TeraWulf capacity expansion and the zero-carbon reality

Scaling the hash rate

TeraWulf operates 10.0 EH/s of self-mining capacity, which doubled compared to the previous year. In September 2024, the company mined 176 bitcoin, with 140 from Lake Mariner and 36 from Nautilus. This production achieved an average rate of 5.9 bitcoin per day. I doubt the power claims. While the company claims 91% zero-carbon energy, the New York Power Authority told Hunterbrook that none of the power provided to the firm can be claimed as renewable. The New York State Energy Research and Development Authority also stated that the company needs to purchase renewable energy credits to substantiate its zero-carbon claims. In September, miners operated at an average of 8.2 EH/s due to demand response events. The nameplate capacity of 10.0 EH/s remains higher than this operational average. This resulted in an average power cost of $35,109 per bitcoin. The company maintains 195 MW at Lake Mariner and 50 MW at Nautilus.

I see the scale growing.

The Nautilus sale and energy costs

The company sold its 25% equity interest in the Nautilus facility for approximately $92 million, which yielded a 3.4x return on investment. This capital funds the construction of the 20 MW CB-1 facility at Lake Mariner. I think the timing of this sale looks suspicious. Nautilus provided a 100% zero-carbon power source at $0.02 per kilowatt hour. Without Nautilus, the company power cost hit 4.8 cents per kilowatt hour, which sits near the industry average of 5 cents. The sale to Talen Energy occurred after Talen sold the larger data center campus on which Nautilus sits to Amazon Web Services for $650 million. Paul Prager noted that, as a 25% owner, the company could not manage the timing. This expansion follows the completion of a 2 MW WULF Den proof-of-concept designed for high-density GPU workloads. The Nautilus facility uses power from the 2.5 GW Susquehanna nuclear generation station. The company holds an option to add an additional 50 MW of bitcoin mining capacity at the Nautilus site.

I see the truth.

Costs rose fast.

AI infrastructure and market outlook

Management focuses on high-density GPU workloads at the Lake Mariner site. The company recently completed a 2.5 MW HPC/AI digital infrastructure proof-of-concept project. The 20 MW colocation building includes liquid cooling and redundancy features like N+1 redundant cooling systems, variable speed fans, chilled water systems, dual power supply, and redundant fiber network paths to support 16 MW of critical IT load. They also secured long-lead items for the 50 MW CB-2 facility for completion in early Q2 2025. I see the price hit 16.78 dollars. This price sits between the 12-month low of 8.60 dollars and the 12-month high of 29.84 dollars. The 50-day average hit 20.27 dollars. Analysts maintain a Strong Buy consensus with a 31.20 dollar target. Cantor Fitzgerald set a $37.00 target. Morgan Stanley moved its target to $62.50. Citigroup issued a $36.00 target. Chardan Capital set $32.00. Oppenheimer issued $35.00. You should watch the AI revenue growth closely. Can the company maintain its ESG focus without the Nautilus contract?