerns involving electricity bills, environmental consequences and pressure on local water supplies.
The election results could have implications for the data centre industry because Texas and Georgia are among the largest markets for such infrastructure in the US. However, a change in governors does not automatically mean that all ongoing projects will be cancelled. State legislatures, utility regulators and local authorities also influence construction approvals.
Elon Musk suggests moving data centres into space
One technology billionaire who appeared unimpressed by the election results was Elon Musk.
Musk relocated from California to Texas in 2020 as Tesla and SpaceX expanded their operations. According to reports by Axios and The Washington Post, he spent an estimated $446 million supporting Republican political groups during the election cycle, making him the largest individual political donor in modern US history.
However, Republicans suffered a significant setback in Texas after Hinojosa defeated Abbott.
Responding to the developments, Musk posted on X (formerly Twitter): "Data centres in space looking pretty appealing right now."
The timing of the post appeared to suggest a response to the election results and the possibility of stricter regulations for data centre construction.
However, Musk has been discussing the idea of space-based data centres for some time. He has previously suggested that computing infrastructure could eventually move entirely into space.
At the same time, Musk is continuing to develop large data centre infrastructure on Earth, which would remain subject to local regulations if governments introduce stricter rules.
Michigan's new senator wants a complete pause on frontier AI
The debate surrounding AI infrastructure is not restricted to Texas and Georgia. Michigan's Abdul El-Sayed, who defeated Republican Mike Rogers to secure a US Senate seat, also made artificial intelligence a major issue during his campaign.
His election is particularly significant because he is set to become the first Muslim elected to the US Senate.
During a 60 Minutes interview with Ross Douthat, El-Sayed said AI had increasingly emerged as one of the most important concerns raised by voters.
His position goes beyond demanding stricter regulations for data centre construction. When Douthat asked whether he would support restricting the development of frontier AI systems, El-Sayed responded: "Full on pause."
During the longer conversation, he argued that some Chinese frontier AI research was "just spoofing our models", comparing the relationship to a water skier being pulled by a boat.
However, he acknowledged that China could eventually "hop on a jet ski and catch up". He also advocated an international agreement to address the risks associated with advanced AI development.
Will the US AI data centre boom slow down?
The growing political opposition to data centre construction comes as electricity consumption from these facilities is expected to increase substantially.
According to estimates from the US Department of Energy, data centres could account for 11.8 per cent of the country's total electricity consumption by 2030, compared with approximately 4.4 per cent in 2023.
The rising demand has turned electricity prices, water consumption and land availability into major political concerns.
Regulatory authority over data centre expansion is divided between federal, state and local governments.
Congress can introduce nationwide regulations covering electricity costs, environmental disclosures and industry incentives. State governments have more direct influence through utility regulators, electricity planning, water regulations and construction permits.
Local authorities can also influence projects through zoning restrictions, land-use approvals and community-level regulations.
The Democratic victories could therefore have significant implications for technology companies planning large infrastructure investments.
Texas Governor-elect Gina Hinojosa has campaigned for a construction moratorium until lawmakers establish safeguards addressing electricity consumption, water resources and property rights. Georgia Governor-elect Keisha Lance Bottoms has also called for a temporary pause while the state evaluates the industry's impact.
With Texas expected to account for roughly a quarter of America's planned data centre capacity by 2030, any regulatory changes there could affect the industry's expansion plans.
For technology companies, the situation presents several challenges. Even without a nationwide ban, stricter state regulations and opposition from local communities could delay projects, increase construction costs and make access to electricity more difficult.
The challenge for AI companies may no longer be limited to securing land, purchasing advanced chips and building infrastructure. They will also need to demonstrate that the benefits of AI data centres justify the enormous quantities of electricity, water and other resources they consume.
Although US President Donald Trump remains in office, the Democrats' increased political influence could mean greater scrutiny of AI infrastructure and expansion plans involving companies such as Musk's SpaceX and other major technology players.
