TERAWULF INC.
2026-02-27 · 10-K
84.6M warrants outstanding at $0.21 strike; $2.525B convertible debt (2030/2031/2032 notes); $515.5M Google warrant asset; 420.1M shares outstanding vs. 385.7M prior year (+8.9%); $100.6M capped call costs in 2025 alone indicate severe conversion pressure.
Cash $3.27B appears strong, but $456.4M restricted cash, negative operating cash flow of $123.2M (2025), $1.06B CapEx burn, and $2.77B debt maturing 2030 within 4 years; $3.65B bank deposits exceed FDIC limits across three institutions creating concentration risk.
Total debt $3.1B long-term + $5.725B total principal across convertibles and secured notes; stockholders' equity only $140.4M (45:1 debt-to-equity ratio); interest expense $80.2M (2025) on $168.5M revenue; operating income negative $186.2M; no meaningful interest coverage.
HPC lease revenue $16.9M (2025) dependent on single customer Fluidstack; mining revenue $151.6M dependent on Foundry USA Pool (terminable at 1 contract day notice); 90% of revenue from digital assets; Fluidstack leases not yet commenced, dependent entirely on Google credit backstop for payment guarantees.
Related-party transactions: $54.6M Beowulf E&D acquisition from management-controlled entity with $55.5M goodwill; $68.8M shares + $12M cash for ground lease from management affiliate; earnout milestones achieved creating $22M additional payments; SEC investigation into electricity sources closed Jan 2025 with no enforcement, but prior short-seller attacks in Aug-Oct 2024.
Bitcoin mining market share declined to 0.9% of global hashrate (down from 1.4% prior year) despite 9.3 EH/s capacity; mining cost per BTC surged 112% YoY to $53,681 (53% of $101K price); hashrate competition intensifying; HPC business nascent with unproven customer retention and competitive positioning.
Context
Financial Trend (2023 to 2025)
TeraWulf is a U.S.-based digital infrastructure company pivoting from bitcoin mining (90% of 2024 revenue) toward HPC/AI data center leasing, with $168.5M in total revenue for fiscal year 2025 . The company is mid-transition, carrying $3.1B in long-term debt against only $140.4M in shareholders equity, and has not yet generated meaningful HPC revenue despite committing billions in capital . The core risk is that this is essentially a pre-revenue HPC company still dependent on bitcoin mining cash flows while absorbing massive financing costs.
Flags
Dilution
High risk- HIGHThe company has 84.6 million common stock warrants outstanding at a weighted average strike price of $0.21 per share, meaning they are almost certain to be exercised . The Google warrants alone total 73.58 million shares at $0.01 exercise price, exercisable through August 2030, and are structured to auto-exercise if the stock is above $0.01 at expiration . The 2031 Convertible Notes of $1.0B convert at $12.43 per share, the 2030 notes of $500M convert at $8.48 per share (already convertible on a short-term basis), and the 2032 notes of $1.025B convert at $19.94 per share . Total convertible debt principal is $2.525B . Shares outstanding already grew from 385.7M to 420.1M during 2025 , and stock-based compensation was $50.9M against $168.5M in revenue, a 30% ratio . The company also issued 18.6M shares worth $95.0M to a related party for a ground lease, and 20.0M shares worth $68.8M to another related party for a separate lease, both in noncash transactions .
- HIGHWarrant liabilities are $844.7M, classified as Level 3 fair value liabilities and remeasured every period . The company recognized a $329.2M loss in 2025 just from the change in fair value of the Google warrants , and a total $429.8M fair value change loss across all warrant and convertible derivative liabilities . This is not a cash charge today but represents the market's pricing of the eventual share delivery obligation.
Liquidity
Medium risk- MEDThe filing explicitly acknowledges that a sustained decline in bitcoin value could "adversely affect business and potentially impact ability to continue as going concern" . With operating cash flow of negative $123.2M, bitcoin mining profitability squeezed (53% cost-to-revenue ratio), and HPC revenue still minimal at $16.9M in 2025 , the company is dependent on continued capital markets access to fund operations and construction. The next bitcoin halving is anticipated in April 2028, which will further compress mining economics .
Leverage
High risk- HIGHTotal long-term debt is $3.05B against shareholders equity of only $140.4M, a 21:1 debt-to-equity ratio; total liabilities of $6.42B against equity of $140.4M produces a 45:1 liability-to-equity ratio . Interest expense exploded from $19.8M in 2024 to $80.2M in 2025, a 305% increase, driven by $58.0M in stated interest plus $22.2M in debt issuance cost amortization . The company raised $3.13B in gross senior secured note proceeds and $1.97B in convertible note proceeds in 2025 alone . The $3.2B in 7.75% senior secured notes due 2030 require semi-annual principal payments beginning April 15, 2026, and include an excess cash flow sweep that could accelerate repayment demands . Total principal outstanding across all debt and convertibles is $5.725B, with $2.77B maturing in 2030 .
Concentration
High risk- HIGHIn 2025, all HPC lease revenue came from a single customer, and all bitcoin mining revenue flowed through a single mining pool operator, Foundry USA Pool . The mining pool contract is terminable at any time by either party with minimal notice . Bitcoin miners are sourced from a single supplier (Bitmain in 2025; historically two suppliers) . The Fluidstack HPC leases, which underpin the entire growth strategy, have not commenced operations as of the filing date; if Fluidstack defaults, Google can assume the lease or pay a termination fee, but the Fluidstack JV at Abernathy is not yet generating revenue . The Core42 contract covers 60 MW and the Akela/Fluidstack contracts cover 378 MW with deliveries expected 2026, meaning the vast majority of contracted HPC capacity is still in construction and pre-revenue .
Governance
Medium riskNothing flagged.
Competition
Medium riskNothing flagged.
Operations
- HIGHNet loss for 2025 was $661.4M, up from $72.4M in 2024, an 814% deterioration . The cost to mine one bitcoin rose from $25,268 in 2024 to $53,681 in 2025, a 112% increase, while operational hashrate share fell from 1.4% to 0.9% of global hashrate . Power costs rose 39%, from $0.043/kWh to $0.060/kWh . The company mined 1,496 BTC in 2025 versus 2,177 BTC in 2024 despite expanded capacity, due to the April 2024 halving and rising global hashrate competition . Construction in process on the balance sheet surged from $107.6M to $1,069.1M in a single year , and total capex was $1.06B in 2025 versus $267.9M in 2024 , creating enormous execution risk on projects that are not yet generating revenue. The company recorded $19.6M in accelerated depreciation in 2025 for miners shut down early to convert to HPC use .
Other
- HIGHLiquidity (operating burn and restricted cash). Operating cash flow was negative $123.2M in 2025, compared to negative $24.4M in 2024, a 405% deterioration . Adjusted EBITDA flipped from positive $60.4M in 2024 to negative $23.1M in 2025 . While headline cash of $3.27B looks strong, $456.4M of it is restricted ($189.9M current, $266.5M noncurrent) and was $0 in the prior year . Bank balances exceed FDIC insurance limits by $3.649B, concentrated at just three institutions . The HPC leases that are supposed to generate future revenue had not yet commenced as of December 31, 2025; Fluidstack deliveries are expected in 2026 . The $90.0M prepaid rent received from a customer in 2025 is recorded as a liability ($58.2M current, $23.3M noncurrent deferred rent), not earned revenue .
- HIGHGovernance (related-party transactions). TeraWulf acquired Beowulf E&D (May 2025), a company controlled by a member of management, for $54.6M in total consideration including $3.0M cash, 5.0M shares, and up to $32.5M in earnout payments plus 3.0M additional shares . All three earnout milestones were achieved in 2025 and triggered $19.0M in additional cash payments plus 3.0M additional shares . The company then recorded $55.5M in goodwill on this acquisition, essentially the entire purchase price . Separately, the company issued 20.0M shares worth $68.8M plus $12.0M cash for a ground lease with a counterparty controlled by management (October 2024), and 18.6M shares worth $95.0M plus $3.0M cash for the Cayuga lease with another counterparty controlled by management (August 2025) . These three related-party transactions together transferred roughly $250M in value to management-linked entities within 12 months, with limited disclosure of how arm's-length fairness was determined.
- MEDLeverage (Abernathy JV off-balance-sheet debt). TeraWulf invested $450M for 50.1% ownership of the Abernathy joint venture in October 2025 . The JV separately issued $1.3B in 7.25% Senior Secured Notes on December 29, 2025 . Because TeraWulf accounts for this under the equity method, the $1.3B in JV-level debt does not appear on TeraWulf's consolidated balance sheet, but TeraWulf's 50.1% economic interest means it absorbs the majority of any JV losses or shortfalls. The campus is not yet operational and is targeted for completion in H
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