WULF
TL;DR Overview
Core Insight: TeraWulf’s edge is its vertically integrated, predominantly zero‑carbon power campuses and engineered, high‑density cooling and fiber, married to long‑duration, investment‑grade‑backed HPC contracts—most notably with Fluidstack and Google’s credit support—shifting the business from cyclical bitcoin mining toward durable, contracted AI compute revenues.
Key Opportunity: The company has secured more than 510 MW of contracted critical IT load across Lake Mariner (NY) and Abernathy (TX), including a 25‑year, ~$9.5 billion AI hosting joint venture in Texas and multi‑phase Fluidstack leases in New York that reached ~$6.7 billion in contracted value (with up to ~$16 billion including extensions). Management is targeting an incremental 250–500 MW of new contracted capacity annually.
Primary Risk: Execution and capital intensity. The model depends on delivering multi‑billion‑dollar buildouts on time and on budget, financing them with large project‑level debt (e.g., $3.2 billion secured notes priced at 7.75%) and convertibles, while managing dilution, customer concentration, and the residual volatility of bitcoin mining economics.
Urgency: In the last weeks, TeraWulf closed $1.025 billion of 0.00% convertible notes due 2032, priced $3.2 billion of senior secured notes for Lake Mariner expansion, and formed a 168 MW AI compute JV in Texas backed by Google‑supported lease obligations. Preliminary Q3 2025 results show sharp revenue and EBITDA inflection as HPC ramps, making this an important moment to reassess the equity story.
1. Executive Summary
TeraWulf is executing a strategic pivot from primarily bitcoin mining to a contracted, long‑duration HPC hosting platform supported by advantaged power, cooling, and fiber. Management reported preliminary Q3 2025 revenue of $48–$52 million—up ~84% year over year—and adjusted EBITDA of $15–$19 million, reflecting early benefits from the Lake Mariner repositioning toward high‑performance compute. The contracted backlog now exceeds 510 MW of IT load across two campuses, underpinned by Fluidstack as an anchor customer and credit enhancement from Google, which has increased its overall backstop to approximately $3.2 billion at Lake Mariner and is supporting ~$1.3 billion of Fluidstack lease obligations at the Abernathy JV.
Capital formation has been aggressive and timely. The company closed $1.025 billion of 0.00% convertible senior notes due 2032 and previously completed $1.0 billion of 1.00% convertible notes due 2031 with capped calls designed to mitigate dilution up to a cap price of $18.76. At the project level, WULF Compute priced $3.2 billion of 7.750% senior secured notes due 2030 to finance Lake Mariner expansion, secured by first‑priority liens, a designated lockbox of Fluidstack revenues, and, until completion, a Google pledge of TeraWulf warrants—an unusual and powerful form of construction‑phase credit enhancement. Management’s stated contracting cadence of 250–500 MW per year, along with an 80‑year ground lease at Cayuga (up to 400 MW potential, 138 MW power expected ready in 2026), lays out a multi‑year growth runway. The central task now is balanced execution—bringing capacity online on schedule, converting backlog to cash flow, and maintaining discipline around leverage and dilution.
2. Trading Analysis
Recent convertible activity sets clear technical guardrails for the stock. The 0.00% 2032 converts priced with an initial conversion rate of 50.1567 shares per $1,000 (conversion price ~$19.94), a ~37.5% premium to the $14.50 close on October 29, 2025. At the full $1.025 billion size, that equates to roughly 51.4 million potential new shares upon conversion, subject to settlement method. The earlier $1.0 billion 2031 converts carry a conversion rate of 80.4602 shares per $1,000 (conversion price ~$12.43), implying ~80.5 million shares if fully settled in equity; TeraWulf entered capped calls with a cap price of $18.76, which are designed to reduce or offset dilution between the conversion price and the cap. The company also disclosed warrants associated with Google’s support—32.5 million shares related to the CB‑5 expansion at Lake Mariner—and a temporary pledge of Google warrants as additional security for the Lake Mariner project bonds. These instruments represent a measurable overhang, but they also signal institutional partners’ alignment with the company’s long‑term HPC buildout.
On the positive side, the $200 million share repurchase program (over $150 million executed by year‑end 2024 and $33 million in Q1 2025) has historically absorbed supply. Near‑term trading may be catalyzed by the formal release of Q3 2025 results in November, incremental HPC contracting updates, and project financing milestones. Over the medium term, equity performance should track the pace of converting contracted MW into revenue and the stock’s relationship to the two convertibles’ economic thresholds: the $12.43 (2031) and ~$19.94 (2032) effective conversion prices, and the $18.76 capped‑call level for the 2031s.
3. Team Overview & Governance
TeraWulf’s leadership is oriented toward energy‑centric, capital‑intensive execution. CEO Paul Prager and CFO Patrick Fleury have steered the balance sheet through multiple convertible offerings and the pricing of $3.2 billion in project bonds, while CTO Nazar Khan has emphasized purpose‑built HPC designs—including dual 345 kV feeds, closed‑loop water cooling, and low‑latency fiber. The promotion of Sean Farrell to Chief Operating Officer underscores an operational focus as buildouts accelerate.
Governance has improved with the acquisition of Beowulf Electricity & Data LLC, eliminating a related‑party structure and bringing 94 employees in‑house. An independent board committee approved the 80‑year Cayuga ground lease, highlighting process discipline around large, insider‑sensitive transactions. The company’s ecosystem now includes investment‑grade‑backed partners, with Google taking an equity interest and providing lease backstops and warrant‑based collateral pledges for project financing—an unusual alignment that lowers execution risk but also deepens strategic interdependence. Details on broader board composition and committee structures were not provided in the source materials.
4. Business Model
The operating model is evolving into an energy‑anchored, contract‑based AI compute landlord. TeraWulf builds and operates high‑density, water‑cooled data halls on top of low‑cost, predominantly zero‑carbon power. It monetizes this infrastructure via long‑term hosting agreements with tenants such as Fluidstack and Core42 (G42). The New York Lake Mariner campus has 245 MW energized, with multi‑phase HPC leases that brought total contracted value to ~$6.7 billion as of August 18, 2025 (and potential to ~$16 billion with lease extensions). The company subsequently added a 160 MW CB‑5 building for Fluidstack on identical economics, reinforcing standardization and scalability.
In Texas, TeraWulf formed a 51%‑owned joint venture with Fluidstack to develop 168 MW at Abernathy. The JV carries a 25‑year, ~$9.5 billion hosting commitment and rights to subsequent phases. Google is backing approximately $1.3 billion of Fluidstack’s long‑term lease obligations to support project‑level debt. Based on disclosed project cost ranges of $8–$10 million per MW, the Abernathy phase implies total capex of roughly $1.3–$1.7 billion against contracted revenue of about $2.26 million per MW per year over 25 years. While JV‑level revenue sharing and margin splits were not disclosed, TeraWulf’s majority stake positions it to benefit disproportionately from successful delivery.
Bitcoin mining remains an important, but diminishing, component. Hashrate grew to 12.8 EH/s by Q2 2025, with 245 MW energized at Lake Mariner. However, higher energy costs and the April 2024 halving compressed mining margins in early 2025, underscoring why management is converting advantaged power sites into long‑duration HPC contracts with projected high site‑level NOI. The company’s stated aim is to operate at a “commercial run‑rate” via annual megawatt contracting, smoothing revenue cyclicality and enhancing visibility.
5. Financial Strategy
The financing stack intentionally blends low‑cash‑interest corporate convertibles with large, ring‑fenced project debt. The 0.00% 2032 converts delivered ~$999.7 million in net proceeds, primarily for Abernathy and general corporate purposes, while the 1.00% 2031 converts raised ~$975.2 million net (including the fully exercised greenshoe), with capped calls intended to mitigate dilution up to $18.76. At the asset level, WULF Compute priced $3.2 billion of 7.750% senior secured notes due 2030 to fund the Lake Mariner expansion. These notes are secured by first‑priority liens on substantially all project assets, a designated lockbox of Fluidstack revenues, and, prior to completion, a pledge by Google of warrants to purchase TeraWulf common stock. TeraWulf also provided customary completion guarantees to fund WULF Compute as necessary to ensure timely completion.
This structure is purpose‑built to align long‑dated, contracted cash flows with non‑recourse or limited‑recourse debt service, while limiting corporate‑level cash interest via 0–1% convertibles. It does, however, introduce potential dilution upon stock appreciation and relies on strict operational execution to satisfy construction covenants and ramp milestones. The disclosed total project cost at Abernathy of $8–$10 million per MW offers transparency into capital intensity; paired with 25‑year commitments and Google’s lease backing, it supports robust debt capacity. Preliminary Q3 2025 EBITDA inflection suggests the transition is taking hold, but audited Q3 results and detailed project debt service schedules were not yet provided in these materials.
The company has also demonstrated shareholder‑friendly capital actions—repaying legacy loans, and authorizing a $200 million buyback (over $150 million executed in 2024 and $33 million in Q1 2025)—while keeping liquidity robust (cash and bitcoin holdings of $219.6 million at Q1 2025 quarter‑end). As the buildout accelerates, investors should watch for incremental contracting updates, definitive closing confirmations on the priced project bonds, and evidence that construction draws track budget without eroding equity cushions.
6. Technology & Innovation
TeraWulf’s core technical moat is in large‑scale, high‑density, water‑cooled data center engineering paired with low‑carbon power procurement. Lake Mariner features dual 345 kV transmission lines, closed‑loop water cooling, and ultra‑low‑latency fiber—capabilities tailored to next‑generation GPU clusters. The company has begun delivering purpose‑built HPC data halls and is repositioning portions of existing mining infrastructure to host AI workloads, improving capital efficiency by reusing power and cooling backbones.
The company cites projected site‑level NOI margins of ~85% under its August 14, 2025 Fluidstack agreements—an ambitious target that, if achieved, reflects the value of high‑density, custom‑engineered HPC at scale. While the documents emphasize rapid deployment schedules (e.g., initial ~40 MW online in first half 2026 and full deployment by year end), granular disclosures on specific hardware stacks, network topologies, or software orchestration were not provided. Nevertheless, the partnerships with Fluidstack and Core42, together with Google’s credit support, suggest alignment with leading AI compute consumers and financiers.
7. Manufacturing & Operations
At Lake Mariner (Barker, NY), the company has energized 245 MW, increased mining hashrate to 12.2–12.8 EH/s through Q2 2025, and is converting capacity for HPC. Fluidstack leases CB‑3/CB‑4 and added CB‑5 for an incremental 160 MW on matching economics, with operations expected in the second half of 2026. TeraWulf secured interconnection to draw 500 MW with a plan to reach up to 750 MW, underscoring campus‑level scalability. Construction progress includes dedicated HPC buildings for early tenants and miner building expansions; operational data indicate ongoing electrical infrastructure upgrades and on‑site repair capability to keep efficiency near 19 J/TH after miner refreshes.
At Abernathy (TX), the 168 MW JV expects facility delivery in the second half of 2026, and holds rights for subsequent phases. Total project costs are estimated at $8–$10 million per MW, with Google‑supported lease obligations enhancing project finance credit quality. In Lansing, NY (Cayuga), the 80‑year ground lease for ~183 acres provides optionality up to 400 MW of digital infrastructure, with 138 MW of low‑cost, predominantly zero‑carbon power expected ready in 2026 and planned adjacent solar and battery storage. These three sites form a coherent, multi‑campus platform designed to sustain the company’s 250–500 MW per year contracting ambition.
8. Regulatory & Market Access
TeraWulf has relied on private Rule 144A markets for speed and scale, selling convertibles and pricing project bonds to qualified institutional buyers. The securitization of project cash flows is notably rigorous: first‑priority liens over project assets, a designated lockbox for Fluidstack USA I Inc. receipts, and a pledge by Google of warrants to purchase TeraWulf stock prior to completion. This is an uncommon structure that strengthens lender protections and lowers execution risk during construction.
On the infrastructure side, New York operations highlight access to predominantly zero‑carbon power and abundant cooling water—factors increasingly relevant to environmental and permitting regimes. The Cayuga ground lease was approved by an independent board committee, which reduces governance and regulatory friction. While the company operates within changing power markets and digital infrastructure policy landscapes, the materials did not cite adverse regulatory actions. Securities underlying the convertibles are unregistered and offered only to QIBs; holders have standard protections, including repurchase rights upon a fundamental change and issuer call features subject to stock price triggers.
9. Historical Context
In 2024, TeraWulf doubled revenue to $140.1 million and expanded self‑mining capacity to 9.7 EH/s, then secured its first AI data center leases with Core42, marking the start of its HPC journey. Early 2025 brought halving‑driven mining headwinds and elevated power costs—Q1 revenue fell to $34.4 million and EBITDA turned negative—prompting accelerated repositioning toward HPC, the acquisition of Beowulf E&D to simplify governance, and the commencement of dedicated HPC buildouts.
The strategic inflection crystallized between August and October 2025. TeraWulf signed two 10‑year HPC colocation agreements with Fluidstack (>200 MW, ~$3.7 billion in initial contract value, with potential to ~$8.7 billion via extensions), then expanded to CB‑5 (another 160 MW) at the same economics, bringing contracted value at Lake Mariner to ~$6.7 billion and potentially ~$16 billion with extensions. Google increased its lease backstops at Lake Mariner to ~$3.2 billion and its pro forma equity stake to ~14% (including warrants), while WULF Compute priced $3.2 billion of 7.75% senior secured notes for the Lake Mariner expansion. In Texas, TeraWulf executed a 168 MW JV with Fluidstack featuring a 25‑year, ~$9.5 billion hosting commitment, supported by ~$1.3 billion in Google‑backed lease obligations. The company simultaneously strengthened its capital position with $1.0 billion of 2031 converts (1.00% with capped calls) and, most recently, closed $1.025 billion of 0.00% 2032 converts. Preliminary Q3 2025 results indicate substantial top‑line and EBITDA momentum as the HPC strategy takes hold. Audited Q3 figures and finalized closings on the priced project bonds were not yet included in these materials.