TeraWulf Stock Soars 43% on Google-Backed AI Hosting Deal

TeraWulf said it had signed two decade-long agreements with Fluidstack amounting to $3.7 billion. (Dreamstime)

Shares of TeraWulf surged Thursday after Alphabet’s Google took a stake in the Bitcoin mining company as part of a lengthy artificial-intelligence hosting deal.

TeraWulf said it had landed two 10-year agreements with AI cloud platform Fluidstack. The deal comprises around $3.7 billion in contracted revenue and includes two five-year extension options that could bring total revenue to roughly $8.7 billion.

Under the terms of the agreement, TeraWulf will deploy more than 200 megawatts of electrical power at its Lake Mariner campus in New York. The arrangement comes out to roughly $1.85 million per megawatt.

Google plans to backstop $1.8 billion of Fluidstack’s lease obligations to support the buildout and project-related debt financing. In return, Google will receive roughly 41 million warrants, or an 8% stake in TeraWulf.

TeraWulf, founded in 2021, owns and operates massive data centers across the U.S. that are suited for Bitcoin mining and other power-intensive processes.

Shares soared 43% to $7.82 on Thursday, putting the stock on pace for its largest same-day percentage increase since a 49% jump in March 2022, according to Dow Jones Market Data.

Cantor Fitzgerald analyst Brett Knoblauch reiterated an Overweight rating on the shares and boosted his price target to $11 from $7. The analyst noted that TeraWulf also secured a 80-year lease for its Cayuga site in Lansing, New York, which gives the company “more capacity to announce additional deals.” This comes in addition to the remaining capacity of its Lake Mariner site.

Between the Mariner and Cayuga sites, TeraWulf has 827.5 megawatts of gross capacity remaining and around 662 megawatts of critical IT load available. Critical IT load is a measure of the amount of power needed to support the most essential equipment like servers and storage systems.

“WULF still has the capacity to effectively triple its current run-rate should it contract all of its capacity out,” Knoblauch wrote. In his view, it wouldn’t be surprising if the stock returned to its November highs of around $9.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com