The first "lost summer" of AI

In the story of AI, people have long believed that the final arbiters are chips, electricity, and cash flow. No one expected that the first to strike would be town mayors, state governors, and ballots.

On a Sunday morning in August 2026, Texas Governor Greg Abbott sat in the ABC News studio and said to the national audience what is arguably the harshest statement the tech industry has heard this year —

Data center companies have "dug their own grave", and the public backlash they are facing is "well-deserved".

The weight of this statement can only be measured by looking back nine months. In November 2025, the same Abbott stood next to Google executives to announce the latter's $40 billion investment in three data center campuses in Texas, and proudly declared Texas the "epicenter of AI development". From "epicenter" to "grave-digging", only three quarters have passed.

What is even more thought-provoking is Abbott's political identity: a Republican, Governor of Texas, the head of a state that claims to be the most business-friendly in the United States. Over the past decade, tech companies have shipped truckloads of server racks into Texas, drawn here by cheap land, abundant natural gas, wind and solar power, and the state's reputation for "never saying no to businesses".

Now, that reputation has changed.

This is no longer a cultural war between Silicon Valley elites and rednecks, but a power game over "who has the right to decide the physical foundation of the AI era". There are four parties at the table: tech giants with trillions of dollars in budgets, presidents eager to reap AI dividends, governors and legislators cornered by ballots, and — the most easily overlooked party that ultimately flips the table — small-town residents.

01

The Gravedigger: From Ribbon-Cutting to Hostility in Just Three Quarters

Let's first look at a timeline, which is almost a textbook sample of "political wind direction reversal":

• November 2025

: Abbott and Google jointly announced the $40 billion investment, with Texas calling itself the "AI epicenter";

• June 2026

: Abbott ordered state regulators to make data centers pay for all the power infrastructure they need, and phase out tax incentives;

• Early July 2026

: Abbott issued an order to suspend the approval of all data center projects seeking access to the Texas grid (ERCOT) before state regulators complete audits of grid connection applications. As he later revealed, this order froze as many as 1,800 projects;

• August 2026

: Abbott publicly pronounced on a TV interview that the data center industry has "dug its own grave".

Texas is not an isolated case; on the contrary, it is one of the last straws that break the camel's back. Blue states took earlier and harsher actions:

New York Governor Kathy Hochul signed the nation's first state-level moratorium last month, freezing the approval of new large data centers (over 50 megawatts) for one year; Pennsylvania Governor Josh Shapiro, the rising Democratic star who was still endorsing Amazon's $20 billion data center investment last year, signed an executive order on August 18 to impose new restrictions and obligation requirements on data center development. Just two weeks ago, he was paying the price for his previous pro-data-center stance: his Republican opponent Stacy Garrity was using last year's ribbon-cutting photos of him as attack ads.

One detail can illustrate how serious the problem is: Abbott revealed on Fox News last week that Texas had sent information request letters to data center companies, asking them to provide estimated data on future power demand — less than 10% of the companies responded.

This detail, more blunt than any poll, exposes the industry's attitude: they are used to land, taxes, and the power grid all making way for AI, used to "getting on the bus before buying the ticket", but never got used to answering questions from communities.

The full original quote of Abbott's "dug their own grave" goes like this: Developers broke into communities without ever seeking the support of the communities first. "Winning the support of local residents is essential."

02

The Iron Fist of NIMBY: 550 Bans and Death Threats

If the shift of governors is the superstructure, the real loosening of the foundation takes place in the town councils.

According to statistics from The Information, over the past 30 days, more than 200 bans and moratoriums targeting data centers have taken effect across the United States, and more than 550 restriction measures are in effect nationwide.

Last week, the Marshall City Council in Michigan passed a one-year construction moratorium; the small town of Salix, Iowa, with a population of 300 — where Google is evaluating a 900-acre farm — vetoed the moratorium by a 3-to-2 vote under the shadow of death threats.

Yes, death threats. This is not a rhetorical device.

An NBC News report on August 21 stated that municipal officials across the United States have received death threats over data center projects, regardless of whether they voted for or against them. Ten days after passing the moratorium, council members in Marshall, Michigan, were notified by the police that they faced a "credible death threat"; the mayor of Salix, Iowa, called police into the meeting room during the council session; commissioners in Box Elder County, Utah, had police stationed outside their homes after approving a project; Emporia, Kansas, simply moved municipal meetings online and canceled the public comment session.

Back in April, a city councilor in Indianapolis who supported the rezoning of land for data centers had 13 shots fired at his home. The Soufan Center, a security think tank, monitored threatening remarks on social media for a year and found that the volume of threatening remarks has surged since April this year and has not fallen back so far.

Violence is the extreme end, but the nerve of anger has spread all over the body. On July 18 this year, synchronized protests against the expansion of AI data centers broke out in many parts of the United States; the same scenario is playing out on the other side of the Atlantic, in Brick Lane in East London, Amsterdam in the Netherlands (where someone splashed acid on an under-construction data center), and the countryside of Devon, UK.

Polls have quantified the level of public anger:

A survey released last month by the University of Pennsylvania's Annenberg Public Policy Center found that 61% of Americans oppose building new data centers near their homes, up from 49% in March this year — an increase of 12 percentage points in four months. Opposition crosses party lines: 69% of Democrats, 54% of Republicans, and 53% of independents;

A Gallup poll at the beginning of the year found that 70% of Americans oppose building AI data centers in their local areas, and many are so firm in their attitudes that they "would rather choose a nuclear power plant";

The latest data cited by Heatmap News is even more exaggerated: about 75% of Americans oppose building data centers near their homes, and 61% of them say they "strongly oppose" it. Some analysts say that public opinion has swung 33 percentage points in a year — a magnitude large enough to reshape any legislative agenda.

Why? Data centers are arguably the "least cost-effective" neighbors in human history: they bring industrial-grade noise, consume staggering amounts of water and electricity, and require the construction of new transmission lines, but hardly create permanent jobs — the permanent staff of a giant data center campus is often smaller than that of a warehouse of the same scale. Residents get bills and humming noise, while tax incentives and employment figures only exist in press releases.

Texas' own accounts show that tax breaks for data centers cost the state treasury at least $1 billion every year, and many other states also have no evidence that the subsidies can "pay for themselves".

In the words of Amanda Litman, founder of Run For Something: Data centers are the most concrete and tangible physical carrier of AI threats — whether it is rising electricity prices or jobs being replaced, people can find a physical entity to protest against in these huge windowless boxes. In more academic terms, this is a 21st-century NIMBY movement, except that this time what people are trying to avoid is computing power.

03

The War on Electricity Bills: Are Data Centers Stealing Your Power?

A large part of the gunpowder for this power game is stored in electricity bills. And it is precisely here that the facts are far more ambiguous than slogans.

First, let's look at the evidence from the prosecution.

PJM, the eastern U.S. power grid covering 13 states and 65 million people, has accumulated about $29-30 billion in new capacity costs in its last four capacity auctions, with data centers accounting for about 46% of that total; a Pennsylvania report shows that PJM's capacity market prices skyrocketed by 833% for the 2025-2026 delivery year, and about 63% of that increase is attributed to data centers;

The Pennsylvania report released on August 18 estimates that households and businesses in the state pay an extra $78.3 million in electricity bills every year, nearly $1 billion a year; commercial electricity prices in Pennsylvania are expected to rise by up to 29% due to the PJM increase; rural counties are the worst hit — electricity prices in Tioga County rose by 58% within a year;

The data from the Union of Concerned Scientists (UCS) is the most striking: among the 130 data center grid connection projects in the PJM region in 2024, about 95% of grid connection costs are paid by ordinary taxpayers (124 projects), rather than the data centers that triggered these investments.

"When these costs are spread across everyone's bills, ordinary customers are essentially financing infrastructure for the richest companies." — This line comes from a financial advisor, but it is almost the core narrative of all backlash movements. Senator Elizabeth Warren even waved the figure of "local residents' electricity bills rising by 267% in five years" in Congress (PolitiFact ruled it "mostly false" — that was a carefully selected wholesale price, not a residential bill).

But the evidence from the defense is equally strong.

A 2026 study by the University of Southern California shows that when utility companies double their data center capacity, residential electricity prices only rise by 0.62% — less than $1 per month for an average household, and this impact is mainly concentrated in small cooperative power grids with no hedging capabilities, while there is almost no significant impact in regions with large investor-owned power grids.

The analysis by energy consulting firm E3 is even more counterintuitive: Texas and Virginia, where data center loads are growing the fastest, are exactly the states with the smallest electricity price increases; while California and New York, where loads are declining, have the largest electricity price increases. The first lesson of economics: the power grid is a huge sunk cost, and demand dilutes fixed costs. Data centers, as super large users, even contribute a net surplus to the power grid.

The truth most likely lies somewhere in between: the historical impact of data centers on electricity prices has been exaggerated, but their cost impact on the future power grid is real — the North American Electric Reliability Corporation (NERC) has warned that reserve capacity in PJM and MISO will continue to deteriorate before 2030. When the power grid approaches its limit, every kilowatt-hour of electricity will become more expensive. The famous "$600 billion revenue gap" put forward by Kinsena Kahn in 2024 has now become a pending proposition where five companies alone will spend $660-690 billion in capital in one year.

What is thought-provoking is that politicians from both parties have no patience to make such distinctions. When 75% of voters believe that data centers are stealing their electricity, the ambiguous zone on electricity bills becomes the best political fuel.

04

The Shift of Power: From Wall Street to the Ballot Box

The most exciting plot of this game is the rift it has torn within the Republican Party.

On one side is Trump. In an interview with his former "fixer" Michael Cohen, Trump defended data centers: the United States is "far ahead" of China in AI, data centers are "building their own power plants, you have never seen such beautiful power plants", and communities that reject data centers "are making a mistake" because data centers bring "a lot of jobs and money". He even publicly criticized Abbott: it is a mistake for Texas to say no to data centers, and this industry "may be bigger than oil".

On the other side is the Republican Party's election campaign machine. An internal memo from the National Republican Senatorial Committee (NRSC), exclusively disclosed by Axios, warned the AI giants: voter anger over data centers is endangering the Republican Party's chance of retaining the key Senate seat in Ohio — the incumbent Republican Senator Jon Husted, due to his track record of attracting data centers, is being used as the main attack ammunition by former Democratic Senator Sherrod Brown who is running for office again, and the race is called a "dead heat" by ABC. The original wording of the memo is almost a lament: "If he loses and data centers take the blame, politicians across the country will see it, and no one will dare to touch the next project in the future."

Thus we see a cross-party "flight": Michigan Democratic Senate candidate Abdul El-Sayed campaigned at the gate of Oracle/OpenAI's 1.4 GW campus, shouting "approve none without federal guardrails"; Michigan Republican Senate candidate Mike Rogers called for a one-year statewide moratorium; Ohio Republican gubernatorial candidate Vivek Ramaswamy issued the "Ohioans First" oath, requiring a construction moratorium before legislation is passed, and even asking data center companies to pay electricity bills for nearby residents — his Democratic opponent Amy Acton proposed a "conditional moratorium" while attacking him as "a fellow of billionaires"; in the Wisconsin gubernatorial primary, Francesca Hong, who called for "Control+Alt+Delete, full moratorium", leads in polls. That 1.4 GW campus in Michigan has already triggered moratoriums from at least 19 Michigan municipal entities, and the treasurer of the town where it is located has threatened to resign.

NPR's observation is sharp: data centers have become a "political issue that crosses party lines". Democratic populists and "democratic socialists", Republican populists and remaining Tea Party members, have all met in victory outside the fences of data center construction sites. The 2028 Democratic candidates are having a headache over "how to respond to public opinion against AI infrastructure", and this issue will most likely burn all the way to the next presidential election.

This constitutes the deepest power shift in the AI era: In the past three years, the hardest constraints on AI infrastructure were GPUs and capital; in 2026, the constraint has become community consent. Wall Street can print money, TSMC can work overtime, but ballot boxes cannot be booked in advance (PR bookings excepted).

05

The Prisoner's Dilemma of Capital: $7.25 Trillion Cannot Stop

Politicians can shift their positions, but capital cannot.

In 2026, the total capital expenditure of the four major hyperscale vendors will be about $7.25-8.6 trillion, a year-on-year increase of 46%-80%: Amazon about $2-2.2 trillion (+83% year-on-year), Google $1.75-2.05 trillion (+110% year-on-year), Microsoft about $1.9 trillion (+65%), Meta $1.25-1.45 trillion (+92%). BofA analyst Vivek Arya even gave a path of $12 trillion in 2027.

And a cold footnote is: the total capital expenditure of hyperscale vendors has reached 102% of their cloud business revenue — the infrastructure bill has officially exceeded the revenue it is supposed to support.

At the same time, the bills in the physical world are equally shocking: transformer delivery lead times have extended from 24 to 30 months in 2020 to 5 years; grid connection queues in Northern Virginia, Phoenix, and Dallas take 4 to 7 years; data centers are expected to account for about 4% of total U.S. electricity consumption currently, rising to 12% by 2028; some estimates say that to complete all announced construction, the U.S. is still short of 500,