U.S. Cities Target AI Data Centers, Crypto Miners May Face Similar Restrictions

Cities across the U.S. are moving to rein in new AI data centers amid mounting concerns about their demands on water, power and land — a trend that could also reverberate through crypto infrastructure and mining operations that rely on the same utilities. This week Austin’s City Council became the latest municipality to act, voting unanimously to start drafting Land Development Code changes that would define data centers and build in safeguards that could restrict or even exclude new facilities. Officials are expected to bring the first phase of the ordinance back to council in December. The push follows a sobering new analysis from nonprofit Ceres that quantified how much freshwater power plants serving data centers draw in seven high-density data center states — Virginia, Texas, California, Illinois, Georgia, Ohio and Arizona. Those plants withdraw about 3.4 trillion gallons of freshwater each year, roughly 10.4 million acre-feet. To put that in perspective, Ceres says the figure exceeds California’s average annual urban water demand (about 8 million acre-feet) and is roughly 12 times the combined annual water use of Los Angeles, Phoenix and Washington, D.C. “Overall, we saw that 66% of the power plants that use water in those states were exposed to medium to high water stress,” Kristen James, senior program director for water at Ceres, said in a statement. The study counts water drawn from rivers, reservoirs and other sources to generate electricity for data centers — noting that while some water is returned to the system, water consumed through evaporation or other processes is not immediately reusable. Austin’s move is part of a broader local backlash: San Marcos, Texas, barred data centers in June; Durham, North Carolina, and Cave City, Kentucky, have imposed moratoriums; and Jersey City, New Jersey, recently banned data centers as the primary use on industrial property. The conflict has at times spilled into the streets and into arrests — at least 37 people were detained during AI data center protests in 2026, and about 200 demonstrators marched on San Francisco offices of OpenAI, Anthropic and xAI in March calling for a pause on more powerful AI systems. States are also grappling with the issue. Maine lawmakers passed what would have been a statewide moratorium on large data centers in April, but Gov. Janet Mills vetoed the bill because it didn’t exempt a proposed project in Jay; she instead created an advisory council to study data center policy. Pennsylvania moved in a different direction, imposing new requirements for large data centers that include annual water and energy reporting. Advocacy groups say local action has been necessary where state-level responses have been limited. “While Gov. Greg Abbott can only offer performative and mostly voluntary measures, local leaders are acting to protect the community from large-scale data centers,” Kaiba White of Public Citizen said, summing up why municipal ordinances are accelerating. For the crypto sector, these developments matter. AI compute farms and crypto mining operations share the same pressures — large and steady electricity demand, significant cooling needs and potential strain on local water supplies and grids. As cities and states tighten zoning, reporting and moratorium rules, companies that host AI workloads or run mining rigs will likely face new constraints, permitting hurdles, or higher operating costs. Investors and operators should be watching municipal code changes and state-level policy shifts closely when planning new facilities or expansions.