Common Questions

Why are data centres moving to West Texas?: West Texas ranks second globally for new data-centre siting because ERCOT's island grid operates outside FERC jurisdiction, and 9.1 GW of existing crypto-mining infrastructure is converting to AI compute — bypassing both grid study queues and gas-turbine ordering delays.Source: ERCOT / briefing analysis
How much crypto-mining capacity in West Texas is converting to AI data centres?: West Texas operators want to repurpose approximately 9.1 GW of existing crypto-mining capacity for AI compute, using brownfield grid connections to bypass the ERCOT large-load study queue.Source: ERCOT
Why is West Texas the second-best location for new data centres in 2026?: ERCOT's independence from FERC jurisdiction allows operators to bypass the federal interconnection queue. 9.1 GW of crypto-mining brownfield is converting to AI compute. Competitive wind and solar PPAs are available. Local consent barriers are minimal.Source: data-centres update 2
What is the GE Vernova turbine backlog and why does it matter for Texas data centres?: GE Vernova is the dominant gas turbine supplier for US power projects. Its order book is full through 2030, meaning any new-build gas power project in West Texas that lacks a confirmed turbine slot today cannot expect delivery until at least 2030-2031. This makes brownfield crypto-site conversions FAR more attractive than new builds.Source: data-centres context
How is ERCOT different from other US electricity grids?: ERCOT is an island grid serving about 90% of Texas's electricity demand. It does not synchronise with the Eastern or Western Interconnection, which means it is not subject to FERC jurisdiction over interstate transmission. Operators connecting behind the meter in West Texas avoid the federal interconnection queue and cost-allocation proceedings entirely.Source: ERCOT / FERC jurisdictional context
What is McKinsey's role in the ERCOT large-load queue?: McKinsey is contracted by ERCOT to develop a framework for managing the large-load queue. West Texas operators seeking to repurpose crypto-mining capacity for AI compute are the most active participants in that process.Source: data-centres context
Where are crypto mining facilities being converted to AI data centres in the US?: West Texas's Midland-Abilene corridor has 9.1 GW of existing crypto-mining capacity converting to AI compute. These brownfield sites reuse existing grid connections, avoiding both the ERCOT large-load study process and the new-build gas turbine backlog.Source: data-centres update 2

Background

West Texas (centred on the Midland-Abilene corridor) ranks second on the global data-centre siting shortlist for 2026, behind Finland's Kajaani-Tampere corridor. Its structural advantage is grid sovereignty: ERCOT is not synchronous with the Eastern or Western Interconnection, so behind-the-meter arrangements in West Texas sit outside FERC jurisdiction. Operators can avoid the federal interconnection queue entirely — a decisive advantage as FERC's RM26-4-000 proceeding remains unresolved. 9.1 GW of existing crypto-mining capacity is converting to AI compute — a brownfield route that sidesteps both the ERCOT large-load study process and the gas-turbine ordering backlog.

The ERCOT grid serves about 90 per cent of Texas's electricity demand and is the largest grid in the continental US not subject to FERC oversight. West Texas hosts significant wind and solar generation, making PPAs at competitive prices readily available. The region's binding constraint is not consent or grid supply but the GE Vernova turbine backlog: any new-build gas project without a confirmed turbine slot today cannot expect delivery before 2030-2031. McKinsey is contracted by ERCOT to develop a framework for managing the large-load queue.

The brownfield conversion route — reusing existing grid connections at former crypto-mining sites — allows operators to bypass the normal large-load study queue, giving West Texas incumbents a significant first-mover advantage. Local opposition is minimal compared to Virginia or Washington state.

Source Material

ERCOT

How the World Sees Them

United States

Operators see West Texas brownfield sites as the fastest available large-scale AI compute capacity in the US market, given that new-build gas and grid-connected ERCOT projects face 2030+ timelines.

Texas communities

West Texas has historically embraced large industrial loads; local opposition is minimal compared to Virginia or Washington state. Water stress is lower in the Permian Basin than in the Phoenix metro area.