New York banned data centers and the flight of investments from the state continues

The state of New York became the first in the United States to impose a moratorium on the construction of new large data centers, a decision that opens a new chapter in the debate over the growth of the infrastructure necessary to drive artificial intelligence. The measure, pushed by Democratic Governor Kathy Hochul, suspends the issuance of new permits for this type of facility for one year while authorities develop a stricter regulatory and environmental framework.

The decision was announced through an executive order and affects data centers with an electricity consumption of 50 megawatts or more. During the moratorium period, the New York Department of Environmental Conservation will stop granting discretionary permits for new projects that have not yet completed their administrative procedures.

As Hochul explained, the goal is to comprehensively assess the impact that these facilities may have on the electrical grid, water supply, and the communities where they are installed. The socialist governor also ordered the preparation of a ''Generic Environmental Impact Study'' that will establish uniform criteria for future projects and determine under what conditions new investments can be developed once the suspension ends.

''I want New York to be first, but first in the right way,'' the Democrat stated while presenting the initiative. She also argued that the rapid growth of data centers threatens to raise electricity rates, consume significant natural resources, and create uncertainty for state residents, which is why she deemed it necessary to intervene before the sector's expansion continues.

The state administration also announced that it will promote a reform to eliminate sales tax exemptions currently enjoyed by large data centers, a measure that would increase costs for companies interested in establishing new operations in New York.

The moratorium comes in a context of growing regulation in various Democratic states due to the rapid development of artificial intelligence. Large tech companies are competing to build new complexes capable of housing thousands of servers, whose operation requires enormous amounts of electricity and water for cooling. At the same time, lawmakers and regulators are analyzing ways to reduce the impact that these facilities may have on energy infrastructure and consumers.

The debate had already begun in the state legislature. Last month, a bill aimed at imposing greater controls on data centers consuming more than 20 megawatts of electricity was approved, a threshold even broader than that contemplated in Hochul's executive order. However, the initiative has not yet reached the governor's desk for enactment, as negotiations about its scope continue.

The temporary ban prompted an immediate response from President Donald Trump, who harshly criticized the decision and claimed that New York risks losing multimillion-dollar investments related to artificial intelligence.

In a message posted on Truth Social, Trump called the measure a ''terrible mistake'' and warned that projects that could have been established in New York will end up moving to other states with more favorable investment policies.

The president stated that data centers represent a significant source of tax revenue, employment, and technological development, and asserted that states governed by Republicans, and even some managed by Democrats, will seize the opportunity to attract those investments.

Trump also rejected the argument that these facilities represent a burden on public finances. He indicated that the companies responsible for data centers finance their own consumption of water and electricity, while the remaining economic benefits end up strengthening both state coffers and the communities where they operate.

In that context, he called on New York to immediately reverse the moratorium and accused Democratic leaders of jeopardizing U.S. leadership in artificial intelligence. The president claimed that preventing the development of new data centers indirectly benefits competitors like China and other countries seeking to establish themselves as technological powers.

Criticism also came from local politics. The Republican leader of the New York City Council, David Carr, supported Trump's stance and described Hochul's decision as a serious economic and energy mistake.

Carr argued that the state had already weakened its electricity generation capacity with the closure of a nuclear plant that supplied approximately a quarter of the electricity consumed by New York City. He also questioned the restrictions on the use of natural gas and the growing dependence on hydroelectric energy imported from Canada, whose cost, he asserted, is considerably higher.

For the Republican leader, temporarily banning the construction of data centers means wasting an opportunity to capture billions of dollars in private investments and create thousands of well-paying jobs in one of the fastest-growing sectors of the digital economy.