TeraWulf expands zero-carbon bitcoin mining with Nautilus facility

The 200 MW facility expansion

The 200 MW Nautilus expansion provides the capacity to begin zero-carbon bitcoin mining at scale. The Nautilus Cryptomine facility in Pennsylvania is a joint venture with Cumulus Coin, LLC. This facility is connected to the 2.3 GW Susquehanna Nuclear Station. The facility provides 50 MW of mining capacity at a five-year contracted fixed rate of $0.02 per kilowatt hour. This connection includes an option for an incremental 100 MW of capacity. The Nautilus facility draws power directly from the Susquehanna Nuclear Station, which supplies the site with stable, zero-carbon electricity and provides the nuclear plant with a stable, baseload customer to manage higher proportions of renewable loads. This zero-carbon strategy is a primary component of the company’s goal to utilize 100% zero-carbon energy through nuclear, hydro, and solar power.

Efficiency and economic resiliency

The 12% post-halving efficiency gain provides a margin of safety compared to traditional fossil-fuel hosting contracts. This efficiency helps the company maintain profitability when the market fluctuates. In March 2023, the company recorded a revenue per bitcoin of $24,990 and a power cost per bitcoin of $7,048. The company targets a power cost of $0.035 per kilowatt hour across its two sites, while the Nautilus site is $0.02 per kilowatt hour. This cost advantage helps the company maintain resiliency in a low-priced bitcoin environment. However, the company faces high volatility because its cash generation swings with bitcoin price, block reward dynamics after the halving, and network difficulty. You likely know that mining efficiency determines survival after a halving.

Operational capacity and infrastructure

The company operates two primary sites: the Lake Mariner campus in New York and the Nautilus facility in Pennsylvania. The Lake Mariner facility is located on the shores of Lake Ontario at the site of a retired coal plant. The Lake Mariner facility harnesses abundant hydro and renewable energy from the shores of Lake Ontario in New York, where it employs workers displaced by the state-mandated fossil fuel phase-out to support the transition to zero-carbon energy. This facility is not impacted by the two-year moratorium on new permits for fossil fuel powered proof-of-work mining in New York. The Governor of New York signed this legislation into law to restrict air permits for operations sourcing energy from fossil fuel power plants.

The Lake Mariner facility manages a fleet of 18,000 miners, which includes 13,000 self-miners and 5,000 hosted miners. The Nautilus facility is 9,200 self-miners. This brings the total operational miner fleet to 27,200 miners. The company’s self-mining hash rate capacity reached 2.8 EH/s, while hosted capacity is 0.5 EH/s. The company targets 6.6 EH/s of operational mining capacity. In March 2023, the company produced 233 bitcoin, which is an average rate of 7.5 bitcoin per day. In November 2022, the company produced 119 bitcoin in one month, which is an increase of 76% over the amount mined in September 2022. The company also produced 4.6 bitcoin per day in late 2022.

Future compute and AI workloads

TeraWulf builds its strategy around securing access to large amounts of low-cost power. The company converts that power into computing output at specialized data-center sites. Management targets the monetization of power more profitably than a pure-play bitcoin miner. This involves developing infrastructure suitable for enterprise AI/HPC use with higher-density power and cooling requirements. The company also seeks to turn power access into durable cash-generating infrastructure. The expansion at Lake Mariner supports both bitcoin mining and high-density compute workloads. These workloads require specific cooling designs and electrical engineering capabilities.

The company targets growth in the AI/HPC hosting segment. This hosting involves providing powered, cooled, and operated data-center capacity for enterprise users. The company positions parts of Lake Mariner for these high-density compute uses. This includes providing colocation or dedicated hosting for enterprise customers. This growth also creates employment opportunities in the local economy. A 2017 report from the US Chamber of Commerce found that mining facilities could create up to 1,688 local jobs during the average 24-month construction phase and around 157 local jobs in the subsequent operation phase. When completed and operational, the facilities in New York are 200 green energy jobs.

How will the company balance bitcoin mining with high-density AI/HPC workloads?