Software infrastructure firm CoreWeave (CRWV) is expanding a data center in Denton, Texas, which is expected to use so much electricity that it will double the city’s current power demand. This shows how artificial intelligence is putting a lot of stress on the U.S. power grid. The site was originally built for crypto mining, but switched to AI use in December. And, unlike before, the facility now runs constantly, even when energy prices are high. Notably, Core Scientific (CORZ), which is in the process of being acquired by CoreWeave, currently operates the Denton facility and is leasing it to CoreWeave for AI projects.
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It is worth mentioning that Denton is a city of about 166,000 that has been growing quickly and is now preparing for the new power demand. Indeed, to handle the added pressure on the system, the city will install backup generators and batteries. Interestingly, Denton expects more than $600 million in tax revenue, and the project is expected to bring 135 new jobs to the area. The data center will use about 390 megawatts of electricity and will be Core Scientific’s largest project.
However, a city utility executive warned that Denton is already using most of its remaining grid capacity, and adding more big energy users could overload the system. Moreover, across Texas, data centers are the top source of new power demand. This has led the Electric Reliability Council of Texas to say that if usage continues to grow this fast, power reserves could fall short by 2026. In fact, a June report by the Texas Reliability Entity warned that keeping electricity flowing to residents will require urgent and proactive planning.
Is CRWV a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on CRWV stock based on four Buys, 15 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average CRWV price target of $99.39 per share implies 25.5% downside risk.
