WULF

Moat Evaluation

TeraWulf appears to be developing several potential moats as it transitions from a primarily Bitcoin mining business toward long‑dated, hyperscale AI/HPC hosting. Recent disclosures from August–October 2025 carry the most weight. These suggest growing scale, advantaged power access, and partner‑backed contracts that could translate into durable advantages if execution remains on track. However, some elements (e.g., projected margins and multi‑year build timelines) are management forecasts; financing closings remain subject to market conditions; and leverage and customer concentration introduce risk.

Potential cost-and-scale advantage from advantaged power, interconnection, and site characteristics

Across multiple 2024–2025 filings and releases, the company emphasizes low-cost, predominantly zero‑carbon power and unusually large, ready‑to‑expand interconnection at its New York campuses. On 2025‑08‑14, TeraWulf secured an 80‑year ground lease at Cayuga (≈183 acres) with power costs averaging below $0.05/kWh and on‑site water intake, with development rights up to 400 MW and 138 MW ready in 2026. Earlier, management noted dual 345 kV transmission lines, closed‑loop water cooling, and low‑latency fiber at Lake Mariner (2025‑08‑14), as well as interconnection approval to draw 500 MW with plans to reach up to 750 MW (2025‑08‑08). These attributes point to potential cost and scale advantages versus peers constrained by grid queues, permitting, or higher power prices. The full moat depends on sustained access to these low costs, timely expansions, and regulatory stability in New York’s power markets.

Emerging switching-cost moat via long-term, backstopped, bespoke AI/HPC leases

Customer arrangements announced in late 2024 and materially expanded in mid‑2025 suggest rising switching costs. TeraWulf disclosed multi‑year, customized data center leases for 72.5 MW with Core42 (2024‑12‑23), with phased delivery in 2025. On 2025‑08‑14, it signed two 10‑year AI hosting agreements with Fluidstack for 200+ MW of critical IT load, and on 2025‑08‑18, Fluidstack exercised an option for an additional 160 MW (CB‑5), bringing contracted critical IT load to ≈360 MW. Management cited contracted revenue growing from ≈$3.7 billion (2025‑08‑14) to ≈$6.7 billion (2025‑08‑18), with potential higher totals upon extensions, and referenced high site NOI margins as a projection. Prior to completion, Google agreed to backstop Fluidstack’s obligations ($1.8 billion on 2025‑08‑14, increased to ≈$3.2 billion on 2025‑08‑18) and to hold warrants/equity. The combination of 10‑year terms, bespoke infrastructure for GPU clusters, staggered deployments, and third‑party backstops can create practical and contractual switching frictions for tenants. The durability of this effect will depend on final contract performance, renewal behavior, and the breadth of the tenant base.

Capital access and partner reinforcement enabling efficient scale

Recent capital markets activity suggests an ability to finance large projects at pace, which can reinforce efficient scale. After a $500 million 2.75% convertible in late 2024 (priced 2024‑10‑24; closed 2024‑10‑25), TeraWulf upsized to $850 million of 1.00% converts (2025‑08‑18) and then to a full $1.0 billion following greenshoe exercise (2025‑08‑22). Most recently, WULF Compute priced $3.2 billion of 7.750% senior secured notes due 2030 at par (2025‑10‑16), secured by first‑priority liens and collateral, including a pre‑completion pledge by Google of warrants to purchase TeraWulf common stock, with proceeds intended to fund Lake Mariner’s expansion. If closed as expected on 2025‑10‑23, this would represent a step‑change in financing scale. Access to this capital, alongside strategic backstops from Google and completion guarantees by TeraWulf, can deter less‑capitalized entrants and help the company establish efficient scale. However, higher leverage, construction execution, interest rate exposure, and concentrated campuses temper the moat’s resilience.

Top 3 Patterns Identified

1: Rapid pivot and scaling from Bitcoin mining to AI/HPC colocation

• Recent Evidence: On 2024‑12‑23, TeraWulf announced over 70 MW of Core42 leases with 2025 phased delivery. On 2025‑08‑14, it signed two 10‑year Fluidstack agreements exceeding 200 MW, and on 2025‑08‑18 Fluidstack expanded by 160 MW (CB‑5), bringing total contracted AI/HPC load to ≈360 MW and contracted revenue to ≈$6.7 billion. Management expected HPC hosting revenue recognition to begin in 2025 (2025‑08‑08).
• Contextual Trends: The shift progressed from a 2.5 MW proof‑of‑concept in late 2024 (2024‑11‑12) to 72.5 MW (Core42) to 360 MW (Fluidstack expansion) within about nine months. This trajectory suggests increasing customer validation and larger deal sizes, though it concentrates exposure in a few tenants and requires multi‑year build-outs.

2: Building a power-cost and location advantage at key New York sites

• Recent Evidence: The 80‑year Cayuga ground lease (2025‑08‑14) cites average power costs below $0.05/kWh, existing industrial water intake, and capacity to 400 MW. Lake Mariner features dual 345 kV lines, closed‑loop water cooling, and low‑latency fiber (2025‑08‑14), with interconnection approval to 500 MW and plans up to 750 MW (2025‑08‑08).
• Contextual Trends: Through 2024–2025 disclosures, management consistently emphasized grid access, cooling, and zero‑carbon power as differentiators. The acquisition of Beowulf E&D (2025‑05‑27) supports vertical integration in power. Risks include New York power market volatility, permitting timelines, and potential regulatory shifts affecting energy sourcing.

3: Increasing reliance on large-scale financing and strategic backstops

• Recent Evidence: Capital raises progressed from a $500 million 2.75% convert (closed 2024‑10‑25) to a $1.0 billion 1.00% convert post‑greenshoe (2025‑08‑22). On 2025‑10‑16, WULF Compute priced $3.2 billion of 7.750% senior secured notes due 2030, with collateral packages and a pre‑completion pledge by Google of warrants. Google’s backstop for Fluidstack obligations increased from $1.8 billion (2025‑08‑14) to ≈$3.2 billion (2025‑08‑18), alongside a pro forma equity stake of ≈14%.
• Contextual Trends: Financing scale and partner support have grown alongside contract wins, enabling rapid build‑out and potential scale economies. The trade‑off is higher financial leverage and execution dependence; some offerings remain subject to market conditions, and collateralized structures signal lender risk controls as the project ramps.