Quick Read
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IREN and Cipher shares plunged 44% and 55% in a month as capital markets turn selective and grid access separates winners from laggards.
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Core Scientific CEO Adam Sullivan says "capital is the throttle on all new development," and cash-starved developers are selling powered land and half-built projects.
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Galaxy's Caspian project was downgraded to study load, and the company expects no clarity until April 2027, while Texas politics threaten new approvals.
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On November 4, Wall Street closed higher after Democrats won Congress, and data center stocks fell sharply. The next day, IREN( NASDAQ:IREN ) delayed its goal of more than $4 billion in operating annual recurring revenue (ARR). The target moved from year-end to January, and management said it could slip to the end of February.
The selloff has been hardest on the former Bitcoin(CRYPTO:BTC) miners that turned themselves into AI hosts. Over the past month, Cipher Digital( NASDAQ:CIFR ) shares fell 55.05%. IREN dropped 44.07% and Hut 8( NASDAQ:HUT ) lost 41.04%. Galaxy Digital( NASDAQ:GLXY ) gave up 36.17% and Core Scientific( NASDAQ:CORZ ) fell 26.22%.
Third-quarter earnings reports show demand for AI computing is still strong, but money and political approval are getting harder to come by. The companies that already have both will separate from the rest.
Demand Is Still Climbing
The biggest cloud provider set the tone. AWS revenue rose 39%, its fastest growth in nearly five years, and its backlog reached $578 billion. Its parent still expects about $220 billion of capital spending in 2026 and plans to spend "meaningfully more in 2027". CEO Andy Jassy described the demand simply: "Almost as fast as we install capacity, customers are gobbling it up."
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Galaxy put U.S. data center vacancy at 0.9%. The former miners have turned that shortage into long-term contracts (we featured seven of the suppliers behind this expansion, from power to cooling, in a free report here). Core Scientific reports more than $24 billion of backlog, and IREN reports $20.3 billion. Hut 8 values its AI portfolio at about $26.6 billion.
Capital Has Become the Choke Point
IREN management told analysts that "capital markets have become more selective in the last few weeks." It still needs to raise $6 billion for planned fiscal 2027 spending. Core Scientific CEO Adam Sullivan was more direct: "capital is the throttle on all new development." He said developers that are running out of money have started selling powered land and half-built projects.
Tenant credit is the second pressure point. Galaxy turned down lease terms on its Helios II expansion over the summer. Galaxy's Christopher Ferraro explained why: "An investment-grade wrap that does not actually achieve investment-grade protection for both our debt and our equity is not really an investment-grade wrap." Construction costs are rising too. At Barber Lake, Cipher paid $359 million of $409 million in change orders requested by its tenant.
Texas Politics Raise the Stakes
Governor-elect Gina Hinojosa has pledged to stop new data center approvals until lawmakers protect electricity customers, water supplies and local communities. That would come on top of restrictions already imposed by outgoing Gov. Greg Abbott. In New York, Gov. Kathy Hochul imposed a one-year moratorium in July on new hyperscale permits for facilities of at least 50 MW.
What separates the companies now is whether they already have power. IREN's 1.4 gigawatt Sweetwater 1 site is already connected to the grid. Hut 8 locked in $3.25 billion and $4.25 billion of investment-grade project bonds that have no claim on the parent company. Others are further behind. Cipher's 1 gigawatt Colchis site has only a conditional grid classification. Galaxy's Caspian project was downgraded to study load, and the company does not expect clarity until April 2027.
Mark December 17 on Your Calendar
Hut 8 expects the results of Texas's data center audits on December 10, 2026. Final classifications in the Electric Reliability Council of Texas (ERCOT) Batch Zero process are due on December 17, 2026. A clean outcome would clear the way for Hut 8 to finance Beacon Point Phase 2. In January, IREN's revised ARR deadline comes, and Core Scientific expects about $650 million from expiring warrants. If Hinojosa's freeze reaches projects already in ERCOT's queue, developers that only have announced plans will run into it first. The companies already connected to the grid will collect the rent.
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