Third-quarter 2026 earnings call, November 6, 2026

TeraWulf used its third-quarter call to argue that its two largest financing and execution risks at the Justified campus in Hawesville, Kentucky, have been substantially reduced. The company announced Google credit support for the financing of its approximately $19 billion, 20-year lease with Anthropic, and a definitive EPC agreement with Fluor covering all three data center buildings. Management framed both against a backdrop of wider credit spreads, heavy infrastructure issuance and investor doubt about AI capital returns. CEO Paul Prager acknowledged that "those are legitimate questions, and we are highly aware of the environment."

Google's backstop is cheaper for TeraWulf than the first version

The most useful new detail concerned how this Google wrap differs from the one at WULF Compute. CFO Patrick Fleury said the structure is similar, in that Google backstops Anthropic's lease obligations and, once the lease commences, protects against default through either a mandatory lease assumption or a debt-reducing termination payment. Two terms are materially better for TeraWulf shareholders. The company is not granting Google any incremental upfront equity, which Google received at WULF Compute in the form of warrants. And the cost of the credit support is recoverable from the tenant under the lease. The support also falls away once Anthropic reaches certain investment-grade ratings. Fleury called this "version 2.0" of the wrap and offered an analogy: "whether you're learning to ride a bike with training wheels or you're raising your kids, when they get 18, they got to leave the nest and fly."

Management was candid about why the backstop is needed. Fleury said Anthropic "is not public and they're not investment grade yet," and that TeraWulf cannot depend on a counterparty without an investment-grade rating given its reliance on capital markets. Every future lease will therefore be backed by an investment-grade tenant or have one as primary lessee. Fleury also noted that the WULF Compute 7.75% senior secured notes, the first financing of their kind in the sector, trade better than almost all of the roughly 25 comparable bonds on his Bloomberg screen. He attributed that to the investment-grade tenant and TeraWulf's roughly 30% equity contribution. Project-level debt for Justified has not yet been raised. Management described only a "clear path," with further terms to be disclosed when the financing launches.

Justified cost visibility improves, but the $10 million to $12 million range is not yet fully fixed

CTO Nazar Khan said engineering and drawings for Justified are about 90% complete and should reach 100% by December 1. Long-lead equipment procurement is above 80% and is expected to be fully locked by year-end. Roughly 80% of the scope under the Fluor agreement should be defined by early December. The company reiterated project costs of $10 million to $12 million per critical IT megawatt, a range it says is comparable with the Lake Mariner basis, and phased ready-for-service dates from late 2027 through the second quarter of 2028. Pilings are underway.

The Fluor contract provides open-book cost reporting, procurement oversight and defined milestones. Guaranteed maximum pricing is still being established as engineering and procurement progress, so the cost protection is not yet fully in place. Khan said the GMP structure splits overrun risk between subcontractors and Fluor, and that TeraWulf has worked to define scope tightly so responsibility is clear. TeraWulf had contributed approximately $550 million of equity to Justified as of September 30, which management described as a substantial portion of the equity contemplated under the current financing plan.

Muskie: a contracted path to a gigawatt, with a 760-megawatt gas plant behind the second half

The most detailed disclosure on Muskie was how the second 500 megawatts would be powered. TeraWulf has a signed 500-megawatt electric service agreement with Kentucky Power under an existing tariff, with deliveries starting in 2028. The second block requires new generation. Khan said the company has worked out an arrangement around Kentucky Power's Big Sandy project, a 760-megawatt combined-cycle gas plant. TeraWulf's full gigawatt load would exceed the plant's capacity, so the facility is effectively built on the back of this demand. Kentucky Power is expected to file with the Kentucky Public Service Commission in the next few weeks, with approval targeted for mid-2027 and plant delivery in 2031.

The economics pass costs to TeraWulf. Khan said the structure gives Kentucky Power "a straight line from the cost that they're incurring versus what we are paying." It includes an incremental $100 million residential credit paid out over 10 years, and interest during construction from 2027 through 2031 will be factored into TeraWulf's rates. Load ramps from the grid in 2028 and 2029 and bridges to the plant later. The company is discussing pulling portions of the second 500 megawatts forward into 2029, which would put a full gigawatt in service before the end of that year. That plan depends on a regulatory approval not yet obtained and on a power plant that will not exist for several years, and investors should weigh it accordingly.

Muskie customer strategy: patience over speed, and no dilutive lease

Prager said Muskie is "far more valuable today than it was at the beginning of the week," and that "the phone has been ringing off the hook" for prompt power. He declined to say when or with whom the next lease will be signed. He emphasized that the company will not accept a deal "that forces us to issue equity at a valuation we do not believe reflects the value of the company." He also noted that tenant selection involves more than credit: a hyperscaler and a frontier model company can differ materially in rent yield, financing cost and cultural alignment.

Responding to Morgan Stanley's Stephen Byrd on equity overhang, Fleury listed the available tools: customer prepayments, customers buying equity at higher prices, leverage at stabilized projects, and infrastructure funds seeking project-level equity at multiples above where public developers trade. He argued that WULF Compute will be "significantly underlevered" relative to peers once it ramps. Unlocking equity from stabilized assets and recycling it to the parent is a stated 2027 priority. Asked by Bank of America whether TeraWulf would sell stabilized assets, Fleury said the business is to build and own long term, but did not rule it out and cited Blackstone's investment in FirstEnergy's transmission business as precedent.

On rate protection, Fleury said lease terms are confidential but that TeraWulf seeks contractual mechanisms to preserve the spread between its weighted average cost of capital and its lease yield, and will conduct open-book discussions with customers on cost of capital. Management said new contract economics have moved with construction, tariff and financing costs. Prager said the company is not trying to follow current market pricing and that the only risk it intends to take is execution.

Management sidesteps the capital-light model

Asked by Northland about Riot's recently announced capital-light, powered-land lease, Prager said it "looks like a great deal on a return basis" but is "not currently our primary focus." Khan offered a numerical rebuttal. By his reading, Riot spends about $2 million per megawatt on powered land for 910 megawatts, with unclear returns on the next $4 million of spend. TeraWulf, by contrast, aims to earn a return on the full $10 million to $12 million per megawatt for a turnkey building. His view is that the full-stack colocation model generates the most equity value per megawatt of power on a risk-adjusted basis. Prager also cited investor concern about terminal value and argued that TeraWulf's sites have strong terminal value given a roughly 5-year upgrade cycle, attractive power prices and inference-suitable locations.

Lake Mariner on schedule, with cost at $8.9 million per megawatt

Operationally, Lake Mariner is delivering on time. CB-3 is online, with 102 critical megawatts generating rent. At CB-4, tenant equipment is deployed and energized in the first two of four data halls, with rent commencement expected shortly. Commissioning of the third hall is underway and the fourth starts mid-November, with all four expected online by year-end, adding up to 168 critical megawatts. CB-5, a copy of CB-4, begins commissioning this month for a first-quarter 2027 start across all four halls. Management expects about half of contracted critical IT capacity to be operating by the end of the first quarter, with approximately $700 million of annualized run-rate leasing revenue. Fleury put total WULF Compute costs at approximately $8.9 million per megawatt, within the original $8 million to $10 million range. About $2.9 billion of project capex is complete, roughly $1 billion remains, and about two-thirds of that is committed. Management also sketched a path to roughly 750 megawatts at Lake Mariner to accommodate a sixth building, CB-6.

Third-quarter financials: revenue nearly doubles, margins still depressed

Revenue was $76.2 million versus $44.8 million in the second quarter. HPC lease revenue rose 97% sequentially to $63.0 million, about 83% of the total, made up of $46.0 million of rent, $11.3 million of tenant fit-out revenue and $5.4 million of power pass-through. Adjusted EBITDA was still negative $12.8 million, versus negative $18.3 million in the second quarter. Reported HPC leasing segment margin was only about 17%, against a long-term target of about 85%. Management said the gap reflects $11.3 million of fit-out revenue and costs, $11.1 million of pre-revenue and noncash costs at WULF Compute and $18.0 million of development costs. Adjusted for those and excluding about $5.3 million of power costs, margin was approximately 83%. Operating expenses rose to $39.5 million from $23.4 million, including $12.3 million of site preparation and demolition for future development. Adjusted SG&A was $27.1 million.

GAAP net income of $709.9 million, against a $939.9 million loss in the prior quarter, was driven by a noncash fair value adjustment on the Google warrants and a gain on the sale of the Abernathy joint venture interest, so it says little about operating performance. Cash interest paid fell to $5.0 million from $125.7 million.

Liquidity and capital plan

TeraWulf ended the quarter with about $2.4 billion of cash and restricted cash, including about $1.1 billion at the parent, of which roughly $300 million collateralizes Muskie letters of credit. The revolver was amended to $400 million of commitments, with a $150 million accordion and no LC sublimit. The $300 million of cash collateral is expected to be replaced by revolver LCs in December when the CB-4 lease commences. The company expects $150 million from the Abernathy sale by year-end and about $130 million by April 30, 2027. Management said existing liquidity and those proceeds cover remaining Lake Mariner commitments, the remaining Justified equity and interim Muskie LC needs without accessing equity markets. That statement covers committed projects only and does not cover a signed Muskie build.

Chesapeake in question and the regulatory backdrop

On the Chesapeake, Maryland, acquisition, Prager said most regulatory approvals are in hand, but conditions precedent that the seller must fulfill remain outstanding. "If those conditions are met, great. And if not, that would be a bummer," he said, adding that the company will not bring anything into the pipeline that is not clearly accretive. The tone suggests the deal is not assured. Prager also said TeraWulf can reach its target of contracting an incremental 250 to 500 megawatts annually with the portfolio it already controls and does not need to buy sites. On regulation, he praised New York's framework-based approach and said Kentucky's Democratic governor, Andy Beshear, "loves the facility." He added that good regulation helps distinguish credible, well-capitalized projects from speculative ones.