Cameron Otsuka

Wisconsin Won't Write the AI Put

Oracle wants to build four datacenters in Wisconsin, estimated to cost $15 billion, as part of its broader compute infrastructure deal with OpenAI. But before Oracle commits to the development, they need to ensure the energy infrastructure needed for the massive data center will be built. Wisconsin considers these, “Bespoke Resources,” aka “power plants we built for a customer.”

So We Energies builds the energy infrastructure, Oracle promises to buy the electricity for a long enough period of time that they can repay them and We Energies recoups the cost of building the infrastructure. If there continues to be demand for this Oracle data center, then Oracle can pay the bills on time and everything is great. If demand or technology changes, Oracle abandons the project, or some other unforeseen circumstance happens, We Energies (and Wisconsin) is left holding the bag for this now unnecessary energy infrastructure.

To prevent this, the Wisconsin Public Service Commission requires large customers to lock themselves into a long-term deal, pay for 100% of the generation costs, and those below an A-minus credit rating must provide additional collateral. From Financial Times:

The Public Service Commission of Wisconsin, which is responsible for scrutinising and setting the prices the state’s utilities can charge, has declined to reconsider rules it imposed on utility We Energies, which would require Oracle to provide a $7bn letter of security at a yearly cost of more than $100mn.

Wisconsin isn’t alone in these terms, with at least 5 other states approving or proposing tariffs attempting to bear less of the data center energy infrastructure risk. As more states update their rules, we may expect a repricing both in expected data center development costs and in the perceived risk (higher lending rates) associated with these builds.

In Oracle’s situation, the tightening data center rules made matters worse, causing S&P to downgrade Oracle’s credit rating even further, from a BBB to a BBB-.

Mine Print Hash

Energy disinflation is easing CPI pressure, which Matt Dines views as making housing affordability the Fed’s next battle. Circle’s OCC charter advances the regulated digital-dollar stack and China’s open-source AI gains are turning up the heat in the geopolitical competition with the US.

Open Threads

Market power competition with China:

• Chinese firms engineering solutions around the disadvantage they are in, given EUV controls. Link
• Kimi K3 makes a significant performance jump towards the frontier. I discuss this in more detail our recent Mine Print Hash episode. Link
  • US may take steps to ban or disincentivize the use of foreign models. Link

Market power competition with stablecoin issuers:

• GENIUS Act rules should be getting finalized, given their July 18, 2026 deadlines. Link
• Circle banned an arbitrage fund from its USDC window, claiming they were manipulating the market for Tether’s gain. Link
• London Stock Exchange announces 24/5 trading (technically more like 23/5 if you look at the fine print). Link