Applied Digital Plunges 17%, Cipher Digital Sinks 14%, TeraWulf Tumbles 13% as Texas Data Center Fears Deepen

Texas politics is becoming the biggest risk for former crypto miners that have rebuilt themselves as AI data center landlords. Applied Digital (NASDAQ:APLD) stock is at $13.74, down 17% in early trading. At the same time, Cipher Digital (NASDAQ:CIFR) stock is at $5.58, down 14%.

TeraWulf (NASDAQ:WULF) stock is at $10.19, down 13%. The slide follows a pledge from Texas Governor-elect Gina Hinojosa, who defeated Greg Abbott, to halt new data center approvals until the state adopts rules protecting residents from higher electricity and water costs. Texas is at the center of the industry’s AI hosting plans.

Texas Pledge and Analyst Cuts Rattle Cipher Digital and TeraWulf

Reuters reported on November 4 that Hinojosa has promised a data center ban until new laws are passed. Cipher Digital is the most exposed of the three, because its Odessa, Barber Lake, Black Pearl and Colchis sites all sit on the Electric Reliability Council of Texas (ERCOT) grid. Applied Digital is centered on North Dakota, while TeraWulf operates mainly in New York and Kentucky.

Bernstein cut its price targets on seven miners on November 4 while keeping Outperform ratings on TeraWulf and Cipher Digital. That move took Bernstein’s TeraWulf target to $20 from $36 and its Cipher Digital target to $15 from $23. Analyst Gautam Chhugani wrote, “We would expect the data center pause to continue and any data center potential legislation to remain in gridlock.”

KBW downgraded Cipher Digital to Market Perform with a $9.50 target. Morgan Stanley noted Cipher Digital as facing greater Texas uncertainty, though it sees TeraWulf and Applied Digital as better placed.

Applied Digital’s Debt Load Raises the Stakes

Applied Digital faces an added financing burden. CEO Wes Cummins has said the company still has to finance about 800 megawatts (MW) of capacity over the next year. On the October 7 earnings call, the CFO put the company’s debt at approximately $6.4 billion. SEC filings show interest expense exceeded the base rent collected in the quarter ended August 31.

Concentration adds another layer for Applied Digital, since a lease with CoreWeave (NASDAQ:CRWV) makes up a large share of its contracted revenue. Texas also touches Applied Digital through a planned 50 MW AI data center at Project Dorothy 3 in Briscoe County, which could require state approvals.

IREN, CoreWeave and Nebius Slide With the Group

IREN (NASDAQ:IREN) stock is at $18.69, down 14%. The company has material Texas exposure through its Childress and Sweetwater sites, and its next quarterly report is due after the market close.

Meanwhile, CoreWeave stock is at $42.57, down 12%. Nebius Group (NASDAQ:NBIS | NBIS Price Prediction) stock is at $122.19, down 14%. With a presence spanning Europe, the U.S. and the Middle East, Nebius has little Texas exposure, so its drop cuts against a purely Texas story and points to selling across the whole AI infrastructure group.

TeraWulf has its own quarterly report coming up. Bernstein noted that companies with approved power capacity may find it “scarce and valuable” if tougher rules make grid connections harder.

Landlords Versus AI Clouds: Where Applied Digital Fits

Applied Digital, Cipher Digital and TeraWulf work mainly as landlords, building powered campuses and leasing them to hyperscalers and AI labs under long-term contracts. CoreWeave and Nebius rent out graphics processing unit (GPU) computing directly, owning the chips and the customer relationships. IREN blends both models, running its own AI cloud on sites it controls. (We featured seven companies riding the same AI infrastructure trend, spanning power to cooling, in a free report here.)

Within the landlord group, Applied Digital leans on North Dakota’s low-cost power and take-or-pay leases with investment-grade hyperscalers. Cipher Digital is tied most closely to Texas, while TeraWulf has spread across several states to avoid relying on one grid.

What Texas Rules Mean for Applied Digital and Its Rivals

Cipher Digital now faces the question of whether ERCOT’s final Batch Zero classifications, expected in December, survive a new governor’s agenda. Goldman Sachs economists expect the pauses in Texas, Georgia and Michigan to prove temporary.

Cummins at Applied Digital offered a bullish case, stating, “As new data center development becomes more difficult in certain markets, we believe the scarcity value of established, powered, and community supported campuses increases.” Bernstein’s expectation of gridlock, coupled with Applied Digital’s heavy debt, gives the bears a case that delays could prove costly.

Macro data adds another variable for Applied Digital and its peers: weekly jobless claims fell to 189,000 for the week ended October 31, and the October payrolls report is due November 6. Those researching the group may want to proceed carefully until the Texas approval freeze resolves.

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