Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• TeraWulf Inc (NASDAQ:WULF) sold its 25% stake in the Nautilus Crypto mine joint venture for $92 million, achieving a 3.4 times return on investment.
• The company secured a new long-term ground lease at Lake Mariner, increasing total acreage by nearly 50% without additional cost per acre.
• TeraWulf Inc (NASDAQ:WULF) successfully raised $500 million through an oversubscribed convertible bond offering, providing financial flexibility.
• The company approved a $200 million stock buyback program, repurchasing $115 million worth of shares to return value to shareholders.
• Operational efficiency was maintained with a cost of mining approximately $54,000 per Bitcoin, keeping TeraWulf Inc (NASDAQ:WULF) among the industry's lowest cost producers.

Negative Points

• GAAP revenues decreased by 24% quarter over quarter, from $35.6 million in Q2 2024 to $27.1 million in Q3 2024.
• The company reported a GAAP net loss attributable to common shareholders of $23.0 million for the third quarter.
• Self-mined Bitcoin production decreased by 21% from the previous quarter, with a total of 555 Bitcoin mined in Q3 2024.
• The cost of energy per Bitcoin mined increased significantly from $22,954 in Q2 2024 to $30,448 in Q3 2024.
• TeraWulf Inc (NASDAQ:WULF) anticipates a planned outage at Lake Mariner, impacting mining capacity and potentially affecting production.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Sign with WULF.

Q: Can you provide details on the capital spent on CB1 and expectations for CB2 construction in the first half of 2025? A: Patrick Fleury, CFO: The build cost for CB1 is about $100 million for a 20-megawatt building, translating to $5 million per megawatt. CB2, a 50-megawatt building, is expected to cost between $250 to $300 million, or about $5.5 million per megawatt. CB1 will be operationally complete by the end of Q1 2025, and CB2 by the end of Q2 2025, with significant capital outlay expected in the coming months.

Q: Regarding the first customer expected by year-end, can you provide insights into the magnitude in terms of megawatts and contract structure? A: Patrick Fleury, CFO: We anticipate having one or two customers for the 72.5 megawatts. Negotiations are advanced, and we will announce a definitive lease agreement before year-end. The contracts will include options for additional capacity with a one-year revenue prepay, ensuring no free options are given.

Q: How has the demand environment changed in the last 90 days, particularly in terms of pricing and terms? A: Paul Prager, CEO: There is increased interest in securing megawatts with single parties rather than multiple sites, driven by the recent FERC ruling. This has resulted in higher value sites seeing increased demand and pricing per kilowatt hour.

Q: Can you elaborate on the strategy for high power compute (HPC) without additional equity, using prepayments and project financing? A: Patrick Fleury, CFO: The project financing market is becoming more robust, and we plan to use one-year revenue prepayments to secure project financing upfront. This approach will allow us to avoid equity funding and maintain unallocated cash for future opportunities.

Q: What is the current plan for the Wolf Den, and could it generate revenue in the current quarter? A: Patrick Fleury, CFO: The Wolf Den is operational, and we plan to use it for customer capacity rather than entering the GPU as a service business. This aligns with our strategy to focus on energy and power infrastructure, leveraging the capacity for our customers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.