TeraWulf lifts quarterly revenue to $76.2M as HPC expands

By Grace Kim

TeraWulf (NASDAQ: WULF) reported third-quarter revenue of $76.2 million, up from $44.8 million in the second quarter, as high-performance computing leases expanded. HPC lease revenue nearly doubled to $63 million and represented about 83% of total revenue, Chief Financial Officer Patrick Fleury said.

What changed in the third quarter?

Net income attributable to TeraWulf reached $709.9 million, versus a $939.9 million net loss in the second quarter. Fleury attributed the swing mainly to a noncash fair-value adjustment on Google warrants and a gain from selling an equity interest in the Abernathy joint venture.

Non-GAAP adjusted EBITDA (a non-GAAP operating earnings measure) improved to negative $12.8 million from negative $18.3 million. Reported HPC leasing segment profit margin was about 17%, below the approximately 85% long-term target, because it included tenant fit-out, pre-revenue and development costs. After adjustments and excluding certain power costs, Fleury put the margin at about 83%.

Takeaway: Leasing improved operations; noncash valuation changes and the Abernathy gain drove reported profit.

How quickly can Lake Mariner ramp?

Chairman and CEO Paul Prager said: “TeraWulf expects additional capacity at its Lake Mariner campus to begin generating revenue over the coming months.”

At Lake Mariner, CB3 is online under its Fluidstack lease, which commenced July 13. Third-quarter results reflected 102 megawatts of operating capacity.

At CB4, tenant equipment is deployed and energized in the first two of four data halls; commercial operation and rent commencement should follow shortly. TeraWulf scheduled the other two halls for fourth-quarter operation.

Fleury expects an additional 168 megawatts online at CB4 by the end of Q4, then another 168 at CB5 by the end of Q1 2027. Prager expects about $700 million in annualized run-rate leasing revenue (current pace extended over 12 months) by the end of Q1 2027.

Fleury estimated WULF Compute project costs at approximately $8.9 million per critical IT megawatt, a capacity unit, within the original $8 million to $10 million range. About $2.9 billion of project spending was complete as of September 30, leaving roughly $1 billion.

Takeaway: Lake Mariner has funded capacity in place, and the next revenue step depends on CB4 and CB5 coming online on schedule.

How is Justified financed and protected?

Justified in Hawesville, Kentucky, carries an Anthropic lease representing approximately $19 billion of contracted revenue over 20 years. Prager said TeraWulf has the required equity and expects project-level debt (borrowing secured by the project) to fund the remaining capital requirement.

Google’s credit support protects against an Anthropic default after commencement through a mandatory lease assumption or debt-reducing termination payment. The tenant reimburses the support cost, and protection ends if Anthropic reaches specified investment-grade ratings.

TeraWulf signed a definitive engineering, procurement and construction agreement with Fluor for all three Justified buildings. Khan said it includes cost and schedule protections, with a guaranteed maximum price (a cost ceiling) to be established as engineering and procurement advance.

Construction pilings are underway. TeraWulf targets phased ready-for-service, or operational, deliveries from late 2027 through Q2 2028 and expects costs of approximately $10 million to $12 million per critical IT megawatt.

Khan said Justified’s engineering and drawings were approximately 90% complete, with completion expected by December 1. The project was more than 80% complete on long-lead equipment, or items with lengthy delivery schedules, and Khan expected that work to reach 100% by year-end.

Takeaway: Justified has a tenant, credit backstop and construction contract, but revenue remains tied to a staged 2027-2028 delivery schedule.

What powers the Muskie expansion?

At the Kentucky-based Muskie site, TeraWulf is working with Kentucky Power and AEP toward an initial gigawatt of electric service. The first 500 megawatts are scheduled for 2028 delivery under an electric service agreement (a power-delivery contract).

The next 500 megawatts needs new generation. The companies plan to seek Kentucky regulatory approval for Kentucky Power’s proposed 760-megawatt Big Sandy combined-cycle gas plant, with approval expected by mid-2027. TeraWulf is exploring moving portions of the second 500 megawatts into 2029, ahead of the plant’s anticipated 2031 delivery.

Prager said TeraWulf is discussing Muskie with prospective customers but gave no lease timing. “The company would not sign a deal that forces it to issue equity at a valuation management believes does not reflect TeraWulf’s value,” he said.

Potential funding sources include:

• Customer prepayments.
• Customer equity investments.
• Additional leverage.
• Project-level investment in stabilized assets.

Prager said TeraWulf intends to build and own assets long term but would consider operating-asset investments to recycle capital.

Takeaway: Muskie has a power-development path, though TeraWulf has set financing and valuation conditions before committing to a tenant.

Can liquidity cover the build-out?

Cash and restricted cash totaled approximately $2.4 billion at September 30. Under current assumptions, Fleury said existing liquidity and expected Abernathy sale proceeds will fund remaining Lake Mariner commitments, the remaining Justified equity investment and interim Muskie letter-of-credit requirements (contingent payment facilities) without accessing equity capital markets.

TeraWulf primarily develops and operates environmentally conscious U.S. data centers for bitcoin mining and other high-performance computing applications, emphasizing low-carbon power such as nuclear and hydroelectric energy. Its sites include Lake Mariner in New York and Nautilus Cryptomine in Pennsylvania.

Takeaway: Current liquidity appears sufficient under stated assumptions, leaving project debt and tenant economics as the main funding tests.