Executive Summary / Key Takeaways

• TeraWulf is undergoing a significant transformation, pivoting from a Bitcoin mining-centric model to a leading, vertically integrated provider of High-Performance Computing (HPC) infrastructure, validated by strategic partnerships with Tier-1 entities like Core42, Fluidstack, and Google (GOOGL).
• Recent capital raises exceeding $5.2 billion in the second half of 2025, coupled with Google's substantial credit backstop, have significantly fortified TeraWulf's financial position, enabling lower-cost capital and accelerated HPC build-outs.
• The company has set aggressive growth targets, aiming for 250-500 megawatts (MW) of new HPC lease signings annually, driven by robust customer demand and strategic expansion at its Lake Mariner, Cayuga, and Abernathy campuses.
• TeraWulf's core competitive advantage lies in its expertise in developing and operating low-carbon, energy-efficient digital infrastructure in strategically located sites, which translates into superior operational economics and a compelling value proposition for AI and compute-intensive workloads.
• While Bitcoin mining remains a profitable complementary segment in the near term, the company's long-term strategy involves converting this capacity to higher-value HPC/AI applications, reflecting a disciplined capital allocation approach.

TeraWulf's Strategic Evolution and Market Position

TeraWulf Inc. has rapidly evolved from its founding in 2021 as a Bitcoin mining operator into a formidable player at the convergence of energy and high-performance computing (HPC). Initially focused on leveraging low-carbon energy for Bitcoin mining at its Lake Mariner Campus in New York and through a joint venture at the Nautilus Cryptomine Facility in Pennsylvania, the company embarked on a strategic pivot in 2024. This shift, marked by the launch of WULF Compute LLC, aimed to diversify revenue streams by developing scalable digital infrastructure for GPU-driven HPC workloads. The divestiture of its Nautilus joint venture in October 2024, which yielded a 3.4x return on investment, underscored this commitment, reallocating capital to wholly-owned HPC infrastructure.

The broader industry landscape is characterized by an unprecedented surge in demand for data center capacity, primarily fueled by the explosion of artificial intelligence. This demand has created a significant energy shortfall, with hyperscalers and cloud companies seeking long-term solutions, including "island generation" that could be four to five years away. TeraWulf's deep understanding of energy infrastructure positions it uniquely within this competitive environment. The company's strategy centers on controlling utility-scale infrastructure, developing in markets with low-cost, low-carbon, long-duration power, and securing long-term, credit-enhanced contracts with Tier-1 counterparties. This approach distinguishes TeraWulf from many competitors, who may lack the integrated energy expertise required to navigate complex power markets and site development challenges.

Technological Edge: Low-Carbon Infrastructure for High-Performance Compute

TeraWulf's core technological differentiation is its vertically integrated digital infrastructure, purpose-built for both Bitcoin mining and HPC workloads, powered predominantly by low-carbon energy sources like hydro and nuclear. This integration provides tangible and quantifiable benefits that underpin its competitive moat. The Lake Mariner Campus, for instance, sources 100% of its power from the low-cost, low-carbon Zone A grid, with 90 MW secured under a 10-year Power Purchase Agreement (PPA) with the New York Power Authority (NYPA). Similarly, the newly acquired Cayuga site benefits from a nearly 90% zero-carbon electricity generation mix.

This commitment to low-carbon energy translates directly into cost advantages. The company's Bitcoin mining fleet, as of September 30, 2025, boasts an average energy efficiency of 17.50 joules per terahash (j/th), with a range of 15 to 23 j/th. Average realized power prices at Lake Mariner were $0.05 per kilowatt-hour (kWh) for the third quarter of 2025 and $0.06 per kWh for the nine months ended September 30, 2025. Management anticipates these prices to normalize to approximately $0.05/kWh for the remainder of 2025 and around $0.045/kWh for 2027-2028. These cost efficiencies are critical, especially given that power constitutes the most significant expense in Bitcoin mining, representing 38.90% and 50.70% of the total value of Bitcoin mined for the three and nine months ended September 30, 2025, respectively.

TeraWulf's infrastructure is designed for scalable, multi-phase expansion. The Lake Mariner Campus is engineered for 500 MW of capacity, with potential for up to 750 MW through targeted transmission upgrades, while the Cayuga site offers up to 400 MW. The company employs advanced liquid cooling systems and Tier 3 redundancy, optimizing its data centers for high-density compute workloads. This design flexibility is crucial in the rapidly evolving AI hardware landscape. TeraWulf continuously optimizes its designs, working closely with partners like Core42 and Dell (DELL) to adapt to the specific requirements of new GPU generations. This iterative design process ensures that the infrastructure remains cutting-edge and supports future GPU technologies, providing a long-term competitive advantage. For investors, these technological differentiators mean lower operating costs, higher potential margins, and a resilient business model capable of adapting to the dynamic demands of the AI industry. The company's CapEx per critical megawatt, at $7.2 million for the Core42 build-out, remains "well below industry peers," further highlighting its cost-effective approach.

Operational Momentum: From Bitcoin Hashrate to HPC Megawatts

The third quarter of 2025 marked a pivotal operational inflection point for TeraWulf, as it recorded its first HPC revenues. The company's Digital Asset Mining segment continues to contribute significantly, with revenue reaching $43.38 million for the three months ended September 30, 2025, a 60.3% increase year-over-year. For the nine months ended September 30, 2025, digital asset revenue was $125.42 million, up 19.4% from the prior year period. The segment generated a profit of $23.77 million in Q3 2025 and $53.08 million for the nine months ended September 30, 2025. As of September 30, 2025, TeraWulf's operational hashrate stood at 8.50 exahash per second (EHs), with a cash cost to mine one Bitcoin of $44,729 in Q3 2025, against an average Bitcoin price of $115,053.

However, the strategic focus has decisively shifted towards HPC. The HPC Leasing segment commenced operations in July 2025, generating $7.20 million in revenue for the three and nine months ended September 30, 2025, from 22.50 MW of energized hosting capacity at WULF Den and CB-1. The segment profit for Q3 2025 was $5.18 million, with management expecting margins to normalize around 85% in Q4 2025. The company is on track to deliver an additional 50 MW of HPC leasing capacity for Core42, with CB-2 expected to go live in Q4 2025. Construction progress is rapid, with CB-3 over 50% directed and scheduled for full enclosure before year-end, and CB-4 and CB-5 already underway.

A significant operational achievement in May 2025 was the acquisition of 100% of Beowulf Electricity Data LLC and its affiliates for approximately $54.60 million. This integration brought 94 employees with deep expertise in power generation and electrical infrastructure directly into TeraWulf, streamlining operations and bolstering the company's ability to execute complex HPC projects. This vertical integration is a cornerstone of TeraWulf's strategy, allowing it to capture infrastructure returns and maintain governance authority throughout development and early operations.

Financial Fortification: Fueling Growth with Strategic Capital

TeraWulf has significantly fortified its financial position, enabling an aggressive HPC growth trajectory. As of September 30, 2025, the company held $711.30 million in cash and cash equivalents, with a working capital balance of $23.30 million. The second half of 2025 was particularly transformative for the company's capital structure, with over $5.2 billion in financings executed at attractive rates. This included a $500 million 2.75% Convertible Senior Notes offering in October 2024, a $1 billion 1% Convertible Senior Notes offering in August 2025, and a $1.025 billion 0% Convertible Senior Notes offering in October 2025.

Crucially, in October 2025, WULF Compute LLC, a wholly-owned subsidiary, completed a $3.2 billion offering of 7.75% Senior Secured Notes due 2030. This financing is backed by a substantial credit enhancement from Google, which is providing $1.8 billion of credit support over a 10-year period for Fluidstack's lease obligations and has pledged its equity stake in TeraWulf to support the construction phase. This partnership with Google is "incredibly novel" and fundamentally enhances TeraWulf's credit profile, allowing for a lower cost of funds and increased financial flexibility. Post these financings, TeraWulf's pro forma liquidity exceeds $1 billion, providing ample capital for its equity contribution to the Abernathy joint venture, strategic site acquisitions, and maintaining a robust balance sheet.

The company's disciplined approach to capital allocation is also evident in its share repurchase program, with $150 million of stock repurchased in 2024, marking the "first return of capital by any public Bitcoin miner." The Board authorized an additional $150 million for the program in Q1 2025, bringing the total to $200 million, alongside an updated $200 million ATM program. These tools provide flexibility to manage capital effectively, balancing growth investments with shareholder returns.

Growth Trajectory: Expanding the HPC Footprint

TeraWulf's outlook is characterized by an ambitious and well-defined growth trajectory in the HPC sector. The company recently increased its annual target for new HPC lease signings from 100-150 MW to 250-500 MW, reflecting strong customer demand and tangible progress in its development pipeline. The Lake Mariner Campus, with 22.50 MW of HPC capacity energized as of September 30, 2025, is on track to deliver an additional 50 MW for Core42 by year-end 2025. The campus has a total potential capacity of 750 MW, with an additional 250 MW capacity approved by NYISO and another 250 MW requested.

Further solidifying its HPC footprint, TeraWulf signed long-term HPC lease agreements with Fluidstack in August 2025 for over 360 MW of critical IT load at Lake Mariner, with potential for an additional 160 MW from CB-5. These Fluidstack leases represent approximately $6.7 billion in contracted revenue, with a potential to reach $16 billion with lease extensions. The construction and delivery for Akela (Fluidstack) are expected in three phases throughout 2026. In October 2025, TeraWulf expanded its partnership with Fluidstack and Google through a joint venture to develop and operate the Abernathy HPC Campus in Texas, adding 168 MW of new HPC capacity with expansion potential up to 600 MW. This joint venture is expected to be financed before year-end 2025.

The company also secured an 80-year ground lease for the Cayuga site in New York in August 2025, laying the groundwork for large-scale HPC deployment beginning in 2027. This site is expected to add 150 MW of capacity in 2026, scalable to 400 MW by 2028. Management is confident in its ability to deliver capacity within 12 months of signing a customer. The goal is to exit 2026 with 200 to 250 MW of revenue-generating HPC compute capacity. While Bitcoin mining operations are expected to continue through at least the end of 2026, the long-term strategy involves converting this capacity to higher-value HPC/AI applications, driven by customer demand and superior returns.

Risks and the Path Forward

Despite its compelling growth narrative, TeraWulf faces several pertinent risks. The Bitcoin mining segment remains susceptible to the inherent volatility of Bitcoin prices and the increasing network difficulty, which intensified after the April 2024 halving. Power cost volatility, as evidenced by the "historic" Q1 2025 price spikes in New York, can also impact profitability, though management views such extreme events as infrequent and does not plan to hedge. The transition to HPC involves execution risk, particularly in managing complex build-outs, optimizing designs for evolving GPU technologies, and ramping up labor, as highlighted by the continuous design refinements with Core42. The company also faces potential impacts from evolving tariffs, estimating a 5% to 10% increase in build costs, though it remains committed to achieving mid-teens unlevered returns on projects.

The broader energy shortfall and grid constraints present both an opportunity and a risk. While TeraWulf's expertise in energy infrastructure allows it to identify and develop advantageous sites, the overall scarcity of power could impact future expansion timelines. However, the company's strategic focus on sites with existing infrastructure and its ability to manage complex energy projects mitigate some of these risks. Management's disciplined execution, strategic partnerships, and robust financing are critical to navigating these challenges and realizing the full potential of its HPC strategy.

Conclusion

TeraWulf is undergoing a profound and well-executed transformation, shifting its core identity from a Bitcoin miner to a leading provider of sustainable, high-performance computing infrastructure. This strategic pivot, underpinned by deep energy expertise and a portfolio of strategically located, low-carbon sites, is now demonstrably validated by significant partnerships with Tier-1 customers like Core42 and Fluidstack, critically supported by Google's financial backing. The company's ability to secure over $5.2 billion in financings in the latter half of 2025, coupled with Google's credit enhancement, provides a robust financial foundation to fuel its ambitious growth targets of 250-500 MW of new HPC signings annually.

TeraWulf's commitment to operational excellence, continuous technological refinement for evolving GPU demands, and a disciplined approach to capital allocation positions it favorably in the burgeoning AI compute market. While the Bitcoin mining segment continues to generate cash flow, its long-term destiny lies in conversion to higher-value HPC/AI capacity, reflecting a clear vision for maximizing shareholder value. The company's unique competitive advantages in energy infrastructure and cost-efficient, scalable data center development suggest a compelling investment thesis for those seeking exposure to the foundational infrastructure powering the artificial intelligence revolution.