TeraWulf Leases 70 MW of Infrastructure to Expand into AI Amid Rising Bitcoin Mining Costs

TeraWulf Leases 70 MW of Infrastructure to Expand into AI Amid Rising Bitcoin Mining Costs

In a strategic move to diversify its revenue streams and counteract the increasing costs of Bitcoin mining, TeraWulf has announced plans to lease more than 70 megawatts (MW) of data center infrastructure to Core42, an artificial intelligence (AI) and cloud services provider. This deal, which will see Core42 rent infrastructure at TeraWulf’s Lake Mariner facility in upstate New York, marks the company's expansion into the rapidly growing AI sector, signaling a shift in focus as Bitcoin mining profitability faces pressure.


TeraWulf, a prominent Bitcoin miner, revealed on December 23 that the leased infrastructure will be activated in phases between the first and third quarters of 2025. The move is part of the company’s broader strategy to tap into AI-driven computing, which is becoming an increasingly lucrative market. The lease agreement is expected to provide TeraWulf with additional revenue from its data centers while complementing its existing profitable Bitcoin mining operations.


TeraWulf’s CEO, Paul Prager, emphasized the growth potential within the energy-efficient, scalable infrastructure market, noting that the partnership would not only diversify the company's income but also significantly enhance its long-term earnings potential. “Surging demand for scalable, energy-efficient infrastructure presents a tremendous opportunity,” Prager said, highlighting the firm’s dual exposure to both the AI and Bitcoin mining sectors.


This move comes as TeraWulf, like many of its peers, grapples with rising production costs in Bitcoin mining. According to a report by CoinShares, the weighted average cash cost to mine a single Bitcoin surged by 13% to $55,950 in the third quarter of 2024. These higher costs have led to a decline in the market share of public Bitcoin miners in the overall Bitcoin network hashrate, with some scaling back their mining operations to invest more heavily in AI. Other miners have even used capital raised through convertible notes to purchase additional Bitcoin rather than expanding their mining operations.


TeraWulf’s balance sheet was also impacted by these rising costs, as it reported a Q3 loss of 6 cents per share, significantly missing analysts’ expectations of a 3-cent loss. However, the company benefited from Bitcoin’s 48% price surge in the same quarter, with the cryptocurrency reaching six figures for the first time.


Despite the challenges in Bitcoin mining, TeraWulf has maintained a positive outlook on its growth prospects. Earlier this year, in July, the company expressed openness to a merger to boost its operating hashrate but made it clear that it would only pursue such an option if it aligned with its long-term goals and wasn’t driven by “empire building.” TeraWulf stated that it was focused on organic growth at its existing facilities and on delivering value to shareholders.


While TeraWulf’s stock took a hit on December 23, closing down 12.1% at $5.81, it has still been one of the top-performing Bitcoin miners in 2024, with its share price up an impressive 152.6% year-to-date. Despite the broader market downturn, TeraWulf’s shift into AI and its ongoing Bitcoin mining operations position it well for long-term growth in the evolving digital infrastructure landscape.

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