New York Halts Expansion of AI Data Centers

New York Halts Expansion of AI Data Centers with Unprecedented Moratorium

New York Governor Kathy Hochul recently made a bold decision by imposing a moratorium on the construction of new large-scale AI data centers across the state. By signing an executive order, she established the first nationwide moratorium on data centers requiring 50 megawatts of power or more. This decision, which has already drawn criticism, including from Senator John Fetterman, imposes a one-year pause on these constructions.

New York has thus decided to slow down the development of these energy-intensive infrastructures. Hochul described these centers as facilities that consume enormous amounts of energy. During a press conference, she emphasized that these hyperscale data centers threaten to overload the state's electrical grid and increase costs for local consumers. She stated, "I refuse to let these costs be passed on to New Yorkers who are already paying too much for their electricity bills."

The decision immediately sparked reactions. Pennsylvania Democratic Senator John Fetterman expressed his disagreement by stating that "China is winning." Meanwhile, shares of several data center companies, such as Digital Realty Trust, Vertiv Holdings, and Equinix, fell, recording losses of up to 2% early in the day.

Hochul also pointed out that these centers require millions of gallons of water, can increase carbon emissions, occupy vast tracts of land, and produce noise and vibration disturbances for nearby residents. She asserted that New York has no choice but to address the challenges posed by these massive facilities. Furthermore, she announced that the state will require these centers to produce their own energy or pay a premium to use the state's electrical grid. "This is the only way to ensure that our residents and businesses have the affordable energy they need," she added.

In response to the order, Vermont Senator Bernie Sanders recalled that his bill for a moratorium on AI data centers, once considered radical, is now finding favorable resonance. "Today, New York has become the first state to adopt a moratorium, and a majority of voters nationwide support it," he wrote. Sanders insisted that AI must benefit all of humanity, not just a few tech billionaires.

Hochul clarified that New York wants to attract investments from AI companies, but not at the expense of local communities and infrastructure. She also indicated her intention to eliminate sales tax exemptions for these large-scale data centers across the state.

Hochul's executive order is stricter than the AI data center moratorium bill passed by the state legislature the previous month. This order applies only to facilities with energy needs of 50 megawatts or more, unlike the 20-megawatt threshold in the bill. The governor's office stated that it will continue to work with the legislature to review the bill titled "Responsible Data Center Development Act."

State Senator Kristen Gonzalez, who sponsored the bill, praised Hochul's order during the press conference. She stated that Hochul "is setting the standard that technology should enhance our lives, not pollute our environment, strain our electrical grid, or increase our electricity bills."

This moratorium comes at a time when tech giants are rushing to build enormous data centers across the United States to support AI technologies such as large language models. The rapid expansion of these centers has become a national debate, with critics warning about energy demand, water consumption, and pressure on local infrastructure.