TeraWulf Q1 2025 Earnings Report

TeraWulf EPS Results

• Actual EPS: -$0.16
• Consensus EPS: -$0.07
• Beat/Miss: Missed by -$0.09
• One Year Ago EPS: N/A

TeraWulf Revenue Results

• Actual Revenue: $34.41 million
• Expected Revenue: $45.72 million
• Beat/Miss: Missed by -$11.32 million
• YoY Revenue Growth: -18.90%

TeraWulf Announcement Details

• Quarter: Q1 2025
• Date: 5/9/2025
• Time: Before Market Opens
• Conference Call Date: Friday, May 9, 2025
• Conference Call Time: 8:00AM ET

TeraWulf (NASDAQ:WULF), together with its subsidiaries, operates as a digital asset technology company in the United States. The company develops, owns, and operates bitcoin mining facilities in New York and Pennsylvania. It is also involved in the provision of miner hosting services to third-party entities. The company was founded in 2021 and is headquartered in Easton, Maryland.

TeraWulf Q1 2025 Earnings Call Transcript

Key Takeaways

• In Q1 2025, Wolf Mining expanded to 245 MW of operational capacity at Lake Mariner, achieved a self-mining hash rate of 12.2 EH/s, and returned to positive EBITDA in April after historic winter power price spikes.
• Wolf Compute is deploying three HPC buildings for anchor tenant Core 42—Wolf Den (operational Q2), CB1 (Q3) and CB2 (Q4)—which will mark the shift from promise to proof and drive new revenue streams.
• TerraWulf received approval for an additional 250 MW at Lake Mariner (bringing total to 500 MW) and plans to seek another 250 MW to reach 750 MW of capacity, positioning the site for further growth.
• The company is on track for mid-year project financing of approximately $300 million for the 72.5 MW Core 42 build-out, with JPMorgan and Morgan Stanley leading and positive lender feedback so far.
• To streamline operations and align incentives, TerraWulf’s board is pursuing full integration of related-party Beowulf Electricity and Data into the corporate structure, eliminating complex disclosures.

Presentation

[Operator]

Greetings and welcome to the TerraWolf twenty twenty five First Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Larkin, Senior Vice President, Director of Investor Relations.

[Operator]

Thank you, sir. You may begin.

[John Larkin, SVP & Director of Investor Relations at TeraWulf]

Thank you, operator. Good morning, and welcome to TerraWolf's twenty twenty five first quarter earnings call. Joining me today are Chairman and CEO, Paul Prager and CFO, Patrick Fleury. Before we get started, please note that our remarks today may include forward looking statements. These statements are subject to risks and uncertainties and actual results may differ materially.

[John Larkin, SVP & Director of Investor Relations at TeraWulf]

During this call, we may use words like anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions which indicate forward looking statements. For a more comprehensive discussion of these and other risks, please refer to our filings with the SEC available on sec.gov and in the Investors section of our website at terrawolf.com. We will also reference certain non GAAP measures today. Please refer to our 10 ks and 10 Q filings and our website for a full reconciliation of these non GAAP measures to the most comparable GAAP measures. We will start this morning's call with prepared remarks from Paul and Patrick, followed by a Q and A session.

[John Larkin, SVP & Director of Investor Relations at TeraWulf]

I'll now turn the call over to our CEO, Paul Prager.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Thank you, John, and good morning, everyone. We appreciate joining us to review our first quarter twenty twenty five results. It was another active quarter for Terrawulf as we continue to build on the strong momentum from 2024. Across both our Bitcoin mining and high performance compute or HPC businesses, we remain committed to executing our strategy, maximizing the value of our megawatts through scalable, sustainable infrastructure. Before turning to the business highlights, I want to take a moment to thank you, our shareholders, especially those of you who have supported us since the very beginning.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

We are positioning TerreWolf to lead at the intersection of energy and compute. It's a long term effort, but one that we believe will create substantial value over time. Starting with Wolf Mining, our sustainable Bitcoin mining platform at our Lake Marina facility in Upstate New York. During the quarter, we successfully energized Miner Building 5, bringing total operational capacity to two forty five megawatts. We exited the quarter with the self mining hash rates of 12.2 exahash and fleet efficiency of 18 joules per terahash.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

As we mentioned on our February call, extreme weather in January and February temporarily impacted power pricing. However, by March and well into April, pricing normalized and our mining operations returned to positive EBITDA in the month of April. I also want to confirm that we received and installed all of our S21 ProMiners before any potential tariff implications, ensuring uninterrupted deployment. Turning to Wolf Compute, our high power compute hosting platform. Our mission here is to scale our purpose built liquid cooled infrastructure to meet the growing demand for AI and compute intensive workloads.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Demand remains strong, especially from enterprises seeking secure, high density infrastructure over the next twelve to eighteen months. We are focused on working with prospective partners that have capital to deploy, secured GPU allocation, and credit profiles that support project level financing. Today, we are actively executing on three dedicated buildings for our HPC anchor tenant, Core 42, the Wolf Den, CB1 and CB2. These facilities are our top construction and operational priority. Following five months of close collaboration with our partner and their integrator and many consultants, The Wolf Den is operational and will begin generating revenues in Q2.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

And we expect CV1 to go live in Q3 and CV2 in Q4. Executing on these initial facilities will drive further demand for our site and further interest in partnering with the TerreWolf team for highly complex HPC deployment. Our partnership with Core forty two is progressing exceptionally well. We collaborate daily to align on technical specifications and deployment timelines. To give a sense of the scale and sophistication involved, Dell, Core forty two's integrator, expects to have over 180 personnel on-site during the GPU tuning phase.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

We are optimizing design elements every day to ensure our infrastructure meets both current and future demands. These refinements may accelerate or delay timing and could affect overall infrastructure costs. Our goal is to design infrastructure that will support future generations of GPUs. So, we are committed to getting it right the first time. A successful launch will not only position us for further potential expansion with CORE 42, but also establish Terawolf as a leader in next generation data center development.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Success here will also accelerate our broader HPC hosting strategy. Additional prospective tenants are closely watching our progress and we are actively engaged in discussions to secure new commitments as we build out our capacity. Let me touch on a few additional updates. First, capacity. In April, we received approval from NISO for an additional two fifty megawatts of capacity at Lake Mariner, bringing the current total to 500 megawatts.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

We intend to request an additional two fifty megawatts that will bring our total power at Lake Mariner to seven fifty megawatts. We appreciate the support and collaboration of MISO as we scale this site. Second, tariffs. We're monitoring the evolving tariff landscape. Based on current information, we estimate a five to 10% impact to build costs.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

We remain committed to underwriting projects to mid teens unlevered returns and will adapt as needed to protect project economics. Third, project financing. We remain on track for mid year execution of the project financing of our 72 and a half megawatt core 42 build out. We are scheduled to officially launch the process next week with our advisors at JPMorgan and Morgan Stanley, and early feedback from potential lenders has been positive. Finally, our growth pipeline.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Beyond our 750 megawatts road map at Lake Mariner, we continue to pursue expansion opportunities. At the top of the list is the Cayuga site, a sister facility to Lake Mariner located on Lake Cayuga in Upstate New York. It shares the same strategic advantages in land, power, and fiber access. That process is progressing with our board, and we'll share more when we have firm updates. We're also evaluating additional sites with strong time to power potential and opportunities for on-site generation.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

This is an area where our energy infrastructure expertise truly differentiates us. Lastly, I want to address the company services agreement with Beowulf Electricity and Data, A private company owned by me that currently provides electricity and digital infrastructure services to Terowulf. We believe the time is right to simplify the structure. We are currently pursuing a full integration of Beowulf and Carewolf to eliminate related party disclosures, streamline operations, and better align incentives across the organization. The process is driven by our board and guided by rigorous governance protocols and independent oversight to ensure transparency and shareholder alignment.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

To summarize, our key near term priorities are, one, optimize our self mining platform following the energization of m b five. Two, deliver all three core 42 buildings on time and on budget. Three, lease additional HPC hosting capacity at Lake Mariner. And four, closed project financing for the Core forty two build out. With that, I will turn it over to our Chief Financial Officer, Patrick Fleury.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Thank you, Paul. The first quarter of twenty twenty five presented challenging market conditions for our Bitcoin mining operations, with a temporary spike in power prices and increasing network difficulty, the impacts of which are reflected in our financial results for the quarter. While our EBITDA was slightly negative for the quarter, it's important to emphasize we are carrying significant incremental costs related to our expansion into high power compute hosting without any current revenue contribution. As I'll discuss later in my remarks, this temporary burden will soon be addressed as our HPC hosting buildings come online in 2Q, 3Q and 4Q twenty twenty five as depicted on Page 15 of our May investor presentation. In the first quarter of twenty twenty five, we self mined three seventy two bitcoin at Lake Manor or approximately 4 bitcoin per day, a 12% decrease over the $4.23 bitcoin mined in 4Q 'twenty four.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Our GAAP revenues were flat quarter over quarter at $34,400,000 in 1Q 'twenty five from $35,000,000 in 4Q 'twenty four. Our value per bitcoin self mined in 1Q twenty five, a non GAAP metric, averaged $92,600 per bitcoin as compared to $82,739 in 4Q twenty four. Our GAAP cost of revenue, exclusive of depreciation, for 1Q 'twenty five was $24,500,000 a 25% increase over $19,600,000 in 4Q 'twenty four. The quarter over quarter increase was due to a 37% increase in realized power prices from $0.59 per kilowatt hour in 4Q 'twenty four to $0.81 per kilowatt hour in 1Q 'twenty five, offset by demand response proceeds of $1,300,000 in 4Q 'twenty four versus $2,800,000 in 1Q 'twenty five. Our power cost or cost of energy per bitcoin mine, a non GAAP metric, was 66,084 in 1Q 'twenty five compared to 46,328 in 4Q 'twenty four.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

As mentioned previously, this temporary spike in power prices, which began in December and persisted through mid February twenty twenty five, was historic as it resulted in a 1.76 standard deviation spike in New York ISO Zone A West average energy prices for January and February versus the average for this period over the last ten years. We expect the remainder of 2025 to be in line with historical power pricing at Lake Mariner with guidance of $05 per kilowatt hour for 2Q through 4Q 'twenty five, which is in line with New York ISO Zone A forward power curves as of 05/05/2025. Operating expenses increased 6% quarter over quarter from $2,700,000 in 4Q 'twenty four to $2,900,000 in 1Q 'twenty five, following a 69% increase from 3Q 'twenty four to 4Q 'twenty four. This trend higher is primarily the result of increased staffing levels at Lake Mariner necessary to support our mining expansion as well as our entry into HPC hosting activities. SG and A expenses increased quarter over quarter from $32,300,000 in 4Q 'twenty four to $50,100,000 in 1Q 'twenty five, primarily due to stock based compensation in 1Q 'twenty five.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Adjusting for stock based compensation, SG and A decreased quarter over quarter from $15,500,000 in 4Q 'twenty four to $11,500,000 in 1Q 'twenty five. Depreciation increased slightly quarter over quarter from $14,900,000 in 4Q 'twenty four to $15,600,000 in 1Q 'twenty five. Loss on fair value of digital currency in 1Q 'twenty five was $900,000 compared to a gain of $600,000 in 4Q 'twenty four. GAAP interest expense in 1Q 'twenty five was $4,000,000 compared to $3,000,000 in 4Q 'twenty four, and we recognized interest income of $2,200,000 in 1Q 'twenty five compared to $2,600,000 in 4Q 'twenty four. Cash interest paid during 1Q 'twenty five and 4Q 'twenty four was negligible as the 2.75% interest on our $500,000,000 convertible notes is accrued and payable on May 1 and November 1.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Our GAAP net loss in 1Q 'twenty five was $61,400,000 compared to a net loss of $29,200,000 in 4Q 'twenty four. Our non GAAP adjusted EBITDA for 1Q 'twenty five was negative $4,700,000 down from positive $2,500,000 in 4Q 'twenty four. Turning our attention to the balance sheet. As of March 31, we held $218,000,000 in cash, with total assets amounting to $841,000,000 and total liabilities of $670,000,000 Through 03/31/2025, we spent approximately $130,000,000 of capital expenditures on Wolfend CB1 and CB2. As disclosed on Page 17 of our May investor presentation, we achieved a BCC segment cost of production of approximately $72,000 in 1Q 'twenty five, and our guidance for 2Q through 4Q 'twenty five is anticipated to be well below this at approximately $47,500 primarily due to the aforementioned decrease in forecasted power prices.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Regarding fixed operating expense guidance for 2025, Page 18 details our anticipated SG and A, operating expense and interest expense provisions. These costs reflect significant increases in the number of employees at both Terrell and Lake Mariner as we grow our business and expand in the high power compute hosting. On Page 12 of the May investor presentation, you'll find our updated total cost of bills and net yield on cost analysis. Since signing the Core forty two leases in December, we've worked hand in glove with Core forty two and our respective partners, including Dell, Ramble and T5, among others, to refine our preliminary data center designs into a final high quality product. The result of this tightly knit partnership and design process is an increase in total capital expenditures of approximately $65,000,000 from $365,000,000 to $430,000,000 along with a commensurate increase in initial rent from approximately $1,500,000 per megawatt to approximately $1,600,000 per megawatt.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

The net result of these changes is a slightly lower net yield on cost, but a 14% increase in year one EBITDA. The incremental spend takes our CapEx per critical megawatt from $6,100,000 to $7,200,000 well within our long standing guidance range of 6 to 8,000,000, and well below industry peers as detailed on page 13. This page highlights the unique value of the existing infrastructure and site specific advantages of building and operating high power compute loads at Lake Mariner. Regarding our capital position and growth plans for the remainder of 2025. Page 14 provides a capital sources and uses bridge.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Our data center financing led by JPMorgan and Morgan Stanley will officially launch next week. We have a high degree of confidence in executing an approximately $300,000,000 debt raise in the middle of twenty twenty five. In anticipation of a sizable unallocated 2025 cash balance, the Board has authorized a new $200,000,000 share repurchase program for an incremental approximately 150,000,000 to the remaining approximately $50,000,000 on our preexisting program. We also intend to file an updated ATM prospective supplement of $200,000,000 which is a housekeeping exercise as the current ATM, with approximately $87,000,000 remaining have lapsed at year end. While some may find it unorthodox to have active buyback and ATM programs, given TerraWolf's historical realized stock volatility of approximately 130 and current macroeconomic conditions, the management team and board find it prudent to have every tool in the tool shed available and at our disposal.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Finally, as a management team, we are repeatedly asked how we value a megawatt of long term contracted high power compute capacity. One simple analysis we regularly reference internally is depicted on page 16. In summary, the Core 42 leases for 60 megawatts of critical load are worth approximately $2 per fully diluted share outstanding, and every incremental 50 megawatts of capacity contracted at similar economics is worth an additional $1.3 or so per fully diluted share. We hope you find this slide useful as a simple reference tool to measure our success as we announce further high power compute deals. With that, I'll turn it back to the operator, and we look forward to answering your questions.

[Operator]

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue.

[Operator]

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Nick Giles with B. Riley Securities. Please proceed with your question.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Hey. Thank you, operator, and good morning, everyone. My first question, it's good to see the integration of Terawulf and Beowulf. And How should we think about any potential cost savings for the parent? What does the timeline look like there?

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Thank you very much.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

From a timeline perspective, this is very rigorous process because it's a related party transaction. So the independent directors of the board have hired independent counsel, independent financial advisors, have negotiated an arrangement with the ownership of Beowulf. And until those independent directors approve the transaction and the audit committee approves the transaction as required by the operating companies articles as well as by insurance. I can't comment on that. That's a process they run independently.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

We think it's something that will be very enabling to Terrell's shareholders long term to just have everybody in one place. And ultimately, it will drive real value in terms of development and of additional sites, as well as construction of high power compute on our existing site. So we're pretty excited about this opportunity. And we think it's near term, but again, it's really up to the independent directors of the board of the company.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Paul, that's very helpful. I appreciate those comments. My second question, one thing that's always stood out about your economics is really the lower capital intensity. And you mentioned the tariff impact of 5% to 10%. So my question is, what are your expectations for build costs more broadly, particularly as you look to Cayuga or other potential sites?

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Some of these other sites have the same capital intensity that Mariners afforded?

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Patrick, do you want to feel that or you would like me to?

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Go ahead. I'll back clean up.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

I think we've guided the markets to $8,000,000 a megawatt. Our range was basically 5 to 8. We tightened it up to 6 to 8. The answer is, we're working very closely with Core forty two and the integrated Dell. We've had several design changes that have had some cost implications.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

That is, A, there's a mechanism within our agreement to capture that, so nobody should be concerned there. But B, we think it enables us to get to a better standard design for a 50 megawatt gross building, 42 net megawatt building that we could just replicate over and over again for both the existing customer CORE forty two and other customers that come to our site. By the way, I look at that learned knowledge, if you will, of the slightly higher price of the finalized design is pretty much optimal leading edge data center design that gives us a competitive advantage going forward. But we're pretty much at that range, dollars 6,000,000 to $8,000,000 and it could be at the high end of that range, but I'm good with that.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Yeah. Nick, if I may add a little bit to that. So as you can see in our new page 13 in our deck, I think this page really highlights A, the uniqueness of Lake Mariner and the other power sites that we have, and also our ability to take those sites, remediate them. I mean, I think this really encompasses all of our strategic advantages. And I think what Paul just said of this close knit partnership with CORE42 and all the consultants we're working with really puts us in a competitive advantage vis a vis our peers because now we have what I would call like close to a perfected design at a cost that is very attractive.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

So, I think it's again, even if you take tariffs on top of that sort of $7,200,000 critical build cost that we talked about of 5% to 10%, you're still within the range that we've been guiding to for a long time of six to 8%.

[Nick Giles, Senior Research Analyst at B.Riley Securities]

Great. Well, Patrick, Paul, I really appreciate all the color and continue best of luck.

[Operator]

Our next question comes from Darren Afton with Roth Capital Partners. Please proceed with your question.

[Darren Aftahi, Senior Research Analyst-Internet, Media and Enabling Technologies at Roth Capital Partners, LLC]

Good morning. Thanks for taking my questions. Just two if I may. On page 10, there's commentary I think around EBITDA margins being incrementally higher on future capacity. Two questions around that.

[Darren Aftahi, Senior Research Analyst-Internet, Media and Enabling Technologies at Roth Capital Partners, LLC]

I guess the first one is in terms of an additional tenant or an existing tenant expanding into future capacity, what sort of bogeys need to be seen in order for that to happen? Is it getting operation building to scale and then people can take the next step? Then I guess the question around incremental adjusted EBITDA, what kind of gives you confidence on that? Is it just lease rates and you think the CapEx can stay the same, so yields will be higher? Just any kind of color would be helpful.

[Darren Aftahi, Senior Research Analyst-Internet, Media and Enabling Technologies at Roth Capital Partners, LLC]

Thanks.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Hey, Patrick, if it's okay, I'll answer the first part of the question, you could get the second.

[Darren Aftahi, Senior Research Analyst-Internet, Media and Enabling Technologies at Roth Capital Partners, LLC]

Sounds good.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Yeah. Darren, don't think there's a bogey out there that we to tap in order to sign up additional capacity. I think those conversations are ongoing. We've been having them since we signed up CORE forty two, or in advance of that even. And we're talking to both CORE forty two and additional customers.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

And so I think what we've tried to share with people is that we sense, by the way our stock is priced in the market, some people still don't sort of believe that we're very much a show me story. We're really comfortable with that. I think if you want to bet on anything, want to bet on the execution capabilities of TerreWolf. And so I think that it is natural for customers who are trying to whether it's Neo Clouds or hyperscalers or enterprise folks, I think it's natural for them to, while they are organizing what their needs are, to want to be able to look at something. It's the difference between it's being able to go in and touch it and see it and hear it and you have all those machines come in.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

It's just a pretty fantastic thing when you get into one of our data halls. So while I agree with you that we built Wulff Den in order to be able to achieve that, and in fact we did. We landed the preeminent customer in the space in Core 42. I think when we energize CB1, it will be even more profound in terms of how people want to react to us and get to the place where they're finally willing to contract. So my view is that no bogeys are required.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

We're open for business now. We're negotiating with a bunch of folks and we're going to sign up deals if they make sense, if they're top quality credits, if they're the right duration today. But I believe once we energize CB1, will be even busier if that's possible in sort of discreetly determining who the right customers are and signing them up to the appropriate contract. So I think that's where we are in terms of landing our next expansion. Patrick?

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Yeah, Darren, with regard to the margins, I think we've had this page in our deck, I think since last about a year ago, last May. And there was some confusion because we initially had that margin 65% to 75%. And then I think I had spoken publicly, Paul, now there are others about how really that was EBITDA margin and the midpoint of that, the 70% was actually we thought about it as effectively cash available for debt service. So meaning EBITDA less maintenance CapEx. And so what I've done here is just to reduce that confusion and put in like this is an EBITDA margin.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

We expect it after lots of work with our partner, our operating partners, other consultants, our hiring plans, actually executing on the ground, that that EBITDA margin will be at about 75% on the first seventy two point five megawatts. We do expect we'll have going forward maintenance of about 3%. And then the call out on the right of page 10 to your point of higher incremental EBITDA margins, this is the benefit of a big site, okay, versus having multiple sites all over the country. I only have to hire, for example, one or two security guards. I don't have to hire 10 because I don't have five different sites.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

So there's really significant and most of the costs that go into that EBITDA margin for the high power compute business are labor. It's just that simple. We gotta have a bunch of people on the site. And so, once you have that base cost, which we already have as I mentioned in my remarks, everything beyond that is incremental and comes in at a much higher margin. So I'm not going to tell you what that margin is today.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

I'll tell you when we announce additional capacity, but expect it will be much greater than 75%.

[Darren Aftahi, Senior Research Analyst-Internet, Media and Enabling Technologies at Roth Capital Partners, LLC]

That's helpful. I appreciate all the detail. Thanks.

[Operator]

Our next question comes from Mike Grondahl with Northland Securities. Please proceed with your question.

[Mike Grondahl, Head of Equities & Director of Research at Northland Capital Markets]

Hey guys, thanks. Wanted to ask, you've spent a lot of time, many months with COR forty two. What has been two or three of the biggest learnings for Wolf through all those discussions?

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Nazir Khan, are you on and do you want to address that? I don't know if the operator is allowing him to enter.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Why don't I field it? If Nazir can get on, I'm happy to. Listen, it's been tremendous. The team that Core42 has brought to bear would indicate that we're in the very, very early stages of these data centers. And each, if you will, generation of of chips has their own particular inherent requirements in terms of the design of the rack.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

So what I like about CORE forty two is that they've just shared everything with us and our design team and construction team so that we've been able to appreciate why some parties focus on cooling in the building, some focus more on cooling on the racks, the weight of some of these water cooled racks. It's just so constantly fluid because this is new technology and it's sensitive. And people are trying to figure it out real time at the same time that there's this massive demand for the high power compute. So I think the biggest lesson learned we have had is that we were right to pick the right partner. Because in our power experience, when we were developing power plants, if we had this level of fluidity as we worked towards the final design, which is where we're at now, because as I indicated, we're going to be energizing CB1 and CB2 very shortly.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

It would have been a far more confrontational kind of a thing, but here it's been just a real collaboration, very cooperative. And these design changes, we had they weren't changes as much as like we had it wrong. It was just an evolution of design, if you will. We had a mechanism within our agreement and Core forty two has been totally stand up about it. I think the lesson learned is pick the right partner and you'll get to the dance in the right place and you'll have a great time.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

And so that's been the lesson for me. Patrick, anything you want to add?

[Patrick Fleury, Chief Financial Officer at TeraWulf]

I think Nazar's unmuted. Nazar's certainly more better suited to answer this question than I am. Go ahead, Nazar.

[Nazar Khan, Co-Founder, COO, CTO & Executive Director at TeraWulf]

Sure. Good morning, Mike. Nazar here. As as Paul said, I think, know, when we signed the agreement with Core forty two in December, ours, you know, they've gone through 40% or so of all of the design specs. And since that time, we've had the chance to go through every single component of the design, the size of every single valve, the location of every single pipe, the location of every single kind of busway.

[Nazar Khan, Co-Founder, COO, CTO & Executive Director at TeraWulf]

So so now we've had a chance to go through a % of the design with them. And and through that, we've come up with a whole host of things that we're working with them on kind of incorporating into future buildings as well. So as Paul had mentioned earlier, we are in the early stages of the evolution of this business, and what we build in kind of CB1 and CB2 likely will not be what we build for CB5 and CB6. And so that process of really working with our customer and partner, Core42, and being able to go through every single component of the design and thinking through what the trade offs are. And for a lot of these decisions, there's no perfect answer, it's always a trade off, You're giving something to get something.

[Nazar Khan, Co-Founder, COO, CTO & Executive Director at TeraWulf]

And so having that discussion with them and being able to then take those learnings and reflect that on what we want to do next, I think has been a very important part of the process. And as we think about going forward, those learnings are going to be invaluable because both just the way the business is evolving, but also the way the underlying hardware equipment is evolving, all of those trade offs and those decisions that we made, we're going to have to revisit as Ruben rolls out and as kind of future generations of those GPUs roll out as well. So that's for me has kind of been the biggest is the importance of having a partner to work with and not just simply a customer who kind signs a piece of paper.

[Mike Grondahl, Head of Equities & Director of Research at Northland Capital Markets]

Great. Hey, thanks for the insight.

[Operator]

Our next question comes from Brett Knudlow with Cantor Fitzgerald. Please proceed with your question.

[Brett Knoblauch, Managing Director at Cantor Fitzgerald]

Hi, guys. Thanks for taking my question. Congrats on getting the additional two fifty approved for Lake Mariner. It seems like this year is definitely focused on energizing the three buildings for Core 42. You now have two fifty capacity and the charts show next year you can kind of really allocate additional capacity.

[Brett Knoblauch, Managing Director at Cantor Fitzgerald]

Would you look to start breaking ground on say CD3 or CD4 before signing an additional tenant? And is that something that you would look to start doing this year or would that be a 2026

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Paul, you want me to take that

[Patrick Fleury, Chief Financial Officer at TeraWulf]

one?

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Yes.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Yeah, Brett. So, I think that the short answer to that is, you know, we do do some spend, you know, mostly preparing, you know, so pads, it's relatively minor and it's getting us whether it's, you know, site prep or site electrical. So it's getting us into a position so that, you know, when the customer's ready to execute, we can go right away. So I would say there's some, site level expense that we kind of constantly are spending. And if you look at our presentation, you can see that.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Like we have, like on page 14, we have, a site electrical and infrastructure column. So, And we've had that in every single one of our decks. So there are some site specific things that we constantly are doing. For example, you've gotta get electricity, high voltage electricity around the site to the various buildings from the substation. So there's prep for that.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

And then, you know, like I said, there's, preparing, you know, buildings and pouring pads and things in the appropriate weather. So there's those types of things, but I think anything, you know, that's significant and major, we would not expand without a signed agreement.

[Brett Knoblauch, Managing Director at Cantor Fitzgerald]

Perfect. That's helpful. And then, Patrick, maybe just a follow-up on the capital allocation priorities, re upped or increased the buyback. Obviously, there is a need for a lot of CapEx to be spent over the next few years. How do you weigh buying back shares versus spending that on infrastructure to sign additional tenants?

[Brett Knoblauch, Managing Director at Cantor Fitzgerald]

Is there a point where one is more attractive to you? What is that point? Or is that just kind of like an ad hoc ongoing discussion that you guys look at?

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Yeah. Look, I I you know, I'll answer that and then Paul can chime in. But it's it's a management board level decision that we constantly evaluate. And as you know, the purpose of having the buyback, and again, I think as you'll see, as you heard in my remarks, you know, we also had about 87,000,000 left on our ATM. And so as part of that process, we increased it from 87 to 200,000,000.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

So, we don't intend to use that, but I want every tool in the tool shed just like I want a buyback. Because as you know, and we've come to realize, Bret, like, Bitcoin mining in particular is an incredibly dynamic business. Right? Like, profitability can change dramatically on every day. And so we can go from making very small amounts of free cash flow to very significant amounts of free cash flow very quickly.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Other things can change also, for example, project financing. We've been targeting 70% loan to cost. Many of our peers are out there doing 90%, right? So that's a lot of money that would come back to us if that changes. So, again, it's really just like my job in particular in advising the management team and the board is to make sure we have every single tool available.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

And given the volatility in our stock, I want them all at my disposal, Paul's disposal, and the board's disposal.

[Brett Knoblauch, Managing Director at Cantor Fitzgerald]

Awesome. Really appreciate it, Patrick. Thank you, guys.

[Operator]

Our next question comes from Brian Dodson with ClearStreet. Please proceed with your question.

[Brian Dobson, Managing Director & Senior Research Analyst at Clear Street LLC]

Hey, good morning. So as you're out in the market speaking with other potential clients, what are you hearing from enterprises and hyperscalers? And what do you feel about the near term demand environment, but also the medium term?

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

This is Paul. Thank you for your question. From a near term demand perspective, I think people are very keen to get power now. So we've seen a lot of energized land deals in the market. And so I think that demand is real.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

I think from a data center perspective, the hyperscalers are still out there. They're refining what they're looking for. I think there was initially this sort of global, let's tie up everything we can. Now I think they're focused on, okay, they have a better sense of their needs and better sense of what makes a site a great site. Lake Mariner is certainly that.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

So we have a lot of incomings all the time. And we have incomings on development sites that we're close to as well. So I think near term demand is real if you have proximate energy. If you could demonstrate that you have a few hundred megawatts near term with the ability to scale after that, the demand is real. And you have to understand these customers.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

A lot of them don't understand energy. So when most of the world is out there advertising one gig and two gig sites, which sounds really, really great, they need to wade through a lot of that, if you will, crap to appreciate that bringing the five nines of quality in terms of electricity to a data hole is tough on the grid operators. And so you to really study the site, where she is in the grid, how robust is the grid, you got to do a lot of work. So I think the hyperscalers are getting smarter every day and starting to lean towards higher quality sites with higher quality owners that understand energy and infrastructure. Enterprise customers, the demand has been a constant and NeoClouds, I think they're running around trying to allocate their book and then figure out what their needs are and how that scales, not only in terms of capacity, but in terms of calendar scheduling.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

From a midterm perspective, I am and we have said this all along, we're less sanguine on the likelihood of increased generation hitting the market at the scale that it needs to within the next few years. It just takes a long time to develop a power plant. And so we think that enables higher values for us because we have what we have. We're energy infrastructure folks that can develop things in a really efficient from a cost and time perspective, more so than I think any of our peers. So we see a lot of demand so much so that I think we are starting to sort of try and categorize the customers that are coming in on the basis of we want to sell data hole by data hole and we're seeing a lot of interest now as well for people that want to come in and take half of the data haul.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

So we're thinking those enterprise customers are starting to show up in the marketplace. We're pretty constructive and we just need to continue to execute.

[Brian Dobson, Managing Director & Senior Research Analyst at Clear Street LLC]

Yeah, thanks. That's really helpful. Just shifting over to the mining business. We've seen elevated global hash rates throughout the last quarter and continuing now. What's your outlook there and how do you plan to combat that as we head into the next halving over the next couple of years?

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

So we can't do a whole lot to combat the hash rate. We have to live with it. I think we are happy that the higher price of Bitcoin and hopefully want it to go higher benefits those who have Bitcoin and guys like us who have really low cost in generating Bitcoin. We brought on most recent generation of miners and we're back to really low costs from an energy perspective and we operate about as efficiently as anybody ever could. So it's a tough business being in mining and we've guided the market to the belief that at this point in time, especially given what we see as the demand for our product in HPC and AI, we want to really continue to focus on that.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

We're certainly enjoying the benefit of having a mining operation now. But that in time, prior to the next halving, we'll probably look to take those megawatts and deploy them in the highest value and we think it's likely to be HPC AI and there's an additional benefit to that as Patrick has spoken about, which is predictable revenues over a long period of time and you could get good project financing terms on that. So, we're excited about Bitcoin going higher. We have a real Bitcoin zealot and Azer Khan on our management team and we'll continue to mine so long as we can make lots of money doing it.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Paul. If I may, Brian, to address your question a little bit more specifically from the finance side, I mean, we just came through a really tough quarter where we had, for us, a one in kind of ten year type event on power prices. And even with that, we've gone through our fleet upgrade, we didn't bring Minor Building five on until the very March, early April. So, really kind of fighting with a hand tied behind our back and we still had, know, and if when you consider that the entire business right, right now is burdened with the cost structure of high power compute, and we don't have any revenue yet. So so the results actually were, you know, not what we wanted, but but pretty darn good when you consider, again, we were running with that whole cost structure.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

We had really high power prices, and now as Paul mentioned in his remarks, you know, we've really seen in April, that's all subsided and and, you know, price has kinda ticked up and we're we're making money. So I I think as we know, you know, a quarter, a year in Bitcoin mining can be a lifetime. And I think our assets, the efficiency of our fleet is among the lowest of our peers. I think we're about 18 jewels per terahash now. So I think we are positioned well to reap the cash flow rewards of that business should Bitcoin move higher.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Yes, agreed. Thanks.

[Operator]

Our next question comes from Steven Galgola with Jones Trading. Please proceed with your question.

[Stephen Glagola, Director - Equity Research at JonesTrading]

Hi, thanks for the question. Paul and Nazar, thanks for your color on sort of the Core forty two design discussions. And I was hoping you could elaborate on if the current delay for additional capacity is primarily related to Core forty two's customer visibility, or are they waiting to see how the first seventy two point five megawatt build out goes? And then I had a follow-up.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Yeah, I don't like the word delay because I don't think that's a real word. The discussions with Core forty two are going exactly as they're supposed to go because they're really focused as we are on delivering what we have contracted. And it's pretty intense. And it's a collaborative effort. It's a constructive effort.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

And the end result is going to be we're hitting the ball out of the park. And the reason for that is that when CB1 and CB2 are energized and they're up and running, that enables Core42's ability to aggregate customers as well as it enables our ability to talk to other parties interested in the site. Because there's something they could see and touch and hear and get excited about. And there's a lot of listen, people have said they were building data halls and they turned out to be big buildings that cost a lot of money that didn't achieve their intended purpose. That's not what we're doing.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

We're building something that we can not only replicate and continue to improve upon and evolve over time, but something that will truly fulfill contractual requirements of our customer and their contractual requirements to their customers. So, we're doing it right. And as a result of that, we're focused on that. And I think having CB1 and CB2 energized enables us to get better terms, better pricing. So, I just don't feel that I had a deadline by which I had to sort of land another customer.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

We had an option within an agreement for them to have more because they wanted that option. But quite rightly, they never talked about it. We never talked about it. We just talked about how do we grow together. And so, I remain very, very constructive on our ability to sign up an additional 100 to 150 megawatts and put it in the ground each year.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

That's what we're about right now.

[Stephen Glagola, Director - Equity Research at JonesTrading]

Thanks Paul, appreciate that. And then Patrick on slide 15 of the presentation, the hosting timeline, do you anticipate the 170 gross megawatt capacity plans for '26 to be brought online gradually throughout the year? Or will that will the full 178 come online towards the end of the year '26? Thanks.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Yeah. So, there's no customer for that right now that we're announcing today. So, that's what we have sort of the arrow in the quiver, so to speak. So, as we've mentioned, I mean, I think we're trying to perfect a 50 megawatt design. So, that capacity is effectively three different buildings.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

And I think as we move forward in time, Steven, you'll see us, you know, from sort of signing a lease to bringing a building online, I think a reasonable timeframe is twelve months. So, know, I think over the next six to seven months here before year end, obviously, to bring that capacity online by fiscal year end 2026, which is what the chart, bar chart says on page 15, we would have to announce contracts for that capacity and start on it by year end.

[Stephen Glagola, Director - Equity Research at JonesTrading]

Thanks, Patrick.

[Operator]

Our next question comes from John Tibaro with Needham and Co. Please proceed with your question.

[John Todaro, Senior Analyst at Needham & Company]

Hey, guys. Thanks for taking my question. First one, you know, as you start to deliver for Core forty two, do you think that gives quite a bit more comfort to either enterprises or major hyperscalers for some of that additional capacity? Is that kind of the right way to be thinking about it? And then I have a follow-up question.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Yeah. I've been saying that this entire call. I mean, listen, it's one thing to think about what you want to have for breakfast if you're me. Right? I'm a short, fat guy and I like breakfast.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

It's another thing when I walk into a bakery and I look at the Cinnarolls and I get really, really worked out and I'm a buyer. The answer is, when we build and energize this data hole, it's moved from the stage of talking about something and talking about design to actually delivering to a customer who is also delivering onwards to their customer base. It's a huge deal, and it makes a tremendous difference in terms of our ability to sell our capacity at the terms and price that we require. So I think, again, Patrick likes to say that we're bummed about our stock price. The management team here are serious holders of stock, and we're bummed about it, but we've got to manage the company in the best interest of the shareholders.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

And in order to do that, we must recognize that we're a little bit of a show me story, because we're building a data center for the top customer in the business. And this is new technology, new business for everybody, for Core forty two, for NVIDIA. This is all new, these kinds of the rack densities. And so we recognize that until we energize CB1, there'll be some doubters out there, but that's okay. We don't care about that.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

We care about execution. And once we deliver on an energized data hall, I think we're ready to roll. So I think it's an important element that we must energize CB1 and have a happy customer because that changes the entire profile of the market. Yep.

[John Todaro, Senior Analyst at Needham & Company]

Fair enough. That makes sense.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Think about there are only two customers right now in this space. Two not customers, companies that have made this transition out of mining into HPC AI. And that's core to us. Right? And so, the market is the market is tough in the current economic environment.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

And so people are instead of saying the glass is half full, they're saying it's half empty and that's okay. They're being skeptical. But once you deliver an energized CB1, that all goes away. So I think that our shareholders will benefit by seeing greater value, just outright. And then separately, we'll all benefit because the customers will say, Wow, that's great.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Core forty two is so lucky. I want that too. Or customers will go to Core forty two and say, Wow, that's great. I want to be one of your customers. Can you get some additional capacity from TerraWolf and we'll be ready to go?

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

That's what's happening.

[John Todaro, Senior Analyst at Needham & Company]

Got it. Thank you. And then maybe one for Patrick. Was there kind of would there be a point where you look to to buy back the converts? I think they got pretty discounted at one point.

[John Todaro, Senior Analyst at Needham & Company]

Just wondering how you think about that capital management strategy long term.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Yeah. Look. I think we'll look at anything and everything on the table. Right? So, you know, I've gotten a bunch of calls from convert investors about that.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

I think the the it's certainly a consideration. That being said, right, that's a 02/1930 maturity. It's a long way out, and it's a low, you know, two two and three quarter percent cash interest, like, very low cost of capital. So not certainly not the top of my priority list. I think, like Paul said, right now, again, I view the buyback and the ATM as tools to put away in the tool shed.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

We have got to execute. Number one, we're executing on CB1, CB2. Number two, we are executing on a project financing, which we talked about today. And then once that is done, we will reevaluate because I think to Paul's point, there may be demand for that cash in growth or otherwise. If there are not, then as long as we have ample liquidity, then yeah, we'll look at the stock, we'll look at the converts, whatever makes the most sense.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

So anything is on the table, but I think, you know, just stating the obvious, like, that is a very long term low cost of capital, so not my number one priority.

[John Todaro, Senior Analyst at Needham & Company]

Got it. Understood. Thank you both.

[Operator]

Our next question comes from Chris Brendler with Rosenblatt Securities. Please proceed with your question.

[Chris Brendler, Senior Research Analyst at Rosenblatt Securities]

Hi, thanks and good morning. My first question is, I think Patrick, you actually already alluded to this in one of your answers was just how rare the sort of power conditions were in the first quarter. I think you said once in a decade. Was that mostly weather or there are other factors in play that caused such unusual spike in power prices? And, are there ways in the future to potentially hedge that risk, from these black swan events?

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Yeah. So that was weather. As you know, we are located in the Northeast, you know, just about 35 miles east of Buffalo. We had a very cold December in the Northeast, and then like everyone else really sort of from the Plains, Texas East had a very cold January that kind of went into February. So, it was strictly power related, Chris.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

I mentioned in my remarks, it was a 1.76, I think, standard deviation event for both January and February over the last ten years. That is really significant. And with regard to your last question, and I think this kind of shows how long this team has been together, which Paul always likes to talk about, but, you know, in my prior life at Blackstone, I owned this power plant, and Paul and Nazar and Stephanie were the management team that ran it. And we all owned it together. And once every ten years, it would rain money.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

And the rest of the time, it was a difficult plant to own. And so for that precise reason of having all that experience in this specific power market, 90 plus percent of the time, the power prices are really, really benign here because we're in a region where there's about 5,000 megawatts of generation and on average only around 2,000 megawatts of demand. Now all of that power tries to make its way down to New York City, and so during times of significant demand in the winter when people need heat and a couple weeks in the summer when people want air conditioning, Otherwise, it is a really, really benign power environment. The cost of hedging, right, which is tying up cash or otherwise, just isn't worth it because it only happens once every ten years. So unfortunately, that literally just happened to us.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

But I can tell you from personal experience, we are really comfortable with Lake Mariner long term. So no, I don't think we will look to hedge that.

[Chris Brendler, Senior Research Analyst at Rosenblatt Securities]

That's fantastic color. Thanks so much, Patrick. My second question would be on the project financing for the first leg of this HPC strategy. Do you think success on the project financing side will help with additional client prospecting. I do think there is a bit of concern sometimes when larger cap hyperscalers in particular are dealing with smaller companies who potentially don't have the balance sheet or the side they're used to dealing with, there's been a little bit of friction there I've been picking up.

[Chris Brendler, Senior Research Analyst at Rosenblatt Securities]

So how important will project financing be to your future HPC prospecting?

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Yes. Maybe I could start Patrick. I don't like the premise of the question because I'm not sure I agree that project financing is really as sensitive to the size of our company. I mean, I think ultimately the project lenders are underwriting G42, right? The ultimate credit.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

And so I don't have and I think that's consistent with the advice we've gotten from JPMorgan and Morgan Stanley. So I don't have quite the concern about our ability to get not only get the financing done, but more importantly, the absolute best terms that would be available in the market. I think Patrick's taken a real conservative approach to our financing in terms of leverage. Our credit is really unique out there in terms of Core 42 and its guarantor G42. And more importantly, it's already I think there was a deal done in the market on the back of the credit Core 42 at 90% leverage, really good terms.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

We're very, very bullish about our ability to execute on the project financing. So is it important to us? Absolutely. I mean, we made a conscious decision to move forward using our own equity to build on behalf of our customer. And it was the right thing to do because it put us in a time zone that the customer needed for his and her customers.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

So it's important and it will enable us to continue to grow at the pace that we want to grow, given the real customer demand that we have. But we are also highly confident of our ability to execute on it at really good terms. Patrick,

[Chris Brendler, Senior Research Analyst at Rosenblatt Securities]

do I apologize, Paul. I was not suggesting that it'd be difficult to get project financing. I was more suggesting that lining up project financing would help sign your next deal.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Yeah, I think, but

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

I think it's in the market, right? I mean, when you look at the announcements made by some of the folks, whether it's Galaxy or Chorus, they all guide towards their intent to do project financing. I think in this case, we've got a guy in Patrick and his team that have only done it about a billion times. And B, we're taking a very conservative approach to it. And we have, we're slightly different in the sense that we've spent all our own equity to build out this facility.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

So it's less of a challenge for the project lenders to see what they're financing as opposed to somebody that's drawing money to build out the project from a greenfield site. So I think that market demand for project finance product is real, very significant, super quality lenders. And it's important for us to get that done because we want to continue to be able to take that cash out, recycle it, and build the next state of all and the next state of all. That's our business model. So again, I appreciate that you think we'll be able to do it.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

I think we'll be able to do it at really great terms, at really good timing. And it's near term, as Patrick said. We're launching maybe Tuesday next week. Can't yell at me now for giving you a day as opposed to saying early next week. But we're excited about it and we think it is critical to achieve so that we could recycle that cash and continue to go out and build.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Yeah, Chris, I would just add to that. We are looking for a financial partner that can grow with us. And so, yes, I do think executing on that, which has been part of our business plan from day one, as Paul said, is a show me story. But I'm excited. I mean, look, I was a credit investor for twenty years.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Like, this is where I shine. This is like my wheelhouse. So, yeah, I'm excited to get that going, and I've got a very high degree of confidence that we'll find the right partner and a partner that not only does this first, call it $300,000,000 but then grows with us as we do additional buildings.

[Chris Brendler, Senior Research Analyst at Rosenblatt Securities]

That's fantastic color guys. Thanks.

[Operator]

Our next question comes from Martin Toner with ATB Capital Markets. Please proceed with your question.

[Martin Toner, Managing Director - Institutional Research, Growth & Innovation at ATB Capital Markets]

Hey guys, I didn't thanks for taking my questions. I didn't catch what's going to launch Tuesday of next week?

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Our project financing. Thank you. C b one, c b two, and Wolfstead.

[Martin Toner, Managing Director - Institutional Research, Growth & Innovation at ATB Capital Markets]

Perfect. Thank you. Only one from me is, as you have gone back to a prospective customers with higher build costs, what have you learned about their price sensitivity? Well, I mean, Nazir, do you want to take that?

[Nazar Khan, Co-Founder, COO, CTO & Executive Director at TeraWulf]

Yeah. Hi, Martin. It's Nazir here. We've been very open with our customers on kind of what the built cost is, We've been guiding the market where our built cost is and so our customers are aware. And as I mentioned to you earlier, when we went through with Core 42, every single design decision we made, there's both kind of a cost component that often comes with it as well.

[Nazar Khan, Co-Founder, COO, CTO & Executive Director at TeraWulf]

So we've been very open with all of the various customer discussions that we're having, where we are kind of coming out. When you look at what the customer is doing with it, they use that compute capacity oftentimes drives kind of their ultimate sensitivity. So if you're a Neoslop player, the cost of moving 5 or $10 1 way or another on your monthly kilowatt per month lease rate has some impact, but when you look at their total cost of compute that they're delivering at $2 or $3 a GPU hour, it's a fairly small component. When you have an enterprise customer that you're having this discussion with and you kind of look at it, they've got a big kind of finance team and they're looking at every single dollar and where it's going, and sometimes they're more often sensitive to kind of those changes. For others, it's just kind of how they're looking at it.

[Nazar Khan, Co-Founder, COO, CTO & Executive Director at TeraWulf]

So for us, I think people are aware that to the extent that there are increases from tariffs that someone's going to have to pay for it, they understand kind of there's a business that we run, we've guided both the market and our customers on where we want to end up in terms of the margins that we have. So it's been a pretty, I'd say constructive discussion with those folks. And again, depending upon what the end use is, sometimes we see different sensitivities arise.

[Martin Toner, Managing Director - Institutional Research, Growth & Innovation at ATB Capital Markets]

That's great. Thank you for that. That's all for me.

[Operator]

Our next question comes from Bill Papastano with KBW. Please proceed with your question.

[Bill Papanastasiou, Vice President at Keefe, Bruyette & Woods (KBW)]

Good morning, gentlemen. Thanks for taking my questions. For my first one, just given the increased attention towards landing additional capacity and diversifying your customer base, what would you say the top two to three milestones that should be monitored when evaluating your progress of securing new contracts as your build out continues through 2025? Thanks.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Again, I don't know if there are ways to sort of guide the market to how our discussions are going, because we've got customers where we've negotiated a contract to the point of their satisfaction, but they're still trying to figure out their capacity requirements. We've got customers who are certain about their capacity requirements, but want to wait for the next generation chip. We've got customers who we've negotiated their requirements from a capacity perspective and the schedule, but they want to talk about terms. And so I can't give you a magic bullet here on how we can inform you on our progress other than to say, one, we're having lots of conversations. Two, you're really intense.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Three, we're on top of our general counsel to manage her legal costs because we're negotiating on so many different fronts. And four, I think the most important element would be when we energize CV1. Think that will be a big day that Core forty two and TerraWolf will celebrate. We hope our shareholders celebrate it because it will reflect that we were able to deliver, that we executed. And it will be a great day for Core forty two because their phone will be ringing off the hook with new customer demand, and we would expect our phones will be ringing off the hook because people will want to take the conversations we're having and convert to a contract.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Contract. So I think that's the only real hard milestone I could give you.

[Bill Papanastasiou, Vice President at Keefe, Bruyette & Woods (KBW)]

Appreciate that Paul for giving the best color you can provide. And then just secondly, with respect to the Bitcoin mining segment, should we expect further expansion to that previous 13.1 exahash target? Not sure if you guys provided commentary that I missed, but is that still in play in the coming quarters? Or was there some sort of larger replacement to the fleet upgrade? Just curious if there's any power capacity that's sitting idle that you guys could capitalize on in Q2 or going forward?

[Bill Papanastasiou, Vice President at Keefe, Bruyette & Woods (KBW)]

Thanks.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

Ned?

[Nazar Khan, Co-Founder, COO, CTO & Executive Director at TeraWulf]

Not for now, Bill. Mean, I think from an infrastructure perspective, we've got about two fifty megawatts of infrastructure available to us. If you look at the composition of our fleet, we are constantly looking at ways to optimize the amount of fleet. Think 60% or so of our capacity is below 20 joules per terahash in terms of efficiency. So I think in the near term, we continue to always evaluate ways to optimize our miner fleet and we've kind of continuously done that over the past year.

[Nazar Khan, Co-Founder, COO, CTO & Executive Director at TeraWulf]

And so near term, think changes, any changes to the Hash Rule will likely come through that kind of an activity.

[Bill Papanastasiou, Vice President at Keefe, Bruyette & Woods (KBW)]

Thank you.

[Operator]

Our next question comes from Joe Flynn with Compass Point Research and Trading. Please proceed with your question.

[Joe Flynn, Senior Research Analyst at Compass Point Research & Trading LLC]

Hi, thanks for the question. You guys

[Joe Flynn, Senior Research Analyst at Compass Point Research & Trading LLC]

kind of ultimately answered it, but there's just a lot of positive side.

[Joe Flynn, Senior Research Analyst at Compass Point Research & Trading LLC]

Seems like the corporate guarantee

[Joe Flynn, Senior Research Analyst at Compass Point Research & Trading LLC]

is there would be a lot

[Joe Flynn, Senior Research Analyst at Compass Point Research & Trading LLC]

of interest in that and pretty tight spreads,

[Joe Flynn, Senior Research Analyst at Compass Point Research & Trading LLC]

but maybe just talk about what the appetite is and where you ultimately, who do you hope to partner with? Yeah, any color would be great.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Yeah. Look. I think there's a, you know, there's a lot of chatter out there in the marketplace. You can see where deals are pricing. And, generally, hyperscaler risk is so for plus 200.

[Patrick Fleury, Chief Financial Officer at TeraWulf]

Core Weave risk is kind of SOFR plus 400 to 500 but tightening. So, I would expect our customer, in my opinion, I think is the better credit quality than Core Weave but not as well known. So I would expect, Joe, we're kind of targeting somewhere probably around that same pricing of so for kind of 400 to 500. And I hope to do better than that, but I think for our first financing, that's kind of, I think, a good target range.

[Operator]

There are no further questions at this time. I would now like to turn the floor back over to Paul Pager for closing comments.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

I want to thank all of you again for joining us. TerreWolf is very well positioned at the convergence of energy and compute. Our scalable, sustainable infrastructure, attractive cost profile, and strong project pipeline provide for a foundation for long term value creation. As we move through 2025, our focus remains on execution. The deployment of our initial HPC buildings will mark a major inflection point, shifting us from promise to proof and unlocking new revenue streams for the company.

[Paul Prager, CEO, Co-Founder & Chairman at TeraWulf]

As a significant shareholder myself, I want to reaffirm that our actions are aligned with long term shareholder interests. We appreciate your continued support and confidence in TerreWolf. Thank you.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• John Larkin, SVP & Director of Investor Relations
• Paul Prager, CEO, Co-Founder & Chairman
• Patrick Fleury, Chief Financial Officer
• Nazar Khan, Co-Founder, COO, CTO & Executive Director

Analysts

• Nick Giles, Senior Research Analyst at B.Riley Securities
• Darren Aftahi, Senior Research Analyst-Internet, Media and Enabling Technologies at Roth Capital Partners, LLC
• Mike Grondahl, Head of Equities & Director of Research at Northland Capital Markets
• Brett Knoblauch, Managing Director at Cantor Fitzgerald
• Brian Dobson, Managing Director & Senior Research Analyst at Clear Street LLC
• Stephen Glagola, Director - Equity Research at JonesTrading
• John Todaro, Senior Analyst at Needham & Company
• Chris Brendler, Senior Research Analyst at Rosenblatt Securities
• Martin Toner, Managing Director - Institutional Research, Growth & Innovation at ATB Capital Markets
• Bill Papanastasiou, Vice President at Keefe, Bruyette & Woods (KBW)
• Joe Flynn, Senior Research Analyst at Compass Point Research & Trading LLC