Investment bank Bernstein's latest research indicates that approved power is becoming increasingly valuable, with scarcity at baseload sites set to keep pushing lease prices higher.

Texas grid operator ERCOT has completed its initial "Batch Zero" screening, with emerging AI infrastructure developers collectively disclosing roughly 8 gigawatts of conditional baseload classification, while an additional 7 gigawatts has been placed under "studied load" status.

A Grid Access Ticket

ERCOT's Batch Zero represents the first queue of projects to be allocated available transmission capacity under a system-wide study framework. Projects are divided into three tiers: baseload (mature projects that are operational or supported by qualifying preliminary studies and no longer subject to further assessment or capacity reallocation), studied load (projects requiring system-level analysis to determine approved capacity and timing, with no guarantee of full requested capacity), and excluded projects (deferred to future batches, with Batch 1 applications not expected until summer 2027).

ERCOT completed its first round of screening on September 3 and issued provisional classification notices to transmission and distribution service providers, with formal verification reports expected in December 2026. Notably, the screening also "downgraded" a number of projects: some originally filed as baseload were reclassified as studied load, indicating baseload allocations came in lower than expected. Cipher Digital (CIFR.US) filed a 3.6GW site as a Batch Zero candidate but received only 1GW of incremental approval. These classifications remain conditional, subject to requirements such as Governor Abbott's audit.

Who Got the Golden Ticket

AI cloud infrastructure provider IREN (IREN.US) saw its Sweetwater campus selected entirely as baseload at 2GW, making it the single largest winner. Hut 8 (HUT.US) (not under coverage) secured baseload for its 1GW Beacon Point site, while Galaxy Digital's Helios Phase I (800MW) and Phase II (830MW) also made the cut in full. CIFR received 1.1GW of baseload (1GW Colchis plus 100MW Stingray), but another 2.1GW (including 900MW Apollo) only received studied load status. Core Scientific (CORZ)'s Hunt (431MW) and Pecos (300MW) sites were classified as baseload. CleanSpark (CLSK.US) secured baseload for both its 285MW Sealy and 300MW Brazoria sites in Texas. MARA (MARA.US) had its Granbury (~280MW) and Garden City (~200MW) projects selected, but its massive 2GW Matagorda project was relegated to studied load.

Scarcity Drives Rental Prices Higher

The report calculates that of the 8GW baseload classification, more than 5GW is available for new AI deployment contracts, including IREN's 2GW campus and CIFR's 1GW Colchis project. With new data center development facing intensifying political scrutiny, moratoriums, and state-level directives creating capacity bottlenecks, the value of approved capacity continues to rise.

Bernstein believes the evolution of grid rules actually acts as a "clearing mechanism": squeezing speculative queue applications out of the pipeline while making sites with genuine development track records more valuable. Studied load allocations won't be finalized until at least April 2027, further strengthening the competitive position of operators holding conditional baseload status.

In terms of investment conclusions, Bernstein maintains "Outperform" ratings on Cipher Digital (CIFR.US), TeraWulf (WULF.US), IREN (IREN.US), Core Scientific (CORZ.US), CleanSpark (CLSK.US), and Riot (RIOT.US), with price targets of $32, $36, $100, $32, $35, and $24 respectively. MARA is rated "Market Perform" with a $17 price target.

The report emphasizes that crypto miners, with their portfolio of approximately 32GW of planned power and their ability to deliver "warm shell" data centers on schedule, are best positioned to solve the AI industry's "time-to-compute" pain point. Over the past two years, miners have signed more than 20 contracts totaling approximately 9GW with hyperscale cloud providers, frontier AI labs, new cloud service providers, and AI chip manufacturers, representing over $180 billion in total value.

Unaffected by the AI Slowdown Debate

It's worth noting that this report arrives amid a turbulent market backdrop. On one hand, debates over an AI investment "cooling off" continue to intensify - from "SaaS doomsday" theories to questions about the sustainability of massive capital expenditures, investors repeatedly question the real demand for AI. But Bernstein's logic sidesteps this argument entirely: regardless of which side wins on the model front, power remains the hardest constraint.

This week, Amazon secured backup power from Generac through a $340 million warrant agreement, following an earlier chip deal with Qualcomm - both moves confirming that tech giants are willing to pay a premium to secure electricity.