We didn’t build networks to beg for permission from governors.
Yet here we are: Donald Trump, the former president, is publicly scolding New York for pausing data center permits, calling the policy a “terrible decision” and urging an immediate reversal. He frames data centers as “cash cows” for jobs and tax revenue, and points to Texas and Alabama as models of low-tax, pro-business success. The subtext is unmistakable: state-level tax arbitrage is driving the location of digital infrastructure, and politicians are now openly competing to host the physical backbone of AI.
But for anyone who believes in permissionless networks, this spectacle should raise a deeper question. If a single politician’s tweet can redirect billions in compute infrastructure, how resilient is the layer beneath our decentralized applications?
— Root: The illusion of sovereignty.
Let’s strip the narrative. New York’s pause — reportedly driven by environmental and grid concerns — is a blunt instrument. It’s a reminder that centralized data centers are subject to the whims of local politics. One state says yes, another says no. Capital flows. Jobs flow. And the entire industry becomes a pawn in a tax competition game that has nothing to do with innovation.
From a crypto perspective, this is exactly the kind of centralization risk we warn about — but applied to the physical layer. Bitcoin mining and Ethereum staking rely on data centers for node operation and validator hardware. Those centers are increasingly concentrated in regions with cheap power and favorable regulations. Trump’s “red state” pitch only accelerates that concentration. If a future political shift turns those states hostile, the entire network’s security could be jeopardized.
I’ve seen this friction firsthand. In 2024, I helped a decentralized identity startup navigate Estonia’s regulatory sandbox. The paperwork alone was soul-crushing — and Estonia is one of the most progressive digital governments. Multiply that by 50 US states, and you get a messy, fragmented landscape where only the largest players (Amazon, Google, Microsoft) have the legal teams to adapt. Smaller DePIN projects? They simply can’t afford the compliance overhead.
The core insight from Trump’s statement is not about tax policy. It’s about the fundamental vulnerability of location-dependent infrastructure. Data centers are giant, immobile assets. They require massive upfront capital, years of permitting, and deep relationships with local utilities. Once built, they cannot be moved. A single zoning change or a new governor with a grudge can render them stranded assets.
This is where DePIN (Decentralized Physical Infrastructure Networks) offers a radical alternative. Projects like Helium, Filecoin, and Render Network distribute compute and storage across thousands of independent nodes — often in residential homes or small businesses. They are geographically diverse by design. A political shift in one region can’t bring down the whole network. The network is borderless, permissionless, and resistant to regulatory capture.
But here’s the contrarian angle: DePIN is not yet scalable for AI training. The raw compute power required by models like GPT-4 or Llama 3 demands hyperscale data centers. No amount of raspberry pis can replace an NVIDIA H100 cluster. So maybe Trump is right that we need more centralized data centers — and the crypto community is being idealistic about replacing them.
Yet that argument misses the point. The real threat isn’t that DePIN will replace data centers tomorrow. It’s that we are building the next generation of digital infrastructure on a foundation that remains politically malleable. Trump’s statement proves that politicians understand the leverage points. If they can control where data centers sit, they can influence the cost of compute, the latency of services, and ultimately the accessibility of the internet.
What happens when a governor decides that only “patriotic” companies can access subsidized power? Or when a state mandates that all AI training must occur within its borders for “security” reasons? Fragmentation. Balkanization. The exact opposite of the borderless, neutral internet that crypto promises.
— Root: The future is borderless, but the hardware is not.
The takeaway is not to abandon data centers, but to ensure that the infrastructure layer remains decentralized in its ownership and governance. That means supporting projects that build community-owned compute networks. It means pushing for open standards in AI hardware and cloud APIs. It means recognizing that the battle for digital sovereignty is not fought in the White House or the state capitol — it’s fought in the protocols we choose to run.
We didn’t build Layer 2 rollups with centralized sequencers because we believe in trust. We built them as a compromise for speed. Similarly, we cannot accept centralized data centers as a permanent compromise for AI compute. The next bull run will be fueled by infrastructure that is resilient not just to hacks, but to politics.
New York will probably reverse its pause. Texas will build more data centers. The red states will win the tax race. But the real prize is a system where no single state — or politician — can turn off the power.
