WULF

Moat Evaluation

TeraWulf appears to be building an emerging moat centered on access to scarce, low‑cost, predominantly zero‑carbon power at scale; long‑duration, backstopped customer contracts; and growing credibility with blue‑chip partners. The most recent disclosures (August 2025) indicate a sharp step‑up in contracted AI/HPC capacity and financing flexibility, which updates earlier 2024–H1 2025 groundwork. While these signals point to strengthening competitive position, durability will hinge on execution, regulatory stability in New York power markets, and concentration risk with a small number of large tenants.

Power-anchored cost advantage and efficient scale

Recent filings and releases suggest TeraWulf’s core advantage is tied to scarce infrastructure: interconnection capacity, high‑voltage transmission, industrial water, and land under very long leases. On August 14, 2025, the company secured an 80‑year ground lease at Cayuga (183 acres) enabling up to 400 MW, citing sub‑$0.05/kWh power and existing electrical and water intake infrastructure ready for 2026. This complements the October 29, 2024 long‑term ground lease at Lake Mariner (35 years plus a 45‑year option) that expanded the campus to 157 acres with exclusive access to as much as 750 MW, and the August 8, 2025 disclosure of interconnection approval to draw 500 MW. The August 18, 2025 expansion with Fluidstack (CB‑5 adding 160 MW) positions Lake Mariner among the largest HPC campuses in the U.S., indicating efficient‑scale dynamics where few sites can viably deliver this combination of power, cooling (closed‑loop water), and dual 345 kV lines. Together, these factors plausibly confer a cost and capacity advantage that competitors may find difficult to replicate quickly. However, sustained advantage will depend on local policy, transmission congestion, and timely build‑out.

Long-duration, backstopped contracts implying switching costs and revenue durability

Tenant commitments tightened notably in August 2025. On August 14, 2025, TeraWulf announced two 10‑year AI/HPC colocation agreements with Fluidstack for 200+ MW, anchoring about $3.7 billion in contracted revenues (potentially $8.7 billion with extensions) with a Google backstop of $1.8 billion and an equity stake around 8%. Four days later (August 18, 2025), Fluidstack exercised an expansion at Lake Mariner (CB‑5, +160 MW), lifting total contracted revenue to $6.7 billion and potential to $16 billion, while Google’s backstop increased to ~$3.2 billion and a pro forma 14% equity position. Earlier, Core42 (G42) signed long‑term leases for 70+ MW (December 23, 2024; January 3, 2025), with revenue recognition expected to begin in Q3 2025 (August 8, 2025). These long‑dated, customized deployments suggest non‑trivial switching costs for tenants due to specialized power/cooling, network latency, and operational risk of relocating GPU clusters. The durability of this “contract moat” will still rely on customer performance and diversification, given concentrated exposure to a few large counterparties.

Credibility and capital access as moat enhancers (intangible assets)

Being selected by Core42 (G42) in late 2024 and deepening ties with Fluidstack, alongside Google’s escalating backstop and equity position disclosed on August 14 and 18, 2025, bolster TeraWulf’s brand credibility in hyperscale AI infrastructure. Access to low‑cost capital further supports moat expansion: the company priced and then fully upsized a 1.00% Convertible Senior Notes due 2031 offering to $1.0 billion by August 22, 2025, after a $500 million 2.75% 2030 issuance closed on October 25, 2024. Proceeds fund data center expansion and capped calls to manage dilution. While capital access is not a moat by itself, it can accelerate site build‑out and tenant onboarding, reinforcing the power‑anchored and contractual advantages. Data gaps remain around realized hosting economics (e.g., the August 14, 2025 projection of 85% site NOI margins is a management estimate) and comparative pricing versus peers.

Top 3 Patterns Identified

1: Step-change in contracted AI/HPC demand and customer quality

• Recent Evidence: On August 14, 2025, TeraWulf signed two 10‑year colocation agreements with Fluidstack (200+ MW; ~$3.7 billion contracted revenue, up to $8.7 billion with extensions) with Google backstopping $1.8 billion and taking ~8% equity. On August 18, 2025, Fluidstack expanded (CB‑5, +160 MW), lifting contracted revenue to $6.7 billion and potential to $16 billion, and Google’s backstop to ~$3.2 billion with ~14% pro forma equity. Earlier Core42 leases (December 23, 2024; January 3, 2025) for 70+ MW begin contributing in 2H 2025 (August 8, 2025).
• Contextual Trends: This materially updates late‑2024/early‑2025 signals (proof‑of‑concept and 72.5 MW for Core42) to a multi‑hundred‑MW platform with tier‑one validation. The trend indicates an expanding moat via contractual stickiness, though concentrated tenant exposure and execution timelines (2026 ramps) introduce risk.

2: Locking in scarce power, land, and interconnection capacity in New York

• Recent Evidence: The August 14, 2025 Cayuga 80‑year ground lease enables up to 400 MW with sub‑$0.05/kWh power and existing water/electrical infrastructure, targeting service in 2026. The October 29, 2024 Lake Mariner lease secures up to 750 MW capacity over very long terms, and August 8, 2025 noted interconnection approval to draw 500 MW. August 18, 2025 disclosed CB‑5 (+160 MW) at Lake Mariner with dual 345 kV transmission and closed‑loop water cooling.
• Contextual Trends: Since late 2024, the company has systematically converted site control into scalable interconnection and campus expansions, suggesting efficient‑scale characteristics difficult to match quickly. Regulatory or grid constraints remain the key variables that could compress this advantage.

3: Enhanced financing flexibility to fund rapid build-out

• Recent Evidence: Between August 18 and August 22, 2025, TeraWulf upsized and closed a $1.0 billion 1.00% convertible notes offering (2031) with capped calls to mitigate dilution; proceeds earmarked for data center expansion. Previously, on October 25, 2024, it closed a $500 million 2.75% 2030 convertible and executed significant share repurchases. Management also highlighted project financing plans in May 2025.
• Contextual Trends: Access to sizable, low‑coupon capital has improved since late 2024, supporting accelerated HPC capacity delivery. While this strengthens the company’s ability to expand potential moats, it also introduces dilution and leverage considerations, making disciplined deployment and tenant diversification essential.