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What changed in TERAWULF INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TERAWULF INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+380 added−421 removedSource: 10-K (2025-03-03) vs 10-K (2024-03-20)

Top changes in TERAWULF INC.'s 2024 10-K

380 paragraphs added · 421 removed · 187 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeSee “Item 1A— Risk Factors.” Risks Related to Our Business • If we fail to increase our hash rate, we may be unable to compete, and our results of operations could suffer. • We expect the cost of acquiring new miners to continue to be affected by the ongoing global supply chain crisis. • We may not be able to timely complete our future strategic growth initiatives or within our anticipated cost estimates, if at all. • We may be unable to access sufficient additional capital for future strategic growth initiatives. • Expansion of our Lake Mariner Facility or the Nautilus Cryptomine Facility potentially exposes us to additional risks. • Since the operation and expansion of the Nautilus Cryptomine Facility is subject to the terms of a joint venture agreement, TeraWulf may have less control over strategic decisions. • If we are unable to comply with the covenants or restrictions contained in our Loan, Guaranty and Security Agreement (the “LGSA”), the lenders could declare all amounts outstanding under the LGSA to be due and payable and foreclose on their collateral, which could materially adversely affect our financial condition and operations. • We have financed our strategic growth primarily by issuing new shares of our common stock in public offerings, which dilutes the ownership interests of our current stockholders, and which may adversely affect the market price of our securities. • We have a history of operating losses, and we may report additional operating losses in the future. • The lack of regulation of digital asset exchanges which bitcoin, and other cryptocurrencies, are traded on may expose us to the effects of negative publicity resulting from fraudulent actors in the cryptocurrency space and can adversely affect an investment in the Company.
Biggest changeSee “Item 1A— Risk Factors.” Risks Related to Our Business • Our HPC business strategy may not perform as planned. • If we fail to increase our hash rate, we may be unable to compete, and our results of operations could suffer. • We expect the cost of acquiring new miners to continue to be affected by the ongoing global supply chain crisis. • We may not be able to timely complete our future strategic growth initiatives or within our anticipated cost estimates, if at all. • We may be unable to access sufficient additional capital for future strategic growth initiatives. • Expansion of our Lake Mariner Facility potentially exposes us to additional risks. • We have financed our strategic growth by issuing new shares of our common stock in public offerings, which dilutes the ownership interests of our current stockholders, and which may adversely affect the market price of our securities. 8 Table of Contents • We have a history of operating losses, and we may report additional operating losses in the future. • The lack of regulation of digital asset exchanges which bitcoin, and other cryptocurrencies, are traded on may expose us to the effects of negative publicity resulting from fraudulent actors in the cryptocurrency space and can adversely affect an investment in the Company.
Risks Related to Ownership of our Common Stock • The trading price of shares of our common stock has been subject to volatility. • We have, primarily, financed our strategic growth through our at-the-market (“ATM”) offerings and issuances of our common stock.
Risks Related to Ownership of our Common Stock • The trading price of shares of our common stock has been subject to volatility. • We have financed our strategic growth through our at-the-market (“ATM”) offerings and issuances of our common stock.
Risks Related to the Price of Bitcoin • Our ability to achieve profitability is largely dependent on the price of bitcoin, which has historically been volatile. 7 Table of Contents • Bitcoin market exposure to financially troubled cryptocurrency-related companies may impact our reputation, the price of bitcoin and the profitability of our bitcoin mining operations. • Bitcoin is subject to halving, and our bitcoin mining operations may generate less revenue as a result. • Transaction fees may decrease demand for bitcoin and prevent expansion. • Bitcoin faces significant scaling obstacles that can lead to high fees or slow transaction settlement times.
Risks Related to the Price of Bitcoin • Our ability to achieve profitability is largely dependent on the price of bitcoin, which has historically been volatile. • Bitcoin market exposure to financially troubled cryptocurrency-related companies may impact our reputation, the price of bitcoin and the profitability of our bitcoin mining operations. • Bitcoin is subject to halving, and our bitcoin mining operations may generate less revenue as a result. • Transaction fees may decrease demand for bitcoin and prevent expansion. • Bitcoin faces significant scaling obstacles that can lead to high fees or slow transaction settlement times.
Holders of our common stock may experience dilution as a result of such issuances. • We previously identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal 8 Table of Contents controls, any of which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.
Holders of our common stock may experience dilution as a result of such issuances. • We previously identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, any of which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.
This policy is designed to uphold the confidentiality, integrity, and availability of our critical systems and information. As of the current filing date, we have not encountered significant impacts from recognized cybersecurity threats on our operations, business strategy, financial condition, or results of operations.
This policy is designed to uphold the confidentiality, integrity, and availability of our critical systems and information. 6 Table of Contents As of the current filing date, we have not encountered significant impacts from recognized cybersecurity threats on our operations, business strategy, financial condition, or results of operations.
Intellectual Property TeraWulf utilizes specific hardware and software tailored for its bitcoin mining operations. Given the prevalence of open-source technology in the blockchain and cryptocurrency sectors, certain source code and software components may be subject to open-source licenses. In such cases, we strictly adhere to the terms outlined in the respective license agreements.
Intellectual Property TeraWulf utilizes specific hardware and software tailored for both its bitcoin mining operations and HPC hosting. Given the prevalence of open-source technology in the blockchain, cryptocurrency, and computing sectors, certain source code and software components may be subject to open-source licenses. In such cases, we strictly adhere to the terms outlined in the respective license agreements.
For TeraWulf, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include, without limitation: • conditions in the cryptocurrency mining industry, including any prolonged substantial reduction in cryptocurrency prices, and specifically, the value of bitcoin, which could cause a decline in the demand for TeraWulf’s services; • competition among the various providers of data mining services; • the need to raise additional capital to meet our business requirements in the future, which may be costly or difficult to obtain or may not be obtained (in whole or in part) and, if obtained, could significantly dilute the ownership interests of TeraWulf’s shareholders; • the ability to implement certain business objectives and the ability to timely and cost-effectively execute integrated projects; • adverse geopolitical or economic conditions, including a high inflationary environment; • security threats or unauthorized or impermissible access to our data centers, our operations or our digital wallet; • counterparty risk with respect to our digital asset custodian and our mining pool provider; • employment workforce factors, including the loss of key employees; • changes in governmental safety, health, environmental and other regulations, which could require significant expenditures; • liability related to the use of TeraWulf’s services; • currency exchange rate fluctuations; and • other risks, uncertainties and factors included or incorporated by reference in this Annual Report, including those set forth under “Risk Factors” in this this Annual Report. 6 Table of Contents These forward-looking statements reflect our views with respect to future events as of the date of this Annual Report and are based on assumptions and subject to risks and uncertainties.
For TeraWulf, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include, without limitation: • conditions in the cryptocurrency mining industry, including any prolonged substantial reduction in cryptocurrency prices, and specifically, the value of bitcoin, which could cause a decline in the demand for TeraWulf’s services; • competition among the various providers of data mining services; • the need to raise additional capital to meet our business requirements in the future, which may be costly or difficult to obtain or may not be obtained (in whole or in part) and, if obtained, could significantly dilute the ownership interests of TeraWulf’s shareholders; • the ability to implement certain business objectives and the ability to timely and cost-effectively execute integrated projects; 7 Table of Contents • adverse geopolitical or economic conditions, including a high inflationary environment and the implementation of new tariffs and more restrictive trade regulations; • security threats or unauthorized or impermissible access to our data centers, our operations or our digital wallet; • counterparty risk with respect to our digital asset custodian and our mining pool provider; • employment workforce factors, including the loss of key employees; • changes in governmental safety, health, environmental and other regulations, which could require significant expenditures; • liability related to the use of TeraWulf’s services; • currency exchange rate fluctuations; and • other risks, uncertainties and factors included or incorporated by reference in this Annual Report, including those set forth under “Risk Factors” in this this Annual Report.
Below is a breakdown detailing the energy sources utilized to operate our bitcoin mining facilities for the year ended December 31, 2023: Percentage of energy consumption by facility Lake Mariner Facility (1) Nautilus Cryptomine Facility Zero Carbon (2) 93.0% 100.0% Carbon (3) 7.0% 0.0% Total 100.0% 100.0% 2 Table of Contents _______ (1) Source: NYISO’s 2021-2040 System & Resource Outlook.
Below is a breakdown detailing the regional and location-specific, as applicable, energy sources utilized to operate our bitcoin mining facilities for the year ended December 31, 2024: 3 Table of Contents Percentage of energy consumption by facility Lake Mariner Facility (1) Nautilus Cryptomine Facility Zero Carbon (2) 93.0% 100.0% Carbon (3) 7.0% 0.0% Total 100.0% 100.0% _______ (1) Source: NYISO’s 2021-2040 System & Resource Outlook.
Risks Related to Governmental Regulation and Enforcement • Changing environmental regulation and public energy policy may expose our business to new risks. • Regulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects, or operations. • Our interactions with a blockchain may expose us to specially designated nationals (“SDN”) or blocked persons and new legislation or regulation could adversely impact our business or the market for cryptocurrencies. • Bitcoin and bitcoin mining, as well as cryptocurrencies generally, may be made illegal in certain jurisdictions, including the ones we operate in, which could adversely affect our business prospects and operations.
Risks Related to Governmental Regulation and Enforcement • Changing environmental regulation and public energy policy may expose our business to new risks. • Regulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects, or operations. • The implementation of new tariffs, more restrictive trade policies or the renegotiation of existing U.S. trade agreements may adversely affect our business, prospects, or operations. • Our interactions with a blockchain may expose us to specially designated nationals (“SDN”) or blocked persons and new legislation or regulation could adversely impact our business or the market for cryptocurrencies. 9 Table of Contents • Bitcoin and bitcoin mining, as well as cryptocurrencies generally, may be made illegal in certain jurisdictions, including the ones we operate in, which could adversely affect our business prospects and operations.
Furthermore, each member of the TeraWulf team holds ownership in the Company through equity awards granted under our 2021 Omnibus Incentive Plan (the “Plan”). The primary objective of the Plan is to attract, retain, and motivate employees, executive officers, and directors through the provision of stock-based compensation awards.
Furthermore, each employee of TeraWulf and many employees of Beowulf E&D hold ownership in the Company through equity awards granted under our 2021 Omnibus Incentive Plan (the “Plan”). The primary objective of the Plan is to attract, retain, and motivate employees, executive officers, and directors through the provision of stock-based compensation awards.
Please note that the contents of, or information accessible through, our website are not part of this Annual Report on Form 10-K (the “Annual Report”). 5 Table of Contents Available Information We maintain a link to investor relations information on our website, www.terawulf.com, where we make available, free of charge, our SEC filings, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Available Information We maintain a link to investor relations information on our website, www.terawulf.com, where we make available, free of charge, our filings with the United States Securities and Exchange Commission (“SEC”), including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
To support our employees, TeraWulf offers a comprehensive benefits program tailored to their needs. This program encompasses a 401(k) retirement plan, flexible work hours, ample leave policies, and initiatives aimed at promoting mental and physical well-being.
We recognize the pivotal role played by our workforce in the Company’s success and prioritize their well-being and dedication. To support our employees, TeraWulf offers a comprehensive benefits program tailored to their needs. This program encompasses a 401(k) retirement plan, flexible work hours, ample leave policies, and initiatives aimed at promoting mental and physical well-being.
At present, TeraWulf neither possesses nor intends to pursue patents for its existing or planned blockchain and cryptocurrency operations. Instead, we rely on safeguarding our interests through trade secrets, trademarks, service marks, trade names, copyrights, and other intellectual property rights. Additionally, we anticipate procuring licenses for utilizing 4 Table of Contents intellectual property rights owned and managed by third parties.
At present, TeraWulf neither possesses nor intends to pursue patents for its existing or planned bitcoin mining or HPC hosting operations. Instead, we safeguard our competitive advantages through trade secrets, trademarks, service marks, trade names, copyrights, and other intellectual property rights. Additionally, we anticipate procuring licenses for utilizing intellectual property rights owned and managed by third parties.
We engage our insurance broker annually to solicit underwriters to provide proposals to renew our current coverages or update our policies to meet our needs. Corporate Information TeraWulf was incorporated under the laws of the State of Delaware in February 2021 and commenced trading on Nasdaq under the symbol “WULF” on December 14, 2021.
Each year, we engage our insurance broker to solicit proposals from underwriters, either to renew our existing coverages or to update our policies as needed. Corporate Information TeraWulf was incorporated under the laws of the State of Delaware in February 2021 and commenced trading on The Nasdaq Stock Market LLC (the “Nasdaq”) under the symbol “WULF” on December 14, 2021.
Our principal executive offices are located at 9 Federal Street, Easton, Maryland 21601. Our telephone number is (410) 770-9500 and our website address is www.terawulf.com.
Our principal executive offices are located at 9 Federal Street, Easton, Maryland 21601. Our telephone number is (410) 770-9500 and our website address is www.terawulf.com. Please note that the contents of, or information accessible through, our website are not part of this Annual Report).
Diversity, Equity and Inclusion TeraWulf is dedicated to cultivating a diverse and inclusive workforce. We prioritize hiring and recruitment based on merit and qualifications, recognizing the inherent value of varied perspectives and experiences. As the Company expands, our commitment to diversity remains integral across all aspects of our operations.
Diversity, Equity and Inclusion TeraWulf is dedicated to cultivating a diverse and inclusive workforce. We prioritize hiring and recruitment based on merit and qualifications, recognizing the inherent value of varied perspectives and experiences. The Company’s Diversity Policy serves as a fundamental framework, outlining TeraWulf’s commitment to fostering an inclusive environment where all individuals are treated with respect and esteem.
The Company’s ongoing objective is to achieve complete reliance on zero-carbon energy sources. Lake Mariner Facility Located at a site adjacent to the now decommissioned coal-fired power plant in Barker, New York, the Lake Mariner Facility began sustainably mining bitcoin in March 2022.
Lake Mariner Facility Located at a site adjacent to the now-decommissioned coal-fired power plant in Barker, New York, the Lake Mariner Facility began mining bitcoin in March 2022. As of December 31, 2024, the Lake Mariner Facility is operating approximately 195 MW of bitcoin mining capacity at the site.
The PPA was executed on February 12, 2022 and has a term of ten years from the date of commencement of NYPA’s power delivery. The Lake Mariner Facility is situated on an expansive site on the shores of Lake Ontario and has the ability to scale up to 500 MW of capacity.
The Lake Mariner Facility is situated on an expansive site on the shores of Lake Ontario and has the ability to scale up to 500 MW of capacity in the near term and up to 750 MW with certain transmission upgrades..
Cybersecurity TeraWulf has adopted a thorough strategy for information security and data governance, incorporating physical, procedural, and technical safeguards. These measures aim to safeguard sensitive information and protect our mining operations against unauthorized access. The Company has established a cybersecurity risk management program detailed in our Information Security and Cybersecurity Policy.
We believe that embracing a range of perspectives not only enhances our organizational culture but also bolsters our capacity to respond to change and stimulate innovation. Cybersecurity TeraWulf has adopted a thorough strategy for information security and data governance, incorporating physical, procedural, and technical safeguards. These measures aim to safeguard sensitive information and protect our operations against unauthorized access.
Currently, business interruption insurance for bitcoin mining companies is extremely limited. We also maintain replacement cost all-risk coverage (excluding mechanical breakdown) property insurance for our facilities and equipment at our Lake Mariner Facility with a limit of $30 million per occurrence. Furthermore, we maintain a separate cyber liability insurance policy with an aggregate limit of $5 million.
Insurance For our Lake Mariner Facility, we carry replacement cost all-risk property insurance with a coverage limit of $100 million per occurrence. Given the current scarcity of business interruption insurance options for bitcoin mining, we actively monitor the global insurance market for alternative solutions. We also maintain separate cyber liability insurance policies with an aggregate limit of $10 million.
As of December 31, 2023, the Lake Mariner Facility is operating approximately 160 MW of bitcoin mining capacity at the site. The Company has an agreement in place with the Power Authority of the State of New York (“NYPA”) for 90 MW of high load factor power to support its bitcoin mining operations (the “PPA”).
The Company has an agreement in place with the Power Authority of the State of New York (“NYPA”) for 90 MW of high-load factor power to support its bitcoin mining operations (the “PPA”). The PPA was executed on February 12, 2022, and has a term of ten years from the date of commencement of NYPA’s power delivery.
In 2023, the Company participated in three ancillary demand response programs in New York, including the Commercial System Relief Program (CSRP), Demand Side Ancillary Services Program (DSASP), and Special Case Resource (SCR) program.
In 2024, we actively participated in three ancillary demand response programs in New York: the Commercial System Relief Program (CSRP), the Demand Side Ancillary Services Program (DSASP), and the Special Case Resource (SCR) program—reinforcing our commitment to grid reliability. As of December 31, 2024, the energy powering our mining operations came from predominantly clean sources, primarily hydro and nuclear.
In the future, TeraWulf may develop proprietary software applications tailored for enhancing our blockchain and cryptocurrency operations. Human Capital Management As of the filing date, TeraWulf has 10 full-time employees and officers. We recognize the pivotal role played by our workforce in the Company’s success and prioritize their well-being and dedication.
In the future, TeraWulf may develop proprietary software applications to optimize and enhance both our cryptocurrency operations as well as our HPC hosting services. Human Capital Resource Management As of the date of this Annual Report on Form 10-K (the “Annual Report”), TeraWulf has 12 full-time employees and officers.
Bitcoin and Blockchain Bitcoin, introduced in 2008, fundamentally transformed the landscape of digital currency by providing a decentralized mechanism for exchanging and preserving value. It operates on a consensus-based network, utilizing a public ledger termed as the "blockchain" to meticulously record every bitcoin transaction.
Our HPC hosting services will focus on providing colocation, cloud, and connectivity services for GPU-based HPC operations and will generate revenue through hosting fees paid by third-party customers. Bitcoin, introduced in 2008, fundamentally transformed the landscape of digital currency by providing a decentralized mechanism for exchanging and preserving value.
TeraWulf's fully integrated bitcoin mining facilities capitalize on zero-carbon energy sources, primarily sourced from baseload nuclear and hydroelectric power. Bitcoin mining involves validating transactions through a proof-of-work consensus method, where miners solve complex mathematical problems to add transactions to the blockchain.
Bitcoin mining involves validating transactions through a proof-of-work consensus method, where miners solve complex mathematical problems to add transactions to the blockchain. The blockchain is maintained by a robust and public open-source architecture consisting of a network of computers, known as nodes, that work together to verify and validate new transactions.
The Company has a total operational capacity of 210 megawatts (“MW”) and is currently constructing an additional 35 MW at its Lake Mariner Facility, which is expected to be operational in mid-2024. As of December 31, 2023, 95% of TeraWulf’s mining operations were fueled by zero-carbon energy, reflecting our dedication to sustainability.
This capacity is expected to come online throughout 2025. Core42 also has an option, 2 Table of Contents exercisable through March 31, 2025, to secure an additional 135 MW of data center infrastructure at the Lake Mariner Facility. As of December 31, 2024, TeraWulf’s mining operations were powered by predominantly zero-carbon energy, underscoring our commitment to sustainability.
Scale Rapidly with Proprietary Expansion Pipeline TeraWulf's growth trajectory is underpinned by access to the latest generation miners, competitive power arrangements, and profound expertise in energy infrastructure and operations. The Company’s existing facilities retain significant expansion capacity, with the Lake Mariner Facility capable of scaling up to 500 MW.
Strategically located at structurally congested point in New York, the Lake Mariner Facility is well-positioned to optimize power usage and provide ancillary services to the electrical grid. Scale Rapidly with Proprietary Expansion Pipeline TeraWulf’s growth is fueled by its access to high-power operational data center capacity, competitive power arrangements, and deep expertise in energy infrastructure and operations.
The Nautilus Cryptomine Facility secures power at a fixed rate of $0.02 per kilowatt-hour for a five-year term, contributing to cost stability. Historically, at the Lake Mariner Facility, the cost of market power has averaged approximately $0.040 per kilowatt-hour.
Low-Cost Energy Supply TeraWulf expects to maintain one of the industry's lowest electricity costs, estimated at approximately $0.045 per kilowatt-hour over the long term. Historically, market power costs at the Lake Mariner Facility have averaged around $0.040 per kilowatt-hour.
Given these uncertainties, you should not place undue reliance on these forward-looking statements.
These forward-looking statements reflect our views with respect to future events as of the date of this Annual Report and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.
(2) Zero carbon usage includes hydro, nuclear, solar and wind power resources. (3) Carbon usage includes coal and gas power resources. Our Strengths Vertical Integration TeraWulf acknowledges the critical significance of owning its bitcoin mining facility sites for operational efficacy, leading to enhanced efficiency and reduced costs.
(2) Zero carbon usage includes hydro, nuclear, solar and wind power resources. (3) Carbon usage includes coal and gas power resources. Our Strengths Vertical Integration TeraWulf’s ownership of its digital infrastructure—spanning bitcoin mining and HPC hosting—ensures operational efficiency, cost control, and reliability. Managing complex energy assets requires specialized expertise, and direct ownership enables seamless execution, supply chain oversight, and accountability.
(CLSK) • Hut 8 Mining Corp. (HUT) • Hive Blockchain Technologies Ltd. (HIVE) • Bitfarms LTD . (BITF) • Iris Energy Limited (IREN) • Cipher Mining Inc. (CIFR) • Bit Digital Inc. (BTBT) With the fluctuation of bitcoin prices, we acknowledge the potential for additional miners to enter the market during periods of price increases.
With the fluctuation of bitcoin prices, we acknowledge the potential for additional miners to enter the market during periods of price increases. Conversely, during periods of price decline, less efficient miners may find it economically challenging to remain operational.
TeraWulf began mining bitcoin at the Nautilus Cryptomine Facility in the first quarter of 2023 and, as of December 31, 2023, had 50 MW of operational bitcoin mining capacity at the Nautilus Cryptomine Facility.
As of December 31, 2024, we had an operational self-mining capacity of 195 MW, with an additional 50 MW under construction and expected to come online in the first half of 2025.
Conversely, during periods of price decline, less efficient miners may find it economically challenging to remain operational. We are confident TeraWulf maintains a competitive advantage by offering some of the most cost-effective unit economics in comparison to other publicly traded bitcoin miners. Suppliers We specialize in high-efficiency bitcoin mining through the utilization of ASICs.
We are confident TeraWulf maintains a competitive advantage by offering some of the most cost-effective unit economics in comparison to other publicly traded bitcoin miners. The success of our HPC hosting and colocation services will greatly depend on our ability to retain and develop opportunities with our existing customer, attract new customers, and secure additional infrastructure.
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ITEM 1. Business Overview TeraWulf Inc. (“TeraWulf,” the “Company,” “our” or “we”) is a leading digital asset technology firm that specializes in digital infrastructure and sustainable energy development. Our primary focus is supporting environmentally conscious bitcoin mining operations by developing and operating state-of-the-art facilities within the United States.
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ITEM 1. Business Overview TeraWulf Inc. (“we,” “us,” “the Company,” or “TeraWulf”) is a vertically integrated owner and operator of next-generation digital infrastructure, primarily powered by predominantly zero-carbon energy. We develop and operate high-performance data centers optimized for both bitcoin mining and high-performance computing (“HPC”) workloads, leveraging clean, cost-effective, and reliable energy sources to drive long-term sustainability in digital infrastructure.
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Our bitcoin mining facilities are powered by clean, affordable, and reliable energy sources, underscoring our commitment to sustainable practices within the cryptocurrency mining industry. Revenue Structure Our primary source of revenue stems from the mining of bitcoin conducted at our sustainable mining facility sites. Additionally, we occasionally generate revenue through the provision of miner hosting services to third-party entities.
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Our operations are anchored at the Lake Mariner Facility in upstate New York, strategically located on the shores of Lake Ontario (the “Lake Mariner Facility” or “Lake Mariner”).
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We exclusively engage in bitcoin mining for our own purposes and do not facilitate bitcoin transactions for external parties. Our industrial-scale bitcoin mining operations are strategically designed to optimize efficiency. This involves continuously expanding our hash rate, which represents the computational power dedicated to supporting the bitcoin blockchain.
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Developed on the site of a decommissioned coal-fired power plant, Lake Mariner is designed for scalable growth, with the capacity to expand up to 500 megawatts (“MW”) in the near term and 750 MW with certain transmission upgrades. This scale, combined with access to low-cost, predominantly zero-carbon power, makes Lake Mariner an attractive site for hyperscale and enterprise customers.
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By doing so, we enhance our chances of successfully solving cryptographic hashes, thereby generating new blocks on the bitcoin blockchain—a process commonly known as “solving a block.” Typically, a miner’s likelihood of solving a block and earning the block reward is directly linked to the proportion of the bitcoin blockchain’s total network hash rate that its hash rate represents.
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Since our public debut in December 2021, bitcoin mining has been our primary revenue driver. However, we have strategically expanded our focus to include HPC hosting and colocation services, positioning ourselves at the intersection of energy and digital compute infrastructure.
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Block rewards, which are fixed, undergo periodic reductions through halving events. The most recent halving occurred in May 2020, reducing the block reward from 12.5 to 6.25 bitcoin. Another halving, which is expected in April 2024, will further reduce the block reward to 3.125 bitcoin. In addition to block rewards, bitcoin miners also earn transaction fees for confirming transactions.
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A key milestone in this transition occurred on December 23, 2024, when we entered into long-term data center lease agreements with Core42 Holding US LLC (“Core42”), a G42 company specializing in sovereign cloud, AI infrastructure, and digital services, securing 72.5 MW of HPC hosting capacity at Lake Mariner for GPU compute workloads.
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By validating unconfirmed transactions and incorporating them into new blocks within the blockchain, miners collect these fees. While miners are not obliged to confirm specific transactions, economic incentives drive them to validate legitimate transactions to earn fees. Historically, miners have accepted relatively low transaction fees, but these fees can vary, making future fee predictions challenging.
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The lease agreements include an option, exercisable through March 31, 2025, to expand by an additional 135 MW. This marks a significant step forward in our HPC hosting strategy, reinforcing our position in the rapidly growing market for artificial intelligence (AI) and machine learning compute infrastructure.
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Presently, we liquidate the bitcoin mined as part of our routine treasury management processes to acquire U.S. dollars for operational, capital, or other corporate expenses. Our bitcoin holdings are securely stored in a cold storage wallet managed by our custodian, NYDIG Trust Company LLC, a duly chartered New York limited liability trust company (“NYDIG”).
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We primarily operate through two wholly-owned subsidiaries: • Lake Mariner Data LLC – we operate a fleet of high-performance bitcoin miners—primarily sourced from Bitmain Technologies Limited—to validate transactions on the bitcoin blockchain.
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For our bitcoin mining operations, we utilize a third-party mining pool operated by Foundry Digital LLC (“Foundry”). At the close of each day, the bitcoin we have earned is transferred by Foundry to our custodial wallet address at NYDIG. We abstain from engaging in the direct sale of our bitcoin on any exchange.
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Our focus remains on optimizing operational efficiencies to reduce costs and maximize bitcoin production. • Wulf Compute LLC – established in 2024, we have constructed and are continuing to expand our purpose-built infrastructure to provide HPC hosting and colocation services for GPU-based workloads, AI, machine learning, and cloud computing applications.
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Instead, we rely on NYDIG to handle the sale of our mined bitcoin in accordance with our execution agreement with NYDIG, as detailed further in the “Risk Factors” section herein. Our bitcoin sales occur on a daily, weekly, and monthly basis.
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By leveraging our engineering expertise, scalable infrastructure, and cost-efficient power model, we aim to become a premier hosting provider for enterprises requiring high-density compute capacity. We believe TeraWulf’s dual-purpose digital infrastructure strategy strengthens operational efficiency, diversifies revenue streams, and enhances our position in the evolving digital economy.
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TeraWulf invests in computation networks (mining rigs) equipped with application-specific integrated circuit (“ASIC”) chips and secures power to validate transactions and maintain the bitcoin ledger.
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Business Strategy TeraWulf’s strategy is built on leveraging our owned and scalable digital infrastructure to drive revenue and profitability through both bitcoin mining and HPC hosting. As a vertically integrated operator, we own and control our infrastructure, allowing us to optimize efficiency, reduce costs, and maintain a highly competitive cost structure.
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Factors such as computing capacity, electricity costs, and location play pivotal roles in mining operations. 1 Table of Contents Our Facilities TeraWulf currently conducts its bitcoin mining operations at two established data centers: the Lake Mariner facility in upstate New York (the “Lake Mariner Facility”) and the jointly owned Nautilus cryptomine facility located in central Pennsylvania (the “Nautilus Cryptomine Facility”).
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We focus primarily on earning bitcoin through mining and selling the bitcoin generated for cash, activities directly related to growing our digital infrastructure and enhancing efficiencies in our operations (e.g., reducing our cost to mine).
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Nautilus Cryptomine Facility Located in Berwick, Pennsylvania, Nautilus Cryptomine LLC (“Nautilus”) is a joint venture between TeraWulf and a subsidiary of Talen Energy Corporation (“Talen”). Nautilus currently owns a 200 MW bitcoin mining facility located adjacent to the 2.5 gigawatt nuclear-powered Susquehanna Station.
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While bitcoin mining remains a core focus, we are strategically shifting an increasing portion of our infrastructure at Lake Mariner to support HPC hosting and colocation, capitalizing on the rapid growth of AI and cloud computing.
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The Nautilus Cryptomine Facility represents the first bitcoin mining facility site that is powered by 100% “behind the meter” zero-carbon nuclear energy, which is contracted at a fixed rate of 2.0 cents per kilowatt-hour for a term of five years with two successive three-year renewal options.
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Our transition to GPU-based workloads is a natural evolution of our platform, originally designed for bitcoin mining and now expanding to accommodate the growing demand for GPU-driven computing.
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Under the Nautilus joint venture agreement, the Company holds a 25% equity interest in Nautilus and Talen holds a 75% equity interest, each subject to adjustment based on relative capital contributions.
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A key milestone in this strategy was the execution of our December 2024 data center lease agreements with Core42, securing an initial 72.5 MW of data center infrastructure and hosting capacity at Lake Mariner for GPU compute workloads.
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On February 28, 2024, the Company exercised its option to increase its energy requirement at the Nautilus Cryptomine Facility by an incremental 50 MW (for a total of 100 MW attributable to TeraWulf). Environmental Considerations Bitcoin mining, a process reliant on energy consumption to power computers for verifying and recording cryptocurrency transactions, often raises concerns regarding its environmental impact.
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This capacity is expected to ramp up in 2025, with an option to expand near-term HPC hosting capacity for Core42 by an additional 135 MW.
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Traditional mining operations fueled by fossil fuels contribute to carbon emissions, exacerbating climate change. In contrast, TeraWulf prioritizes sustainable practices, sourcing energy from non-fossil fuel and clean sources such as hydroelectric and nuclear power, which emit no carbon.
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These agreements accelerate our entry into the fast-growing hyperscale data center market and strengthen our position in the evolving digital economy. 1 Table of Contents Our modular, scalable data center design enables us to efficiently co-locate HPC infrastructure near reliable, low-cost power sources, reducing energy costs while maintaining operational flexibility.
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Additionally, our Lake Mariner Facility serves as a valuable tool for the grid operator to balance load with increasing contributions of renewable, and by definition intermittent, energy sources.
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As demand for AI, cloud computing, and machine learning continues to surge, our ability to design, build, and operate large-scale, sustainable data centers uniquely positions us to capitalize on this transformation. Looking ahead, we remain focused on expanding our infrastructure, optimizing operations, and enhancing our competitive advantages in both bitcoin mining and HPC hosting.
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As of December 31, 2023, 95% of the energy utilized in our mining facilities came from clean sources, primarily hydro and nuclear power, and we are driving to achieve 100% zero-carbon powered operations.
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By prioritizing sustainable digital infrastructure and low-cost energy solutions, TeraWulf is well-positioned to drive long-term value for shareholders while shaping the future of energy-driven compute infrastructure. We generate revenue by operating our digital infrastructure and mining computers as part of a blockchain transaction processing pool, receiving digital assets in the form of bitcoin in exchange for our activity.
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Energy infrastructure assets are inherently complex, requiring specialized equipment, intricate commercial relationships, and engagement with diverse stakeholder groups. Through site ownership, TeraWulf adopts a comprehensive approach, ensuring projects are executed with due regard for safety, timeliness, and reliability. Moreover, vertical integration empowers TeraWulf to uphold environmental responsibility and foster positive community relations.
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It operates on a consensus-based network, utilizing a public ledger termed as the “blockchain” to meticulously record every bitcoin transaction, allowing users to send and receive payments without the need for banks and other intermediaries. Bitcoin is not linked to any fiat currency or country’s monetary policy, therefore serves as a store of value outside of government control.
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Ownership facilitates active management of site development, project supply chains, and commercial agreements, thereby promoting transparency and accountability for employees, investors, and local communities. Environmentally Clean TeraWulf is steadfast in its commitment to spearheading sustainable bitcoin mining practices.
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Because the blockchain is decentralized and transparent, all users can verify the legitimacy of a transaction without having to rely on a third party. This eliminates the need for intermediaries, which can be slow and expensive, and makes the network resistant to censorship and fraud.
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Presently, 95% of the energy powering its two mining facilities is derived from zero-carbon sources, with a targeted transition to 100% zero-carbon energy usage. The Nautilus Cryptomine Facility relies exclusively on 100% zero-carbon nuclear energy, while the Lake Mariner Facility draws power from Western New York, where over 93% of energy originates from zero-carbon resources, primarily hydro and nuclear.
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Bitcoin mining plays a key role in the maintenance and growth of the bitcoin network by providing the computational power needed to verify transactions and add new blocks to the blockchain. Factors such as computing capacity, electricity costs, and location play pivotal roles in mining operations.
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Recognizing the environmental ramifications of bitcoin mining, TeraWulf regards its access to cost-effective, zero-carbon energy as a significant and enduring competitive advantage relative to industry peers. Low-Cost Energy Supply TeraWulf anticipates maintaining one of the industry’s lowest electricity costs, estimated at approximately $0.035 per kilowatt-hour.
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Generally, the greater the share a single mining rig can capture of the blockchain’s total network hashrate, or the aggregate hashrate deployed to solving a block on the bitcoin blockchain, the greater the rig’s chances of solving a block and therefore earning the reward.
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Over the year ended December 31, 2023, the average aggregate power price at the Lake Mariner Facility and the Nautilus Cryptomine Facility was $0.032 per kilowatt-hour. Positioned at structurally congested points within their respective markets, these facilities offer opportunities for power optimization and provision of ancillary services to the electrical distribution grid.
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Network difficulty, which is a measure of how hard it is for miners to solve a block on the bitcoin blockchain (and, thus, earn a mining reward), is determined by the network’s total hashrate (i.e., the total computational power devoted to solving a block), which is adjusted every 2,016 blocks (with a new block being added approximately every ten minutes).
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Furthermore, TeraWulf plans to expand mining capacity at the Nautilus Cryptomine Facility by another 50 MW in 2025, solidifying its position for scalable growth. Experienced Team TeraWulf has an experienced executive management team with many years of experience designing, developing and operating energy infrastructure. Additionally, TeraWulf benefits from the support of Beowulf Electricity & Data Inc.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe lack of regulation of digital asset exchanges which bitcoin, and other cryptocurrencies, are traded on may expose us to the effects of negative publicity resulting from fraudulent actors in the cryptocurrency space and can adversely affect an investment in the Company. The digital asset exchanges on which bitcoin is traded are relatively new and largely unregulated.
Biggest changeHowever, future market prices of bitcoin are difficult to predict, and we cannot guarantee that our future revenue from bitcoin mining and HPC data center operations will exceed our associated costs. 14 Table of Contents The lack of regulation of digital asset exchanges which bitcoin, and other cryptocurrencies, are traded on may expose us to the effects of negative publicity resulting from fraudulent actors in the cryptocurrency space and can adversely affect an investment in the Company.
We have issued, and may continue to issue, new shares of our common stock, which has a dilutive effect. We have, primarily, financed our strategic growth through our at-the-market (ATM) offerings and issuances of our common stock.
We have issued, and may continue to issue, new shares of our common stock, which has a dilutive effect. We have financed our strategic growth through our at-the-market (ATM) offerings and issuances of our common stock.
Our existing bitcoin mining operations and the expansions of our Lake Mariner Facility and the Nautilus Cryptomine Facility are largely based on our assumptions regarding the future value of bitcoin, which has been subject to significant historical volatility and may be subject to influence from malicious actors, real or perceived scarcity of bitcoin, political, economic, and regulatory conditions and speculation making bitcoin’s price more volatile or creating “bubble” type risks for the trading price of bitcoin.
Our existing bitcoin mining operations and the expansions of our Lake Mariner Facility are largely based on our assumptions regarding the future value of bitcoin, which has been subject to significant historical volatility and may be subject to influence from malicious actors, real or perceived scarcity of bitcoin, political, economic, and regulatory conditions and speculation making bitcoin’s price more volatile or creating “bubble” type risks for the trading price of bitcoin.
Moreover, in the State of New York, we currently participate in energy demand response programs to curtail operations, return capacity to the electrical grid, and receive funds to offset foregone operational mining revenue when necessary, such as in extreme weather events. Furthermore, we, as well as other bitcoin miners, have recently received a mandatory survey from the U.S.
Moreover, in the State of New York, we currently participate in energy demand response programs to curtail operations, return capacity to the electrical grid, and receive funds to offset foregone operational mining revenue when necessary, such as in extreme weather events. Furthermore, we, as well as other bitcoin miners, received a mandatory survey from the U.S.
However, pursuant to our Digital Asset Custodial Agreement, dated as of March 10, 2022, between us and NYDIG (as may be amended, modified or supplemented from time to time, the “Custodial Agreement”), NYDIG has covenanted that it holds our digital assets in a segregated account that will at all times be identifiable in NYDIG’s database as being stored for our benefit; that NYDIG has no right, interest or title in our digital assets; and that our digital assets do 16 Table of Contents not constitute an asset on the balance sheet of NYDIG.
However, pursuant to our Digital Asset Custodial Agreement, dated as of March 10, 2022, between us and NYDIG (as may be amended, modified or supplemented from time to time, the “Custodial Agreement”), NYDIG has covenanted that it holds our digital assets in a segregated account that will at all times be identifiable in NYDIG’s database as being stored for our benefit; that NYDIG has no right, interest or title in our digital assets; and that our digital assets do not constitute an asset on the balance sheet of NYDIG.
Such breaches, whether attributable to a vulnerability in our systems or otherwise, could result in claims of liability against us, damage our reputation and materially harm our business. We rely on the well-known U.S. based third-party digital asset-focused custodian, NYDIG, to safeguard our bitcoin using cold storage.
Such breaches, whether attributable to a vulnerability in our systems or otherwise, could result in claims of liability against us, damage our reputation and materially harm our business. 18 Table of Contents We rely on the well-known U.S. based third-party digital asset-focused custodian, NYDIG, to safeguard our bitcoin using cold storage.
If a corresponding and proportionate increase in the price of bitcoin does not follow future halving events, the revenue we earn from our bitcoin mining operations would see a decrease, which could have a material adverse effect on our results of operations and financial condition. 13 Table of Contents Transaction fees may decrease demand for bitcoin and prevent expansion.
If a corresponding and proportionate increase in the price of bitcoin does not follow future halving events, the revenue we earn from our bitcoin mining operations would see a decrease, which could have a material adverse effect on our results of operations and financial condition. Transaction fees may decrease demand for bitcoin and prevent expansion.
To the extent that we are unable to recover our losses from such action, error or theft, such events could have a material adverse effect on our business, results of operations and financial condition. Our business could be harmed by prolonged power and internet outages, shortages, or capacity constraints.
To the extent that we are unable to recover our losses from such action, error or theft, such events could have a material adverse effect on our business, results of operations and financial condition. 19 Table of Contents Our business could be harmed by prolonged power and internet outages, shortages, or capacity constraints.
Such circumstances could have a material adverse effect on us, which could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin we mine or otherwise acquire or hold for our own account, and thus harm investors. 20 Table of Contents TeraWulf may be at a higher risk of litigation and other legal proceedings due to heightened regulatory scrutiny of the cryptocurrency industry, which could ultimately be resolved against TeraWulf, requiring material future cash payments or charges, which could impair TeraWulf’s financial condition and results of operations.
Such circumstances could have a material adverse effect on us, which could have a material adverse effect on our business, prospects or operations and potentially the value of any bitcoin we mine or otherwise acquire or hold for our own account, and thus harm investors. 22 Table of Contents We may be at a higher risk of litigation and other legal proceedings due to heightened regulatory scrutiny of the cryptocurrency industry, which could ultimately be resolved against the Company, requiring material future cash payments or charges, which could impair our financial condition and results of operations.
A perceived lack of stability in the digital asset exchange market and the closure or temporary shutdown of digital asset exchanges due to business failure, hackers or 12 Table of Contents malware, government-mandated regulation, or fraud may reduce confidence in digital asset networks and result in greater volatility in cryptocurrency values.
A perceived lack of stability in the digital asset exchange market and the closure or temporary shutdown of digital asset exchanges due to business failure, hackers or malware, government-mandated regulation, or fraud may reduce confidence in digital asset networks and result in greater volatility in cryptocurrency values.
Given the political significance and uncertainty around the impact of climate change and how it should be addressed, and energy disclosure and use regulations, we cannot predict how legislation and regulation will affect our 18 Table of Contents financial condition and results of operations in the future in the United States.
Given the political significance and uncertainty around the impact of climate change and how it should be addressed, and energy disclosure and use regulations, we cannot predict how legislation and regulation will affect our financial condition and results of operations in the future in the United States.
Expansion of our existing mining facilities potentially exposes us to additional risks, including risks related to, among other sources: construction delays; lack of availability of parts and/or labor, increased prices as a result, in part, of inflation, and delays for data center equipment; labor disputes and work stoppages, including interruptions in work due to pandemics, epidemics, and other health risks; unanticipated environmental issues and geological problems; delays related to permitting and approvals to commence operations from public agencies and utility companies; and delays in site readiness leading to our failure to meet commitments made in connection with such expansion.
Expansion of our existing mining facilities and digital infrastructure to support HPC hosting and colocation potentially exposes us to additional risks, including risks related to, among other sources: construction delays; lack of availability of parts and/or labor, increased prices as a result, in part, of inflation, and delays for data center equipment; labor disputes and work stoppages, including interruptions in work due to pandemics, epidemics, and other health risks; unanticipated environmental issues and geological problems; delays related to permitting and approvals to commence operations from public agencies and utility companies; and delays in site readiness leading to our failure to meet commitments made in connection with such expansion.
Our bitcoin mining operations require a substantial amount of power and can only be successful, and ultimately profitable, if the costs we incur, including for electricity, are lower than the revenue we generate from our operations.
Our bitcoin mining and HPC data center operations require a substantial amount of power and can only be successful, and ultimately profitable, if the costs we incur, including for electricity, are lower than the revenue we generate from our operations.
We may not be able to obtain additional debt or equity financing on favorable terms, if at all, which could impair our growth and adversely impact our existing operations. In 2022 and 2023, a number of digital asset platforms and exchanges filed for bankruptcy and/or became the subjects of investigation by various governmental agencies for, among other things, fraud.
We may not be able to obtain additional debt or equity financing on favorable terms, if at all, which could impair our growth and adversely impact our existing operations. From 2022 through 2024, a number of digital asset platforms and exchanges filed for bankruptcy and/or became the subjects of investigation by various governmental agencies for, among other things, fraud.
As a result, any mining facility we establish can only be successful if we can obtain sufficient electrical power for that facility on a cost-effective basis, and our establishment of new facilities requires us to find locations where that is the case.
As a result, any bitcoin mining and HPC data center facility we establish can only be successful if we can obtain sufficient electrical power for that facility on a cost-effective basis, and our establishment of new facilities requires us to find locations where that is the case.
The next halving for the bitcoin blockchain is currently anticipated to occur in April 2024. While bitcoin prices have historically increased around these halving events, there is no guarantee that the price change will be favorable or would compensate for the reduction in mining rewards.
The next halving for the bitcoin blockchain is currently anticipated to occur in March 2028. While bitcoin prices have historically increased around these halving events, there is no guarantee that the price change will be favorable or would compensate for the reduction in mining rewards.
In 2022 and 2023, a number of digital asset exchanges filed for bankruptcy proceedings and/or became the subjects of investigation by various governmental agencies for, among other things, fraud, causing a loss of confidence and an increase in negative publicity for the digital asset ecosystem.
From 2022 through 2024, a number of digital asset exchanges filed for bankruptcy proceedings and/or became the subjects of investigation by various governmental agencies for, among other things, fraud, causing a loss of confidence and an increase in negative publicity for the digital asset ecosystem.
In general, less stringent markets are perceived to have a higher risk of fraud or manipulation and any lack of oversight or perceived lack of transparency could reduce confidence in the price of bitcoin and other cryptocurrencies, which could adversely affect the price of bitcoin. As discussed in Item 1.
In general, less stringent markets are perceived to have a higher risk of fraud or manipulation and any lack of oversight or perceived lack of transparency could reduce confidence in the price of bitcoin and other cryptocurrencies, which could adversely affect the price of bitcoin.
Bitcoin is subject to price volatility resulting from financial instability, poor business practices, and fraudulent activities of players in the broader cryptocurrency market.
Bitcoin is subject to price volatility 15 Table of Contents resulting from financial instability, poor business practices, and fraudulent activities of players in the broader cryptocurrency market.
This request was subsequently withdrawn by the EIA; however, it is possible that mandatory surveys such as this will be used by the EIA to generate negative reports regarding the bitcoin mining industry’s use of power and other resources, which could spur additional negative public sentiment and adverse legislative and regulatory action against us or the bitcoin mining industry as a whole.
This request was subsequently withdrawn by the EIA; however, it is possible that mandatory surveys such as this will be used by the EIA to generate negative reports regarding the bitcoin mining and HPC data center industries’ use of power and other resources, which could spur additional negative public sentiment and adverse legislative and regulatory action against us or the bitcoin mining and HPC data center industries as a whole.
Our operations require a significant amount of electrical power and access to high-speed internet to be successful. If we are unable to secure sufficient electrical power, or if we lose internet access for a prolonged period, we may be required to reduce our operations or cease them altogether.
Our bitcoin mining and HPC data center operations require a significant amount of electrical power and access to high-speed internet to be successful. If we are unable to secure sufficient electrical power, or if we lose internet access for a prolonged period, we may be required to reduce our operations or cease them altogether.
“Business—Regulation” of this Annual Report, bitcoin and crypto asset markets generally may be subject to increased scrutiny and regulation by the U.S. legislature and government agencies, and such evolving regulatory and legal environment may impact our bitcoin mining activities and therefore an impact on our business.
Bitcoin and crypto asset markets generally may be subject to increased scrutiny and regulation by the U.S. legislature and government agencies, and such evolving regulatory and legal environment may impact our bitcoin mining activities and therefore an impact on our business.
If we are unable to acquire enough new miners or access sufficient capital to fund our acquisitions, the results of our operations and financial condition could be adversely affected, as could investments in our securities. We expect the cost of acquiring new miners to continue to be affected by the ongoing global supply chain crisis.
If we are unable to acquire enough new miners or access sufficient capital to fund our acquisitions, the results of our operations and financial condition could be adversely affected, as could investments in our securities. 10 Table of Contents We expect the cost of acquiring new miners and other digital infrastructure equipment to continue to be affected by ongoing challenges to the global supply chain.
Expansion of our Lake Mariner Facility and Nautilus Cryptomine Facility potentially exposes us to additional risks.
Expansion of our Lake Mariner Facility potentially exposes us to additional risks.
Companies across many industries are facing increasing scrutiny related to their ESG practices. Investor advocacy groups, certain institutional investors, investment funds and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the non-financial impacts of their investments.
Investor advocacy groups, certain institutional investors, investment funds and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the non-financial impacts of their investments.
If we are unable to complete our planned expansions on schedule and within our anticipated cost estimates, our deployment of newly purchased miners may be delayed, which could affect our competitiveness and our results of operation, which could have a material adverse effect on our financial condition and the market price for our securities . 9 Table of Contents We may be unable to access sufficient additional capital for future strategic growth initiatives.
If we are unable to complete our planned expansions on schedule and within our anticipated cost estimates, our deployment of newly purchased miners may be delayed, which could affect our competitiveness and our results of operation, which could have a material adverse effect on our financial condition and the market price for our securities.
While our present expansion projects are proceeding on track with our expectations, we cannot guarantee we will complete these expansions (or any future strategic growth initiatives) on time or within our cost estimates, if at all, due in part to the ongoing effects of the global supply chain crisis related to macroeconomic effects of COVID-19, increased inflation and changing conditions within the United States labor market.
While our present expansion projects are proceeding on track with our expectations, we cannot guarantee we will complete these expansions (or any future strategic growth initiatives) on time or within our cost estimates, if at all, due in part to the ongoing challenges to the global supply chain, the implementation of new tariffs and more restrictive trade policies, increased inflation and changing conditions within the United States labor market.
While this treatment creates a potential tax reporting requirement for any circumstance where the ownership of a bitcoin passes from one person to another, usually by means of bitcoin transactions (including off- 21 Table of Contents blockchain transactions), it would also apply capital gains treatment to those transactions which may adversely affect the Company’s business, financial condition and results of operations.
While this treatment creates a potential tax reporting requirement for any circumstance where the ownership of a bitcoin passes from one person to another, usually by means of bitcoin transactions (including off-blockchain transactions), it would also apply capital gains treatment to those transactions which may adversely affect the Company’s business, financial condition and results of operations. 23 Table of Contents Risks Related to Ownership of Our Common Stock The trading price of shares of our common stock has been subject to volatility.
If we are unable to overcome these risks and additional pressures to complete our expansion and construction projects in a timely manner, if at all, we may not realize their anticipated benefits, and our business and financial condition may suffer as a result.
If we are unable to overcome these risks and additional pressures to complete our expansion and construction projects in a timely manner, if at all, we may not realize their anticipated benefits, and our business and financial condition may suffer as a result. Economic and geopolitical events and macroeconomic conditions may create increased uncertainty and price changes.
Failure to successfully integrate acquired businesses could negatively impact our balance sheet and results of operations. Strategic acquisitions and/or combinations are a component of our growth strategy and the success of any acquisition we make depends in part on our ability to integrate the acquired business and realize anticipated synergies.
Strategic acquisitions and/or combinations are a component of our growth strategy and the success of any acquisition we make depends in part on our ability to integrate the acquired business and realize anticipated synergies.
Any of the foregoing could result in a material adverse effect on our business and financial condition. We are subject to a highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our business, reputation, prospects or operations.
We are subject to a highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our business, reputation, prospects or operations.
For example, we may encounter challenges in the integration process such as: difficulties associated with managing the resulting larger and more complex company; conforming administrative and corporate structures and standards, controls, procedures and policies, business cultures, hiring and retention of key employees, and compensation and benefits structures, coordinating geographically dispersed operations; and our ability to deliver on our strategy going forward.
Integrating acquired businesses may involve unforeseen difficulties, may require a disproportionate amount of our management’s attention, and may require us to reallocate our resources, financial or otherwise. 13 Table of Contents For example, we may encounter challenges in the integration process such as: difficulties associated with managing the resulting larger and more complex company; conforming administrative and corporate structures and standards, controls, procedures and policies, business cultures, hiring and retention of key employees, and compensation and benefits structures, coordinating geographically dispersed operations; and our ability to deliver on our strategy going forward.
Our primary business is bitcoin mining, and we have recorded historical losses and negative cash flows from our operations when the value of bitcoin we mine does not exceed our associated costs. Further, as part of our strategic growth plans, we have made capital investments in expanding our bitcoin mining operations.
Our primary business is bitcoin mining, and we have recorded historical losses and negative cash flows from our operations when the value of bitcoin we mine does not exceed our associated costs.
As bitcoin has grown in popularity and in market size, the U.S. regulatory regime – namely the Federal Reserve Board, U.S. Congress and certain U.S. agencies (e.g., the SEC, the CFTC, FinCEN and the Federal Bureau of Investigation have begun to examine the operations of the bitcoin network, bitcoin users and the bitcoin exchange market.
Congress and certain U.S. agencies (e.g., the SEC, the CFTC, FinCEN and the Federal Bureau of Investigation have begun to examine the operations of the bitcoin network, bitcoin users and the bitcoin exchange market.
We currently do not have a back-up pool provider, so if Foundry were to cease operations, there would be some delay and consequently lost revenue until we retained a new pool provider and pointed our miners at the new pool provider, 15 Table of Contents which we would do by using a mass command issued by our management software.
If Foundry were to cease operations, there would be some delay and consequently lost revenue until we pointed our miners at our backup pool provider, which we would do by using a mass command issued with our management software.
Adverse changes to, or our failure to comply with, any laws and regulations may have an adverse effect on our reputation and brand and our business, operating results, and financial condition.
Adverse changes to, or our failure to comply with, any laws and regulations may have an adverse effect on our reputation and brand and our business, operating results, and financial condition. The compliance costs of responding to new and changing regulations could adversely affect our operations.
The expansion of our miner fleet and expansion of our existing mining facilities are capital-intensive projects, and we anticipate that future strategic growth initiatives will likewise continue to be capital-intensive.
We may be unable to access sufficient additional capital for future strategic growth initiatives. The expansion of our miner fleet, our existing mining facilities and our digital infrastructure to support HPC hosting and colocation are capital-intensive projects, and we anticipate that future strategic growth initiatives will likewise continue to be capital-intensive.
Ultimately, we continue to monitor macroeconomic conditions to remain flexible and to optimize and evolve our business as appropriate, and we will have to accurately project demand and infrastructure requirements globally and deploy our workforce and capital resources accordingly.
We cannot predict the duration or direction of current or new global trends or their sustained impact. Ultimately, we continue to monitor macroeconomic conditions to remain flexible and to optimize and evolve our business as appropriate, and we will have to accurately project demand and infrastructure requirements globally and deploy our workforce and capital resources accordingly.
Mining pools allow miners to combine their processing power, increasing their chances of solving a block and getting paid by the network. The rewards are distributed by the pool operator, proportionally to our contribution to the pool’s overall mining power, after deducting the applicable pool fee, if any, used to solve a block on the bitcoin blockchain.
The rewards are distributed by the pool operator, proportionally to our contribution to the pool’s overall mining power, after deducting the applicable pool fee, if any, used to solve a block on the bitcoin blockchain.
Because a miner’s relative chance of successfully solving a block and earning a new bitcoin reward is generally a function of the ratio of the miner’s individual hash rate relative to the global network hash rate, as the global network hash rate increases, a miner must increase its individual hash rate to maintain its chances of earning new bitcoin rewards.
Because a miner’s relative chance of successfully solving a block and earning a new bitcoin reward is generally a function of the ratio of the miner’s individual hash rate relative to the global network hash rate, as the global network hash rate increases, a miner must increase its individual hash rate to maintain its chances of earning new bitcoin rewards. 16 Table of Contents Therefore, as new miners enter the industry and as miners deploy greater numbers of increasingly powerful machines, existing miners must seek to continually increase their hash rate to remain competitive.
Ongoing and future regulation and regulatory actions could significantly restrict or eliminate the market for or uses of bitcoin and/or may adversely affect the Company’s business, reputation, financial condition and results of operations. The compliance costs of responding to new and changing regulations could adversely affect our operations.
Ongoing and future regulation and regulatory actions could also significantly restrict or eliminate the market for or uses of bitcoin and/or may adversely affect the Company’s business, reputation, financial condition and results of operations. Moreover, new laws, regulations, or interpretations may result in additional litigation, regulatory investigations, and enforcement or other actions.
Risks Related to Our Business If we fail to increase our hash rate, we may be unable to compete, and our results of operations could suffer.
A failure to success implement our HPC business strategy may adversely affect our business, prospects, or operations. If we fail to increase our hash rate, we may be unable to compete, and our results of operations could suffer.
Many digital asset exchanges do not provide the public with significant information regarding their ownership structure, management teams, corporate practices, or regulatory compliance. As a result, the marketplace may lose confidence in, or may experience problems relating to, such digital asset exchanges, including prominent exchanges handling a significant portion of the volume of digital asset trading.
As a result, the marketplace may lose confidence in, or may experience problems relating to, such digital asset exchanges, including prominent exchanges handling a significant portion of the volume of digital asset trading.
To the extent we have not complied with such laws, rules, and regulations, we could be subject to significant fines, revocation of licenses, limitations on our products and services, reputational harm, and other regulatory consequences, each of which may be significant and could adversely affect our business, operating results, and financial condition.
To the extent we have not complied with such laws, rules, and regulations, we could be subject to significant fines, revocation of licenses, limitations on our products and services, reputational harm, and other regulatory consequences, each of which may be significant and could adversely affect our business, operating results, and financial condition. 21 Table of Contents Potentially increasing regulation and regulatory scrutiny may result in new costs for the Company and Company’s management having to devote increased time and attention to regulatory matters, change aspects of the Company’s business or result in limits on the utility of bitcoin.
We are subject to price volatility and uncertainty due to geopolitical crises and economic downturns. Such geopolitical crises and global economic downturns may be a result of invasion, or possible invasion by one nation of another, leading to increased inflation and supply chain volatility.
Such geopolitical crises and global economic downturns may be a result of invasion, or possible invasion by one nation of another, global outbreaks of various epidemics or disease, the implementation of new tariffs and more restrictive trade regulations, leading to increased inflation and supply chain volatility.
The Company does not hold its digital assets with a banking institution or a member of the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection Corporation (“SIPC”) and, therefore, its digital assets are not subject to the protections enjoyed by depositors with FDIC or SIPC member institutions. 17 Table of Contents Increased scrutiny and changing expectations from stakeholders with respect to our environmental, social, and governance (ESG) practices and the impacts of climate change may result in additional costs or risks.
The Company does not hold its digital assets with a banking institution or a member of the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection Corporation (“SIPC”) and, therefore, its digital assets are not subject to the protections enjoyed by depositors with FDIC or SIPC member institutions.
Moreover, because there are very few manufacturers of miners capable of producing a sufficient number of miners of adequate quality to meet this need, scarcity results, leading to higher prices.
Moreover, because there are very few manufacturers of miners capable of producing a sufficient number of miners of adequate quality to meet this need, scarcity results, leading to higher prices. Compounding this phenomenon, it has been observed that some manufacturers of bitcoin miners may increase the prices for new miners as the market price of bitcoin increases.
However, as a 95% zero-carbon bitcoin miner, we believe we are advantageously positioned relative to our competitors in this regard. Further, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change or energy use by us or other companies in our industry could harm our reputation.
Further, even without such regulation, increased awareness and any adverse publicity in the global marketplace about potential impacts on climate change or energy use by us or other companies in our industry could harm our reputation. Any of the foregoing could result in a material adverse effect on our business and financial condition.
Increasingly strict legal and regulatory requirements and any regulatory investigations and enforcement may result in changes to our business, as well as increased costs, and supervision and examination for ourselves and our service providers. Moreover, new laws, regulations, or interpretations may result in additional litigation, regulatory investigations, and enforcement or other actions.
In addition, regulatory developments and/or the Company’s business activities may require the Company to comply with certain regulatory regimes. Increasingly strict legal and regulatory requirements and any regulatory investigations and enforcement may result in changes to our business, as well as increased costs, and supervision and examination for ourselves and our service providers.
Sustaining our growth plans will require the ongoing readiness and solvency of our suppliers and vendors, a stable and motivated production workforce, and government cooperation, each of which may be affected by macroeconomic factors outside of our immediate control. We cannot predict the duration or direction of current or new global trends or their sustained impact.
Such shifts could have a materially adverse effect on our business, operations and the value of the bitcoin we mine. 11 Table of Contents Sustaining our growth plans will require the ongoing readiness and solvency of our suppliers and vendors, a stable and motivated production workforce, and government cooperation, each of which may be affected by macroeconomic factors outside of our immediate control.
Until recently, relatively little regulatory attention has been directed toward bitcoin and the bitcoin network by U.S. federal and state governments, foreign governments and self-regulatory agencies. We currently only operate in the United States, and do not currently have any plans to expand our operations beyond the United States.
We currently only operate in the United States, and do not currently have any plans to expand our operations beyond the United States. As bitcoin has grown in popularity and in market size, the U.S. regulatory regime, namely the Federal Reserve Board, U.S.
The Company believes that since cryptocurrency mining, and the digital asset industry generally, is a relatively new business sector, it is more likely subject to government investigation and regulatory determination, particularly following the recent cryptocurrency market participant bankruptcies described elsewhere herein.
The size, nature and complexity of the Company’s business could make it susceptible to various claims, both in litigation and binding arbitration proceedings, legal proceedings, and government investigations. The Company believes that since cryptocurrency mining, and the digital asset industry generally, is a relatively new business sector, it is more likely subject to government investigation and regulatory determination.
Similarly, the ongoing global supply chain crisis, coupled with increased demand for computer chips, has created a shortfall of semiconductors, resulting in challenges for the supply chain and production of the miners we employ in our bitcoin mining operations.
Similarly, ongoing challenges to the global supply chain, coupled with increased demand for computer chips and semiconductors and resulting shortages, have resulted in production cost increases affecting the miners we employ in our bitcoin mining operations and other digital infrastructure equipment for our data centers, and their manufacturers have passed on increased production costs to purchasers like us.
Our operations may involve the use of hazardous substances and materials, such as petroleum fuel for temporary generators, as well as batteries, cleaning solutions, and other materials.
Our operations may involve the use of hazardous substances and materials, such as petroleum fuel for temporary generators, as well as batteries, cleaning solutions, and other materials. The course of future legislation and regulation in the United States remains difficult to predict, and potential increased costs associated with new legislation or regulation cannot be estimated at this time.
We may not be able to timely complete our future strategic growth initiatives or within our anticipated cost estimates, if at all.
Therefore, we expect to continue to incur higher than usual costs to obtain and deploy new miners and other digital infrastructure equipment, which could adversely affect our financial condition and results of operations. We may not be able to timely complete our future strategic growth initiatives or within our anticipated cost estimates, if at all.
However, as a 95% zero-carbon bitcoin miner, we believe we are advantageously positioned relative to our competitors in this regard. Risks Related to Governmental Regulation and Enforcement Changing environmental regulation and public energy policy may expose our business to new risks.
However, as a predominantly zero-carbon bitcoin miner, we believe we are advantageously positioned relative to our competitors in this regard. We are currently making considerable investments in our information technology systems and processes. Difficulties from or disruptions to these efforts may interrupt our normal operations and adversely affect our business and results of operations.
Removed
The miners are highly specialized servers built around ASIC chips, which very few manufacturers are able to produce in sufficient scale and quality to suit our operations. As a result, the cost to produce these miners has increased, and their manufacturers have passed on increased costs of production to purchasers like us.
Added
Risks Related to Our Business Our HPC business strategy may not perform as planned. We believe the potential for HPC hosting complements our current business model with expected stable, long-term and high margin revenue.
Removed
Therefore, until the global supply chain crisis is resolved, and these extraordinary pressures are alleviated, we expect to continue to incur higher than usual costs to obtain and deploy new miners, which could adversely affect our financial condition and results of operations.
Added
We also believe that using our existing infrastructure for HPC customers provides more consistent dollar-based revenue and substantially less risk than our traditional bitcoin mining customers or our bitcoin self-mining operations.
Removed
Since the operation and expansion of the Nautilus Cryptomine Facility is subject to the terms of a joint venture agreement, TeraWulf may have less control over strategic decisions. On March 23, 2023, TeraWulf (Thales) LLC (“Thales”), a wholly owned subsidiary of the Company, entered into a second amended and restated joint venture agreement for Nautilus with an affiliate of Talen.
Added
However, the success of our HPC hosting services may not develop as anticipated, and may be affected by factors such as the reliability and timing of power supply, supply chain disruption (including local labor availability), the implementation of new tariffs and more restrictive trade regulations and changes in in-house specialized expertise to manage the business.
Removed
The Nautilus joint venture agreement provides that, except for certain specified matters, decisions are to be made by a majority vote of the board of managers. The board of managers is comprised of one manager appointed by Thales and four managers appointed by Talen.
Added
We are subject to price volatility and uncertainty due to geopolitical crises and economic downturns.
Removed
Any significant disagreements between partners on strategic decisions or the inability of the Talen affiliate to meet obligations to Nautilus or third parties may impede the Company’s ability to control aspects of the ongoing operation and future expansion of the Nautilus Cryptomine Facility. Economic and geopolitical events may create increased uncertainty and price changes.
Added
Enhanced tariff, import/export restrictions, or other trade barriers may have an adverse impact on global economic conditions. There have been, and continue to be, uncertainties with respect to the global economy and trade relations between the U.S. and other countries globally, including trade policies, treaties, tariffs, and customs duties and taxes.
Removed
Such shifts could have a materially adverse effect on our business, operations and the value of the bitcoin we mine. We may be impacted by macroeconomic conditions due to global pandemics, epidemics or outbreaks of disease and the resulting global supply chain crisis.
Added
Implementation of more restrictive trade policies or the renegotiation of existing U.S. trade agreements or trade agreements of other countries where we procure supplies and materials for our digital infrastructure could negatively impact our business results of operations, cash flows, and financial condition.
Removed
Global trade conditions and consumer trends that originated during the COVID-19 pandemic continue to persist and may also have long-lasting adverse impact on us and our industry.
Added
Tariffs, sanctions and other barriers to trade could adversely affect the business of our customers and suppliers, which could in turn negatively impact our net revenue and results of operations.
Removed
There are continued risks arising from new pandemics, epidemics or outbreaks of disease, and ongoing COVID-19 related issues which have exacerbated port congestion and intermittent supplier shutdowns and delays, resulting in additional expenses to expedite delivery of new miners, as well as critical materials needed for our expansion plans.
Added
If tariffs, trade restrictions or trade barriers are expanded or increased, then our exposure to future taxes and duties on imported products and components could be significant and could have a material effect on our financial results.
Removed
Further, miner manufacturers have been impacted by the constrained supply of the semiconductors used in the production of the highly specialized ASIC chips miners we rely on, and by increased labor costs to manufacture new miners as workforces and global supply chains continue to be affected 10 Table of Contents by COVID-19 and may further be impacted by global outbreaks of various epidemics or disease, ultimately leading to continually higher prices for new miners.
Added
We cannot predict the extent to which the U.S. or other countries will impose new or additional quotas, duties, tariffs, taxes, or other similar restrictions upon the import of goods and services in the future, nor can we predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business.
Removed
Thus, until the global supply chain crisis is resolved, and these extraordinary pressures are alleviated, we expect to continue to incur higher than usual costs to obtain and deploy new miners, and we may face difficulties obtaining the new miners we need at prices or in quantities we find acceptable, if at all, and our business and results of operations may suffer as a result.
Added
The continuing adoption or expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our HPC data centers, our costs, our customers, our suppliers, and the U.S. economy, which in turn could have a material adverse effect on our business, operating results, and financial condition.
Removed
In addition, labor shortages that have persisted since the COVID-19 pandemic and those arising from any new pandemics, epidemics or outbreaks of disease may lead to increased labor costs and difficulty in hiring and retaining the highly qualified and motivated people we need to conduct our business and execute on our strategic growth initiatives.
Added
We may be harmed by increased costs to procure power, prolonged power outages, shortages or capacity constraints as well as insufficient access to power. Any power outages, shortages, capacity constraints or significant increases in the cost of power may have an adverse effect on our business and our results of operations.
Removed
Integrating acquired businesses may involve unforeseen difficulties, may require a disproportionate amount of our management’s attention, and may require us to reallocate our resources, financial or otherwise.
Added
We rely on third parties, third party infrastructure, governments, and global supplies to provide a sufficient amount of power to maintain our bitcoin mining and HPC data center operations to meet the needs of our current and future HPC hosting and colocation customers.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+2 added−1 removed9 unchanged
Biggest changeSee “Risk Factors - Cyberattacks, data breaches or malware may disrupt our operations and trigger significant liability for us, which could harm our operating results and financial condition, and damage our reputation or otherwise materially harm our business.” 23 Table of Contents Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and oversees management’s implementation of our cybersecurity risk management program.
Biggest changeSee “Risk Factors - Cyberattacks, data breaches or malware may disrupt our operations and trigger significant liability for us, which could harm our operating results and financial condition, and damage our reputation or otherwise materially harm our business.” Cybersecurity Governance Our Board considers cybersecurity risk as part of its risk oversight function and oversees management’s implementation of our cybersecurity risk management program. 25 Table of Contents The Board receives periodic reports from management on our cybersecurity risks.
In addition, we have newly formed a multifunctional cybersecurity committee comprised of information technology, operations, risk, and finance members who will meet quarterly to assess new vulnerabilities and threats, update risk assessments and assess the implementation of the Company’s cybersecurity risk management program. This committee will report periodically to the management team on matters involving cybersecurity risks and incidents.
In addition, we have a multifunctional cybersecurity committee comprised of information technology, operations, risk, and finance members who will meet quarterly to assess new vulnerabilities and threats, update risk assessments and assess the implementation of the Company’s cybersecurity risk management program. This committee will report periodically to the management team on matters involving cybersecurity risks and incidents.
The Board receives regular reports from management on our cybersecurity risks. In addition, management updates the Board, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential. The Board also receives briefings from management on our cyber risk management program.
In addition, management updates the Board, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential. The Board also receives briefings from management on our cyber risk management program.
Our approach to controls and risk management is based on guidance from the National Institute of Standards and Technology (“NIST”). This does not mean that we meet any particular technical standards, specifications, or requirements, but rather that we use the NIST framework as a guide to help us identify, assess, and manage cybersecurity controls and risks relevant to our business.
Our approach to controls and risk management is based on guidance from the National Institute of Standards and Technology (“NIST”). This does not mean that we meet any particular technical standards, specifications, or requirements, but rather that we use NIST frameworks, guidance and recommendations to help us identify, assess, and manage cybersecurity controls and risks relevant to our business.
Removed
Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the information technology environment.
Added
Our Vice President of Information Technology also serves as our Chief Information Security Officer and is responsible for managing and implementing the Company’s Information Security and Cybersecurity policy, which can be found on the Company’s website.
Added
In addition, the Vice President of Information Technology sets company-wide control requirements, assesses adherence to controls, identifies and prioritizes cybersecurity risks, and oversees incident protection and response. The Vice President of Information Technology has over three decades of Information Technology experience overseeing cybersecurity as an integral part of the IT function.

Item 2. Properties

Properties — owned and leased real estate

6 edited+4 added−3 removed0 unchanged
Biggest changeLocated on an expansive site on the shores of Lake Ontario adjacent to the now decommissioned coal-fired power plant in Barker, New York, the Lake Mariner Facility began sustainably mining bitcoin in March 2022.
Biggest changeLake Mariner Facility TeraWulf owns and operates the Lake Mariner Facility, a high-performance digital infrastructure campus located in Barker, New York, on the site of a former coal-fired power plant. The facility began sustainably mining bitcoin in March 2022 and, as of December 31, 2024, has approximately 195 MW of operational mining capacity.
On March 1, 2024, Cumulus Data sold substantially all its assets to an unaffiliated third party, including the land leased to Nautilus 24 Table of Contents pursuant to the Nautilus ground lease. In connection with the asset sale, the Nautilus ground lease was assigned to the purchaser of the assets with no changes to its terms and conditions.
On March 1, 2024, Cumulus Data sold substantially all its assets to an unaffiliated third party, including the land leased to Nautilus under the ground lease. In connection with the asset sale, the Nautilus ground lease was assigned to the purchaser of the assets, with no changes to its terms and conditions.
Since January 1, 2023, the use of TeraWulf’s corporate offices is covered by the base fee under the Amendment No. 1 to the Services Agreement (as amended, the “Services Agreement”). TeraWulf considers its current office space adequate for its current operations.
Since January 1, 2023, the use of TeraWulf’s corporate offices has been covered under the base fee outlined in Amendment No. 1 to the Services Agreement (as amended, the “Services Agreement”). The Company considers its current office space adequate for its existing operations.
ITEM 2. Properties Corporate Headquarters TeraWulf maintains its principal corporate offices in Easton, Maryland and New York, New York. Beowulf Electricity & Data Inc. (“Beowulf E&D”), a company controlled by TeraWulf’s CEO, provides TeraWulf with the office space at these locations in accordance with the terms of an Administrative and Infrastructure Services Agreement, dated as of April 27, 2021.
ITEM 2. Properties Corporate Headquarters TeraWulf maintains its principal corporate offices in Easton, Maryland and New York, New York. Office space at these locations is provided by Beowulf E&D, a company controlled by TeraWulf’s CEO, under an Administrative and Infrastructure Services Agreement dated April 27, 2021.
Nautilus Cryptomine Facility Nautilus has entered into a ground lease with Cumulus Data LLC (“Cumulus Data”), an affiliate of Talen, pursuant to which Nautilus leases from Susquehanna Data LLC the site of the Nautilus Cryptomine Facility for an initial term of five years with two three-year extension options and option to extend the term by an interim period of up to six and one half months after the first three-year extension.
The facility was operated under a ground lease agreement between Nautilus and Cumulus Data LLC (“Cumulus Data”), an affiliate of Talen Energy Corporation. The lease covered the site of the Nautilus Cryptomine Facility for an initial five-year term, with two three-year extension options and an additional interim extension option of up to six and a half months.
On February 28, 2024, the Company exercised its option to increase its energy requirement at the Nautilus Cryptomine Facility by an incremental 50 MW (for a total of 100 MW attributable to TeraWulf).
TeraWulf began mining bitcoin at the Nautilus Cryptomine Facility in Q1 2023, with 50 MW of operational capacity as of December 31, 2024. On February 28, 2024, the Company exercised its option to increase its energy allocation by an additional 50 MW, bringing its total attributable capacity to 100 MW.
Removed
Lake Mariner Facility Lake Mariner has entered into a lease agreement with Somerset Operating Company, LLC (“Somerset”), a company controlled by TeraWulf’s CEO, pursuant to which Lake Mariner leases from Somerset approximately 79 acres in Niagara County, New York for an initial term of eight years with a five-year extension option.
Added
The site is designed for scalable expansion, with the ability to increase capacity up to 500 MW in the near term and potentially 750 MW with targeted transmission upgrades. The Lake Mariner Facility operates under a lease agreement with Somerset Operating Company, LLC (“Somerset”), a company controlled by TeraWulf’s CEO.
Removed
The Lake Mariner Facility is operating approximately 160 MW of bitcoin mining capacity at the site as of December 31, 2023 and has the ability to scale up to 500 MW of capacity.
Added
Under the agreement, Lake Mariner leases approximately 157 acres in Niagara County, New York, for an initial term of 35 years which automatically renews for up to nine additional periods of five years each, unless Lake Mariner provides written notice to Somerset to terminate the lease at least six months prior to the expiration of the initial term or the then-current renewal term, as applicable.
Removed
TeraWulf began mining bitcoin at the Nautilus Cryptomine Facility in the first quarter of 2023 and, as of December 31, 2023, had 50 MW of operational bitcoin mining capacity at the Nautilus Cryptomine Facility.
Added
The Lake Mariner site’s strategic location provides access to low-cost, predominantly zero-carbon power, making it an optimal hub for both bitcoin mining and HPC hosting operations. 26 Table of Contents Nautilus Cryptomine Facility Prior to divesting its interest, TeraWulf operated bitcoin mining activities at the Nautilus Cryptomine Facility, located in Berwick, Pennsylvania.
Added
Subsequently, on October 2, 2024, TeraWulf sold its entire 25% equity interest in Nautilus to Cumulus Coin LLC, allowing the Company to reallocate capital toward the expansion of its wholly owned digital infrastructure at Lake Mariner and its high-performance computing strategy.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeTeraWulf is not subject to any material pending legal and administrative proceedings, lawsuits or claims as of the date of this Annual Report. TeraWulf’s business and operations are also subject to extensive regulation, which may result in regulatory proceedings against TeraWulf. ITEM 4. Mine Safety Disclosures Not applicable. 25 Table of Contents PART II
Biggest changeTeraWulf is not subject to any material pending legal and administrative proceedings, lawsuits or claims as of the date of this Annual Report. TeraWulf’s business and operations are also subject to extensive regulation, which may result in regulatory proceedings against TeraWulf. ITEM 4. Mine Safety Disclosures Not applicable. 27 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+2 added−26 removed2 unchanged
Biggest changeITEM 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for the Registrant’s Common Equity Our common stock is listed on The Nasdaq Stock Market LLC (the “Nasdaq”) under the symbol “WULF.” As of December 31, 2023, there were 44 registered owners of our common stock.
Biggest changeITEM 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for the Registrant’s Common Equity Our common stock is listed on the Nasdaq under the symbol “WULF.” As of February 26, 2025, there were 63 registered owners of our common stock.
Dividends We did not declare or pay any cash dividends on our common stock during 2023. We do not currently intend to pay dividends on our common stock and we intend to retain our future earnings, if any, to fund the development and growth of our business.
Dividends We did not declare or pay any cash dividends on our common stock during 2024. We do not currently intend to pay dividends on our common stock and we intend to retain our future earnings, if any, to fund the development and growth of our business.
Removed
Issuer Purchases of Equity Securities There were no purchases of our common stock by the Company during the year ended December 31, 2023.
Added
Issuer Purchases of Equity Securities On October 23, 2024, the Company announced that the Company’s board of directors approved a share repurchase program authorizing the Company to repurchase up to $200.0 million of the Company’s outstanding shares of Common Stock through December 31, 2025.
Removed
Unregistered Sale of Equity Securities October 2022 Private Placement On October 6, 2022, the Company entered into (a) subscription agreements (the “October Subscription Agreements”) with certain accredited investors (the “October Investors”) pursuant to which such October Investors purchased from the Company units (the “October Units”) consisting of: (i) 7,481,747 shares of common stock (the “October Shares”) and (2) warrants (the “October Private Placement Warrants”) exercisable for 7,481,747 shares of common stock (such shares, the “October Private Placement Warrant Shares”) in a private placement transaction exempt from registration under Section 4(a)(2) and/or Regulation D under the Securities Act and (b) a warrant agreement (the “October Private Placement Warrant Agreement) governing the terms and conditions of the October Private Placement Warrants.
Added
During the fourth quarter of 2024, the Company repurchased shares of Common Stock as follows: Period (a) Total number of shares purchased (b) Average price paid per share (c) Total number of shares purchased as part of publicly announced program (d) Maximum dollar value of shares that may yet be purchased under the program October 1 through October 31, 2024 17,968,750 $ 6.4000 17,968,750 $ 85,000,000 November 1 through November 30, 2024 — — — 85,000,000 December 1 through December 31, 2024 600,000 5.3424 600,000 81,794,560 Total 18,568,750 $ 6.3658 18,568,750 $ 81,794,560 Unregistered Sale of Equity Securities There have been no sales of unregistered securities by the Company during the year ended December 31, 2024, except as previously disclosed on Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Removed
Upon closing of the private placement transaction on October 6, 2022, the October Units separated into the October Shares and the October Private Placement Warrants. On January 30, 2023, certain of the October Investors agreed to amend the terms of their warrants such that their warrants would become exercisable only after February 23, 2023.
Removed
All warrants under the October Private Placement Warrant Agreement remain outstanding. In connection with the signing of the October Subscription Agreements, the Company and the October Investors entered into a Registration Rights Agreement, dated as of October 6, 2022, pursuant to which the Company agreed to provide customary registration rights to the October Investors.
Removed
October 2022 Lender Warrants On October 7, 2022, the Company entered into an amendment and restatement of that certain warrant agreement, dated July 1, 2022, by and among the Company and the holders party thereto (such amended agreement, the “Amended and Restated Warrant Agreement”) pursuant to which the Company issued to its lenders under the LGSA warrants exercisable for 2,667,678 shares of common stock exercisable at an exercise price equal to $0.01 per share of common stock in a private placement transaction exempt from registration under Section 4(a)(2) and/or Regulation D of the Securities Act.
Removed
The Amended and Restated Warrant Agreement provided for the immediate exercisability of the lender warrants which were all exercised between October 3, 2022 and September 18, 2023. 26 Table of Contents December 2022 Private Placement and January 2023 Private Placement On December 12, 2022, the Company entered into (a) subscription agreements with certain accredited investors (the “December Investors”) pursuant to which the Company issued to certain of the December Investors, 4,375,000 shares of common stock (the “December Private Placement Warrant Shares”) issuable upon exercise of 5,625,000 warrants (the “December Private Placement Warrants”) which are exercisable at an exercise price equal to $0.40 per share of common stock in a private placement transaction exempt from registration under Section 4(a)(2) and/or Regulation D under the Securities Act and (b) a warrant agreement (the “December Private Placement Warrant Agreement”) governing the terms and conditions of the December Private Placement Warrants.
Removed
The December Private Placement Warrants became exercisable on January 16, 2023; 50% of the December Private Placement Warrants were exercised in January 2023; the remaining 50% of the December Private Placement Warrants expired on January 31, 2023.
Removed
In connection with the signing of the December Private Placement Warrant Agreement, the Company and certain of the December Investors entered into a Registration Rights Agreement, dated as of December 12, 2022, pursuant to which the Company agreed to provide customary registration rights to such December Investors.
Removed
On January 30, 2023, the Company entered into additional subscription agreements with the December Investors pursuant to which such December Investors purchased 4,375,000 shares of Common Stock from the Company, at a purchase price of $0.40 per share of common stock, in private placement transactions exempt from registration under Section 4(a)(2) and/or Regulation D of the Securities Act for an aggregate purchase price of $1.75 million (the “January Private Placement”).
Removed
The January Private Placement closed on March 9, 2023. January 2023 Exchange Agreement In January 2023, the Company entered into an exchange agreement (the “Exchange Agreement”) with an entity controlled by by Mr. Prager (the “Exchanging Shareholder”).
Removed
Pursuant to the Exchange Agreement, the Exchanging Shareholder exchanged a total of 12,000,000 shares of Common Stock for 12,000,000 new warrants issued by the Company (the “New Exchange Warrants”) in a private exchange exempt from registration under Section 4(a)(2) and/or Regulation D o the Securities Act.
Removed
The New Exchange Warrants were exercisable at a strike price of $0.0001 per share beginning on the first business day following the date on which shareholder approval of an increase in the Company’s authorized Common Stock was obtained, which occurred on February 23, 2023.
Removed
The New Exchange Warrants were exercised, and 12,000,000 shares of Common Stock were issued in April 2023. The Exchanging Shareholder is entitled to customary registration rights with respect to the shares of common stock issuable upon exercise of the New Exchange Warrants.
Removed
Additional 2023 Private Placements Warrants On January 30, 2023, the Company entered into (a) subscription agreements (the “Warrant Subscription Agreements”) with certain accredited investors (the “Warrant Investors”) pursuant to which such Warrant Investors purchased from the Company warrants, each exercisable to purchase one share of the Company’s common stock, at an exercise price of $0.00001 per share of Common Stock (the “Warrants”), in private placement transactions exempt from registration under Section 4(a)(2) and/or Regulation D of the Securities Act, for an aggregate purchase price of $2.5 million, based on a price per share of common stock of $1.05 for a total of 2,380,952 shares of common stock and (b) warrant agreements (the “Warrant Agreements”) with governing the terms and conditions of the warrants, which became exercisable beginning on February 24, 2023 and were all exercised on March 13, 2023.
Removed
Pursuant to the Warrant Subscription Agreements, the Company agreed to provide customary registration rights to the Warrant Investors with respect to the common stock issuable upon conversion of the Warrants. The Warrant Subscription Agreements contain customary representations, warranties and covenants and are subject to customary closing conditions and termination rights.
Removed
Convertible Promissory Notes Amendment to Existing Convertible Promissory Notes On January 30, 2023, the Company entered into amendments to its convertible promissory notes (the “Existing Convertible Promissory Notes”), originally issued to certain accredited investors on November 25, 2022 and further amended on December 12, 2022, in privately negotiated transactions as part of a private placement exempt from 27 Table of Contents registration under Section 4(a)(2) and/or Regulation D of the Securities Act in, an aggregate principal amount of approximately $3.4 million.
Removed
The Existing Convertible Promissory Notes converted into shares of Common Stock on February 28, 2023 at a price of $0.40.
Removed
Entry into New Convertible Promissory Note On January 30, 2023, the Company entered into a new convertible promissory note (the “New Convertible Promissory Note”) to an accredited investor in a privately negotiated transaction as part of a private placement exempt from registration under Section 4(a)(2) and/or Regulation D of the Securities Act in an aggregate principal amount of $1.25 million.
Removed
The New Convertible Promissory Note has a maturity date of April 1, 2025 and accrues annual interest at a rate of 4.00%. The New Convertible Promissory Note converted into shares of Common Stock on February 28, 2023 at a price of $0.40.
Removed
February 2023 Private Placement On February 1, 2023, the Company entered into additional subscription agreements (the “February Subscription Agreements”), with certain accredited investors (the “February Common Stock Investors”), pursuant to which such February Common Stock Investors purchased from the Company shares of the Company’s Common Stock, at a purchase price of $0.68 per share of common stock, in private placement transactions exempt from registration under Section 4(a)(2) and/or Regulation D under the Securities Act for an aggregate purchase price of $0.94 million (the “February Private Placement”).
Removed
The February Private Placement closed on February 2, 2023. Pursuant to the February Subscription Agreements, the Company agreed to provide customary registration rights to the Common Stock Investors. The February Subscription Agreements contain customary representations, warranties and covenants and are subject to customary closing conditions and termination rights.
Removed
March 2023 Lender Warrants On March 1, 2023, in connection with the execution of the Fifth Amendment to the LGSA, the Company entered into a Warrant Agreement to issue the following warrants to the lenders: (i) 26,666,669 warrants to purchase an aggregate number of shares of the Company’s common stock equal to 10.0% of the fully diluted equity of the Company as of the Fifth Amendment Effective Date with an exercise price of $0.01 per share of the Company’s Common Stock (the “Lender Penny Warrants”) and (ii) 13,333,333 warrants to purchase an aggregate number of shares of the Company’s common stock equal to 5.0% of the fully diluted equity of the Company as of the Fifth Amendment Effective Date with an exercise price of $1.00 per share of the Company’s Common Stock (the “Lender Dollar Warrants”).
Removed
Both the Lender Penny Warrants and the Lender Dollar Warrants are subject to anti-dilution protection for any additional capital raising transaction by the Company of up to $5.0 million following the completion of the Qualified Equity Capital Raise.
Removed
The Lender Penny Warrants are exercisable during the period beginning on April 1, 2024 through December 31, 2025, and the Lender Dollar Warrants are exercisable during the period beginning on April 1, 2024 through December 31, 2026.
Removed
Also on March 1, 2023, the Company entered into a registration rights agreement in respect of the Lender Penny Warrants and the Lender Dollar Warrants which provides the lenders with customary shelf and piggyback registration rights.
Removed
The Lender Penny Warrants and the Lender Dollar Warrants were issued in a private placement transaction exempt from registration under Section 4(a)(2) and/or Regulation D of the Securities Act. ITEM 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

85 edited+76 added−133 removed11 unchanged
Biggest changeThe following table is a reconciliation of the Company’s Adjusted EBITDA to its most directly comparable GAAP measure (i.e., net loss attributable to common stockholders) for the periods indicated (in thousands): Year Ended December 31, 2023 2022 Net loss attributable to common stockholders $ (74,495) $ (91,574) Adjustments to reconcile net loss attributable to common stockholders to non-GAAP adjusted EBITDA: Preferred stock dividends 1,074 783 Loss from discontinued operations, net of tax 129 4,857 Equity in net (income) loss of investee, net of tax, related to Nautilus 9,290 15,712 Distributions from investee, related to Nautilus 21,949 — Income tax expense (benefit) — (256) Interest expense 34,812 24,679 Depreciation 28,350 6,667 Amortization of right-of-use asset 1,001 303 Stock-based compensation expense 5,859 1,568 Related party expense to be settled with respect to common stock 2,917 2,083 Costs related to non-routine regulatory activities — 996 Other income (231) — Non-GAAP adjusted EBITDA $ 30,655 $ (34,182) 37 Table of Contents Liquidity and Capital Resources As of December 31, 2023, the Company had balances of cash and cash equivalents of $54.4 million, a working capital deficiency of $92.1 million, total stockholders’ equity of $222.5 million and an accumulated deficit of $259.9 million.
Biggest changeGAAP measure (i.e., net loss) for the periods indicated (in thousands): Year Ended December 31, 2024 2023 Net loss $ (72,418) $ (73,421) Adjustments to reconcile net loss to non-GAAP Adjusted EBITDA: Loss from discontinued operations, net of tax — 129 Gain on sale of equity interest in investee (22,602) — Equity in net (income) loss of investee, net of tax, related to Nautilus (3,363) 9,290 Distributions from investee, related to Nautilus 22,776 21,949 Income tax benefit — — Other income (3,927) (231) Loss on extinguishment of debt 6,300 — Interest expense 19,794 34,812 Loss on disposals of property, plant, and equipment, net 17,824 1,209 Depreciation 59,808 28,350 Amortization of right-of-use asset 1,373 1,001 Stock-based compensation expense 30,927 5,859 Transaction-based compensation expense 3,885 — Related party expense to be settled with respect to common stock — 2,917 Non-GAAP adjusted EBITDA $ 60,377 $ 31,864 37 Table of Contents Liquidity and Capital Resources As of December 31, 2024, the Company had balances of cash and cash equivalents of $274.1 million, working capital of $229.6 million, total stockholders’ equity of $244.4 million and an accumulated deficit of $332.3 million.
The Company’s Adjusted EBITDA also includes the impact of distributions from investee received in bitcoin related to a return on the Nautilus investment, which management believes, in conjunction with excluding the impact of equity in net loss of investee, net of tax, is reflective of assets available for the Company’s use in its ongoing operations as a result of its investment in Nautilus.
The Company’s Adjusted EBITDA also includes the impact of distributions from investee received in bitcoin related to a return on the Nautilus investment, which management believes, in conjunction with excluding the impact of equity in net income (loss) of investee, net of tax, is reflective of assets available for the Company’s use in its ongoing operations as a result of its investment in Nautilus.
Based upon the level of historical U.S. losses and future projections over the period in which the net deferred tax assets are deductible, at this time, management believes it is more likely than not that the Company will not realize the benefits of the remaining deductible temporary differences, and as a result the Company has recorded a full valuation allowance against its gross deferred tax assets as of December 31, 2023 and 2022.
Based upon the level of historical U.S. losses and future projections over the period in which the net deferred tax assets are deductible, at this time, management believes it is more likely than not that the Company will not realize the benefits of the remaining deductible temporary differences, and as a result the Company has recorded a full valuation allowance against its gross deferred tax assets as of December 31, 2024 and 2023.
The portion of the benefits associated with the tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
The portion of the benefits associated with the tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the Company’s balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
The most critical estimate for income taxes is the determination of whether to record a valuation allowance for any net deferred tax asset, including net loss carryforwards, whereby management must estimate whether it is more likely than not that the deferred tax asset would be realized. ITEM 7A.
The most critical estimate for income taxes is the determination of whether to record a valuation allowance for any net deferred tax asset, including net loss carryforwards, whereby management must estimate whether it is more likely than not that the deferred tax asset would be realized.
Although management utilizes internally and presents Adjusted EBITDA, the Company only utilizes that measure supplementally and does not consider it to be a substitute for, or superior to, the information provided by GAAP financial results.
Although management utilizes internally and presents Adjusted EBITDA, the Company only utilizes that measure supplementally and does not consider it to be a substitute for, or superior to, the information provided by U.S. GAAP financial results.
In accordance with the guidance of ASC 740, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.
In accordance with the guidance of ASC 740, the benefit of a tax 40 Table of Contents position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely that not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.
The principal uses of cash are for the operation and buildout of mining facilities, debt service, and general corporate activities and, to a lesser extent, investments in the Nautilus joint venture related to mining facility buildout and general corporate activities.
The principal uses of cash are for the operation and buildout of data center facilities, debt service, and general corporate activities and, to a lesser extent in 2023, investments in the Nautilus joint venture related to mining facility buildout and general corporate activities.
The Company records proceeds related to participation in demand response programs as a reduction in cost of revenue in the period corresponding to the underlying demand response program period; the amount of aggregate proceeds received or expected to be received were $3.5 million and $0.1 million for the years ended December 31, 2023 and 2022, respectively.
The Company records proceeds related to participation in demand response programs as a reduction in cost of revenue in the period corresponding to the underlying demand response program period; the amount of aggregate proceeds received or expected to be received were $8.6 million and $3.5 million for the years ended December 31, 2024 and 2023, respectively.
To date, the Company has relied primarily on proceeds from its issuances of debt and equity and sale of bitcoin, both self-mined and distributed from the joint venture which owns the Nautilus Cryptomine Facility (see Note 11), to fund its principal operations.
To date, the Company has relied primarily on proceeds from the sale of bitcoin, both self-mined and distributed from the joint venture which owned the Nautilus Cryptomine Facility, and its issuances of debt and equity to fund its principal operations.
The Company's Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to operating (loss) income or any other measure of performance derived in accordance with GAAP.
The Company's Adjusted EBITDA is not a measurement of financial performance under U.S. GAAP and should not be considered as an alternative to net loss or any other measure of performance derived in accordance with U.S. GAAP.
(2) Total global hashrate obtained from YCHARTS (https://ycharts.com/indicators/bitcoin_network_hash_rate) (3) Joules of energy required to produce each terahash of processing power (4) While nameplate inventory for TeraWulf’s two facilities is 5.5 EH/s, inclusive of gross total hosted miners, actual monthly hashrate performance depends on a variety of factors, including (but not limited to) performance tuning to increase efficiency and maximize margin, scheduled outages (scopes to improve reliability or performance), unscheduled outages, curtailment due to participation in various cash generating demand response programs, derate of ASICS due to adverse weather and ASIC maintenance and repair.
(2) Total global hashrate obtained from YCHARTS (https://ycharts.com/indicators/bitcoin_network_hash_rate) (3) Joules of energy required to produce each terahash of processing power (4) While nameplate inventory at the Lake Mariner Facility was 9.7 EH/s as of December 31, 2024 and was 5.5 EH/s for TeraWulf’s two facilities as of December 31, 2023, inclusive of gross total hosted miners, actual monthly hashrate performance depends on a variety of factors, including (but not limited to) performance tuning to increase efficiency and maximize margin, scheduled outages (scopes to improve reliability or performance), unscheduled outages, curtailment due to participation in various cash generating demand response programs, derate of ASICS due to adverse weather and ASIC maintenance and repair.
Depreciation for the years ended December 31, 2023 and 2022 was $28.4 million and $6.7 million, respectively. The increase was primarily due to the increase in mining capacity due to infrastructure constructed and placed in service between December 31, 2022 and December 31, 2023 at the Lake Mariner Facility.
Depreciation for the years ended December 31, 2024 and 2023 was $59.8 million and $28.4 million, respectively. The increase was primarily due to the increase in mining capacity due to infrastructure constructed and placed in service between December 31, 2023 and December 31, 2024 at the Lake Mariner Facility.
This measure is not a financial measure calculated in accordance with GAAP, and it should not be considered as a substitute for net income, operating income, or any other measure calculated in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.
GAAP, and it should not be considered as a substitute for net loss, operating loss, or any other measure calculated in accordance with U.S. GAAP, and may not be comparable to similarly titled measures reported by other companies.
To date, the Company has relied primarily on proceeds from its issuances of debt and equity and sale of bitcoin, both self-mined and distributed from the joint venture which owns the Nautilus Cryptomine Facility (see Note 11), to fund its principal operations.
To date, the Company has relied primarily on proceeds from sales of bitcoin, both self-mined and distributed from the joint venture which owned the Nautilus Cryptomine Facility, and its issuances of debt and equity to fund its principal operations.
The Company is actively expanding its enrollment in such available programs in New York. 34 Table of Contents Costs and Expenses The following table presents operating expenses (in thousands): Year Ended December 31, 2023 2022 Operating expenses $ 2,116 $ 2,038 Operating expenses - related party 2,773 1,248 $ 4,889 $ 3,286 Operating expenses (including related party expenses) for the years ended December 31, 2023 and 2022 were approximately $4.9 million and $3.3 million, respectively, a net increase of $1.6 million.
The Company is actively expanding its enrollment in such available programs in New York State. 34 Table of Contents The following table presents operating expenses (in thousands): Year Ended December 31, 2024 2023 Operating expenses $ 3,387 $ 2,116 Operating expenses - related party 4,262 2,773 $ 7,649 $ 4,889 Operating expenses (including related party expenses) for the years ended December 31, 2024 and 2023 were approximately $7.6 million and $4.9 million, respectively, a net increase of $2.7 million.
The Company performs an analysis each day to identify whether events or changes in circumstances, principally decreases in the quoted price of bitcoin on the active trading platform, indicate that it is more likely than not that its bitcoin are impaired.
The Company performed an analysis each day to identify whether events or changes in circumstances, principally decreases in the quoted price of bitcoin on the active trading platform, indicated that it was more likely than not that its bitcoin were impaired.
Additionally, miner acquisition costs, or capital expenditures, are not factored into the above cost of mining analysis as capital expenditures do not impact the marginal cost of production of one bitcoin. Miner acquisition costs, or capital expenditures, are recorded at cost in property, plant and equipment in the consolidated balance sheets.
Miner acquisition costs, or capital expenditures, are not factored into the cost of mining analysis, as they do not impact the marginal cost of producing one bitcoin. Instead, these costs are recorded as property, plant, and equipment in the consolidated balance sheets.
For impairment testing purposes, the lowest intraday trading price of bitcoin is identified at the single bitcoin level (one bitcoin). The excess, if any, of the carrying amount of bitcoin and the lowest daily trading price of bitcoin represents a recognized impairment loss.
For impairment testing purposes, the lowest intraday trading price of bitcoin was identified at the single bitcoin level (one bitcoin). The excess, if any, of the carrying amount of bitcoin and the lowest daily trading price of 39 Table of Contents bitcoin represented a recognized impairment loss.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the other Items included in this Annual Report and with the accompanying consolidated financial statements and notes thereto included elsewhere in this report.
Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the other Items included in this Annual Report on Form 10-K (the “Annual Report”) and with the accompanying consolidated financial statements and notes thereto included elsewhere in this report.
Combined facilities (1) As of December 31, 2023 Global hashrate (EH/s) (2) 558.4 Miner efficiency (w/th) (3) 27.6 TeraWulf combined average operating hashrate (EH/s) (4) 5.0 TeraWulf % of Global hashrate 0.9 % (1) Results reflect hashrate of mining operations at the Lake Mariner Facility and TeraWulf’s net share of hashrate produced at the Nautilus Cryptomine Facility.
The table below presents our miner efficiency and computing power as compared to the global computing power as of December 31, 2024 and 2023: December 31, 2024 December 31, 2023 (1) Global hashrate (EH/s) (2) 704.0 558.4 Miner efficiency (w/th) (3) 19.0 27.6 TeraWulf combined average operating hashrate (EH/s) (4) 9.7 5.0 TeraWulf % of Global hashrate 1.4 % 0.9 % (1) Results as of December 31, 2023 reflect hashrate of mining operations at the Lake Mariner Facility and TeraWulf’s net share of hashrate produced at the Nautilus Cryptomine Facility.
Accordingly, Adjusted EBITDA is not meant to be considered in isolation of, and should be read in conjunction with, the information contained in the Company’s consolidated financial statements, which have been prepared in accordance with GAAP.
Accordingly, Adjusted EBITDA is not meant to be considered in isolation of, and should be read in conjunction with, the information contained in the Company’s consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The following table is a reconciliation of the Company’s Adjusted EBITDA to its most directly comparable U.S.
Cash provided by financing activities was $119.9 million and $90.0 million for the years ended December 31, 2023 and 2022, respectively.
Financing activities Cash provided by financing activities was $335.2 million and $119.9 million for the years ended December 31, 2024 and 2023, respectively.
We define Adjusted EBITDA as income (loss) from continuing operations adjusted for (i) impacts of interest, taxes, depreciation and amortization; (ii) preferred stock dividends, stock-based compensation expense and related party expense to be settled with respect to common stock, all of which are non-cash items that the Company believes are not reflective of its general business performance, and for which the accounting requires management judgment, and the resulting expenses could vary significantly in comparison to other companies; (iii) equity in net loss of investee, net of tax, related to Nautilus; (iv) costs related to non-routine regulatory activities, which costs management does not believe are 36 Table of Contents reflective of the Company’s ongoing operating activities; (v) other income which is related to interest income or income for which management believes is not reflective of the Company’s ongoing operating activities; and (vi) gains and losses related to discontinued operations that are not be applicable to the Company’s future business activities.
We define Adjusted EBITDA as net loss adjusted for (i) impacts of interest, taxes, depreciation and amortization; (ii) stock-based compensation expense, amortization of right-of-use asset and related party expense to be settled with respect to common stock, all of which are non-cash items that the Company believes are not reflective of its general business performance, and for which the accounting requires management judgment, and the resulting expenses could vary significantly in comparison to other companies; (iii) one-time, non-recurring transaction-based compensation expense related to the 2030 Convertible Notes (iv) equity in net income (loss) of investee, net of tax, related to Nautilus and the gain on sale of interest in Nautilus; (v) other income which is related to interest income or income for which management believes is not reflective of the Company’s ongoing operating activities; (vi) loss on extinguishment of debt and net losses on disposals of property, plant and equipment, net, which are not reflective of the Company’s general business performance and (vii) loss from discontinued operations, net of tax, which is not applicable to the Company’s future 36 Table of Contents business activities.
Non-GAAP Measure To provide investors with additional information in connection with our results as determined in accordance with generally accepted accounting principals in the United States (“GAAP”), we disclose Adjusted EBITDA as a non-GAAP measure.
Non-GAAP Measure To provide investors with additional information in connection with our results as determined in accordance with generally accepted accounting principals in the United States (“U.S. GAAP”), we disclose Adjusted EBITDA as a non-GAAP measure. This measure is not a financial measure calculated in accordance with U.S.
During the years ended December 31, 2023 and 2022, the Company received proceeds from issuance of (i) Common Stock, net of issuance costs, of $135.9 million and $47.3 million, respectively, (ii) warrants of $2.5 million and 5.7 million, respectively, and (iii) convertible promissory notes of $1.3 million and $14.7 million.
During the year ended December 31, 2023, the Company received proceeds from (i) issuances of Common Stock, net of issuance costs, of $135.9 million (ii) proceeds from warrant exercises of $2.5 million, and (iii) issuance of convertible promissory notes of $1.3 million.
Critical Accounting Policies and Estimates The above discussion and analysis of the Company’s financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.
Critical Accounting Estimates The above discussion and analysis of the Company’s financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with U.S. GAAP.
The following table presents selling, general and administrative expenses (in thousands): Year Ended December 31, 2023 2022 Selling, general and administrative expenses $ 23,693 $ 22,770 Selling, general and administrative expenses - related party 13,325 13,280 $ 37,018 $ 36,050 Selling, general and administrative expenses (including related party expenses) for the years ended December 31, 2023 and 2022 were $37.0 million and $36.1 million, respectively, a net increase of $1.0 million.
The following table presents selling, general and administrative expenses (in thousands): Year Ended December 31, 2024 2022 Selling, general and administrative expenses $ 57,883 $ 23,693 Selling, general and administrative expenses - related party 12,695 13,325 $ 70,578 $ 37,018 Selling, general and administrative expenses (including related party expenses) for the years ended December 31, 2024 and 2023 were $70.6 million and $37.0 million, respectively, a net increase of $33.6 million.
The Company has raised capital through both the issuance of equity and corporate level debt. These funds have been utilized to support operations, invest in our joint ventures, purchase miners and other fixed assets. Costs related to such issuances are not included in this analysis.
To support operations, invest in our joint venture, and purchase miners and other fixed assets, we have raised capital through both equity issuances and corporate-level debt. Costs related to these capital raises are not included in this analysis.
Excludes bitcoin earned from profit sharing associated with a hosting agreement that expired in February 2024 at the Lake Mariner Facility. 2 Excludes bitcoin earned from profit sharing associated with a hosting agreement that expired in February 2024 at the Lake Mariner Facility of 51 bitcoin for the year ended December 31, 2023, and includes TeraWulf’s net share of bitcoin mined at the Nautilus Cryptomine Facility, based on the hashrate share attributed to the Company. 3 Excludes energy expenses associated with a hosting agreement that expired in February 2024 at the Lake Mariner Facility and includes TeraWulf’s net share of energy expense at the Nautilus Cryptomine Facility, based on aggregate nameplate power consumption of deployed miners attributed to TeraWulf’s contribution to Nautilus.
(3) Excludes bitcoin earned from profit sharing associated with a bitcoin miner hosting agreement that expired in February 2024 at the Lake Mariner Facility of 6 and 64 bitcoin for the years ended December 31, 2024 and 2023, respectively, and includes TeraWulf’s net share of bitcoin mined at the Nautilus Cryptomine Facility, based on the hashrate share attributed to the Company.
The Company records expected payments to be received for demand response programs as a reduction in cost of revenue, which amounted to $3.5 million for the year ended December 31, 2023. 32 Table of Contents The Company has purchased all miners with cash and has not used limited recourse equipment financing to complete its miner purchases.
The Company records expected payments to be received for demand response programs as a reduction in cost of revenue, which amounted to $8.6 million and $3.5 million for the years ended December 31, 2024 and 2023, respectively. The Company has purchased all miners with cash, without relying on limited recourse equipment financing for miner acquisitions.
Depreciation of property, plant and equipment is computed using the straight-line method over the estimated useful lives of the equipment: generally 4 years for miners and 5 years for computer equipment.
Depreciation of property, plant, and equipment is calculated using the straight-line method, with estimated useful lives of four years for miners and five years for computer equipment.
Energy prices are also highly sensitive to weather events, such as winter storms and polar vortices, which increase the demand for power regionally. When such events occur, we may curtail our operations to avoid using power at increased rates or we may be curtailed under demand response programs in which we participate.
Energy prices are also highly sensitive to weather conditions, such as winter storms and polar vortices, which can increase regional power demand and drive up costs. During such events, we may curtail operations to avoid consuming power at peak rates, or we may be curtailed under demand response programs in which we participate.
Impairment of Long-lived Assets The Company reviews its long-lived assets, including property, plant and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset, or asset group, may not be recoverable.
Changes in depreciation and amortization, generally accelerated depreciation, are determined and recorded when estimates of the remaining useful lives or residual values of long-term assets change. The Company reviews its long-lived assets, including property, plant and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset, or asset group, may not be recoverable.
These miners were comprised as follows: Vendor and Model Number of miners Bitmain S19 Pro 6,700 Bitmain S19 XP 6,300 Bitmain S19j Pro 11,800 MinerVA M7 4,100 Whatsminer M30S+ 1,200 30,100 As of December 31, 2023, our fleet of miners ranged in age from 0.4 to 1.6 years and have an average age of approximately 0.8 years.
These miners were comprised as follows: Vendor and Model Number of miners Bitmain S19 XP 18,500 Bitmain S19j XP 18,100 Bitmain S19k Pro 4,200 Bitmain S21 8,300 Bitmain S21 Pro 12,900 62,000 As of December 31, 2024, our fleet of miners ranged in age from 0.1 to 2.6 years and have an average age of approximately 0.7 years.
From time to time, the Company also receives bitcoin as distributions-in-kind from its joint venture. Digital currency is included in current assets in the consolidated balance sheets due to the Company’s ability to sell it in a highly liquid marketplace and because the Company reasonably expects to liquidate its digital currency to support operations within the next twelve months.
Bitcoin are accounted for as intangible assets with indefinite useful life and is included in current assets in the consolidated balance sheets due to the Company’s ability to sell it in a highly liquid marketplace and because the Company reasonably expects to liquidate its bitcoin to support operations within the next twelve months.
Ultimately, in order to mine profitably, we work to ensure that these mining rewards cover our direct operating costs. 31 Table of Contents The table below presents the average cost of mining each bitcoin, including bitcoin mined at the Lake Mariner Facility and the Company’s net share of bitcoin mined at the Nautilus Cryptomine Facility, for the year ended December 31, 2023 and the total energy cost per kWh utilized within the facilities.
To maintain profitability, we focus on optimizing operational efficiency and cost management, ensuring that our mining rewards consistently cover direct operating expenses. 31 Table of Contents The table below presents the average cost of mining each bitcoin, including bitcoin mined at the Lake Mariner Facility and the Company’s net share of bitcoin mined at the Nautilus Cryptomine Facility, for the years ended December 31, 2024 and 2023 and the total energy cost per kWh utilized within the facilities.
Our fleet of miners at the Lake Mariner Facility had a range of energy efficiency from 22.0 to 39.0 joules per terahash (“j/th”) and has an average energy efficiency of 28.8 j/th. Nautilus Cryptomine Facility Located in Berwick, Pennsylvania, Nautilus Cryptomine LLC (“Nautilus”) is a joint venture between TeraWulf and a subsidiary of Talen Energy Corporation (“Talen”).
As of December 31, 2024, our fleet of miners at the Lake Mariner Facility had a range of energy efficiency from 15 to 23 joules per terahash (“j/th”) and has an average energy efficiency of 19.8 j/th. 30 Table of Contents Nautilus Cryptomine Facility The Nautilus Cryptomine Facility, located in Berwick, Pennsylvania, was a joint venture between TeraWulf and Talen Member.
The amounts include an impairment loss of $13.6 million and $11.5 million for the years ended December 31, 2023 and 2022, respectively, related to the distribution of miners from Nautilus to the Company whereby the miners were marked to fair value from book value on the date distributed.
The amount includes an impairment loss of $13.6 million for the year ended December 31, 2023 related to the distribution of miners from Nautilus to the Company whereby the miners were marked to fair value from book value on the date distributed. The impairment loss was the result of decreasing prices for miners between initial purchase and distribution.
Lake Mariner Facility Located at a site adjacent to the now decommissioned coal-fired power plant in Barker, New York, the Lake Mariner Facility began sustainably mining bitcoin in March 2022.
Lake Mariner Facility Strategically located in Barker, New York, on the site of a former coal-fired power plant, the Lake Mariner Facility began operations in March 2022, designed to support sustainable bitcoin mining.
Cash flow information is as follows (in thousands): Year Ended December 31, 2023 2022 Cash provided by (used in): Operating activities: Continuing operations $ 4,160 $ (32,262) Discontinued operations 103 (1,804) Total operating activities 4,263 (34,066) Investing activities (78,013) (94,047) Financing activities 119,866 89,981 Net change in cash and cash equivalents and restricted cash $ 46,116 $ (38,132) Cash provided by (used in) operating activities for continuing operations was $4.2 million and $(32.3) million for the years ended December 31, 2023 and 2022, respectively.
Cash flow information is as follows (in thousands): Year Ended December 31, 2024 2023 Cash provided by (used in): Operating activities: Continuing operations $ (24,422) $ 4,160 Discontinued operations — 103 Total operating activities (24,422) 4,263 Investing activities (91,159) (78,013) Financing activities 335,207 119,866 Net change in cash and cash equivalents and restricted cash $ 219,626 $ 46,116 Operating activities Cash (used in) provided by operating activities for continuing operations was $(24.4) million and $4.2 million for the years ended December 31, 2024 and 2023, respectively, reflecting a decrease of $28.6 million.
Cost of mining - Analysis of costs to mine one bitcoin Year Ended December 31, 2023 Cost of mining - Lake Mariner Facility and net share of the Nautilus Cryptomine Facility Cost of energy per bitcoin mined $ 8,676 Other direct costs of mining - non energy utilities per bitcoin mined $ 29 Cost to mine one bitcoin $ 8,705 Value of each bitcoin mined (1) $ 29,645 Cost to mine one bitcoin as % of value of bitcoin mined 29.4 % Statistics Lake Mariner Facility and net share of the Nautilus Cryptomine Facility Total bitcoin mined (2) 3,343 Total value of bitcoin mined (1) ($ in thousands) $ 99,105 Total kWhs utilized 910,743,637 Total energy expense, net of expected demand response proceeds (3) ($ in thousands) $ 29,006 Cost per kWh $ 0.032 Energy expense, net as % of value of bitcoin mined 29.3 % Other direct costs of mining ($ in thousands) $ 97 1 Computed as the weighted-average opening price of bitcoin on each respective day the mined bitcoin is earned.
Year Ended December 31, Cost of mining - Analysis of costs to mine one bitcoin 2024 2023 Cost of mining - Lake Mariner Facility and net share of the Nautilus Cryptomine Facility Cost of energy per bitcoin mined $ 25,227 $ 8,676 Other direct costs of mining - non energy utilities per bitcoin mined $ 41 $ 29 Cost to mine one bitcoin (1) $ 25,268 $ 8,705 Value of each bitcoin mined (2) $ 62,889 $ 29,645 Cost to mine one bitcoin as % of value of bitcoin mined 40.2 % 29.4 % Statistics Lake Mariner Facility and net share of the Nautilus Cryptomine Facility Total bitcoin mined (3) 2,728 3,343 Total value of bitcoin mined (2) ($ in thousands) $ 171,547 $ 99,105 Total MWhs utilized 1,601,061 910,744 Total energy expense, net of expected demand response proceeds (4) ($ in thousands) $ 68,815 $ 29,006 Cost per kWh $ 0.043 $ 0.032 Energy expense, net as % of value of bitcoin mined 40.1 % 29.3 % Other direct costs of mining ($ in thousands) $ 111 $ 97 (1) “Cost to mine one bitcoin” is a cash cost metric and does not include depreciation.
During the year ended December 31, 2023, the Company recorded a loss on disposal of property, plant and equipment of $1.2 million related to disposals of miners and write-off of deposits on miners. No loss on disposal of property, plant, and equipment was recorded during the year ended December 31, 2022.
During the years ended December 31, 2024 and December 31, 2023, the Company recorded a loss on disposal of property, plant and equipment of $17.8 million and $1.2 million, respectively, related to disposals of miners and write-off of deposits on miners. 35 Table of Contents Interest expense Interest expense for the years ended December 31, 2024 and 2023 was $19.8 million and $34.8 million, respectively, a decrease of $15.0 million.
The increase was primarily due to the increase in mining and hosting capacity due to infrastructure constructed and placed in service between December 31, 2022 and December 31, 2023 at the Lake Mariner Facility. Cost of revenues is comprised primarily of power expense and, to a lesser degree, the cost of services provided under our miner hosting agreements.
Cost of revenues is primarily comprised of power expense and the increase was primarily due to the increase in mining capacity due to infrastructure constructed and placed in service between December 31, 2023 and December 31, 2024 at the Lake Mariner Facility and, to a lesser extent, an increase in realized power prices during the year ended December 31, 2024 as compared to the same period in the prior year.
Revenue and Cost of Revenue The following table presents revenue and cost of revenue (exclusive of depreciation) (in thousands): Year Ended December 31, 2023 2022 Revenue $ 69,229 $ 15,033 Cost of revenue (exclusive of depreciation) $ 27,315 $ 11,083 Revenue for the years ended December 31, 2023 and 2022 was $69.2 million and $15.0 million, respectively, an increase of $54.2 million.
Revenue The following table presents revenue (in thousands): Year Ended December 31, 2024 2023 Revenue $ 140,051 $ 69,229 Revenue for the years ended December 31, 2024 and 2023 was $140.1 million and $69.2 million, respectively, an increase of $70.9 million.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. Any impairment loss recorded is measured as the amount by which the carrying value of the assets exceeds the fair value of the assets.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted cash flows expected to be generated by the asset. Significant judgment is used when estimating future cash flows, particularly the price of bitcoin and the network hashrate.
Under the Nautilus joint venture agreement, the Company holds a 25% equity interest in Nautilus and Talen holds a 75% equity interest, each subject to adjustment based on relative capital contributions.
Under the terms of the joint venture agreement, TeraWulf held a 25% equity interest in Nautilus, while Talen Member held a 75% equity interest, with ownership subject to adjustments based on capital contributions.
Equity in net loss of investee, net of tax Equity in net loss of investee, net of tax for the years ended December 31, 2023 and 2022 was $9.3 million and $15.7 million, respectively.
Equity in net loss of investee, net of tax Equity in net income (loss) of investee, net of tax for the years ended December 31, 2024 and 2023 was $3.4 million and $(9.3) million, respectively, which represents TeraWulf’s proportional share of income or loss of Nautilus, which commenced operations in February 2023.
During the years ended December 31, 2023 and 2022, the Company reported cash outflows from operations of (i) $6.6 million and $0, respectively, related to principal payments on long-term debt (ii) $2.0 million and $0, respectively, related to payments of tax withholding related to net share settlements of stock-based compensation awards, (ii) $0 and $15.3 million, respectively, related to principal payments on convertible promissory notes, and (iii) $11.0 million and $0, respectively, related to payment of CVR liability related to proceeds from sale of IKONICS’ net assets held for sale.
The cash provided by financing activities during the year ended December 31, 2023 was partially offset by payments of contingent value rights liability related to the proceeds from sales of net assets held for sale of RM 101 of $11.0 million, principal payments on long-term debt of $6.6 million, and payments related to tax withholdings related to net share settlements of stock-based compensation awards of $2.0 million.
Certain statements contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations may be deemed forward-looking statements. See “Forward-Looking Statements.” 28 Table of Contents Overview We are a leading digital asset technology firm that specializes in digital infrastructure and sustainable energy development.
Certain statements contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations may be deemed forward-looking statements. See “Forward-Looking Statements.” 28 Table of Contents This MD&A generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
The management team manages this decision on an hour-by-hour basis. During the year ended December 31, 2023, the Company curtailed operations at the Lake Mariner Facility due to weather events, energy price spikes, and demand response program participation.
These decisions are actively managed on an hour-by-hour basis to optimize profitability. 32 Table of Contents During the years ended December 31, 2024 and 2023, we curtailed operations at the Lake Mariner Facility in response to weather events, energy price spikes, and participation in demand response programs.
The Nautilus Cryptomine Facility represents the first bitcoin mining facility site that is powered by 100% “behind the meter” zero-carbon nuclear energy, which is contracted at a fixed rate of 2.0 cents per kilowatt-hour for a term of five years with two successive three-year renewal options.
The Nautilus Cryptomine Facility was a 200 MW bitcoin mining operation, situated adjacent to the 2.5-gigawatt nuclear-powered Susquehanna Station and was the first bitcoin mining site powered entirely by behind-the-meter, zero-carbon nuclear energy, operating under a fixed-rate power contract of 2.0 cents per kilowatt-hour for a five-year term, with options for two three-year renewals.
The Company did not have any liabilities required to be revalued in accordance with ASC 480 or ASC 815 as of December 31, 2023. 43 Table of Contents Income Taxes The Company accounts for income taxes pursuant to the provision of ASC 740, Accounting for Income Taxes (“ASC 740”), which requires, among other things, an asset and liability approach to calculating deferred income taxes.
Income Taxes The Company accounts for income taxes pursuant to ASC 740, Income Taxes (“ASC 740”), which requires, among other things, an asset and liability approach to calculating deferred income taxes.
Nevertheless, if depreciation of our miner fleet were factored into the above cost of mining analysis, it would add $11,187 per bitcoin mined in the year ended December 31, 2023.
If depreciation of our miner fleet were factored into the above cost of mining analysis, it would add $22,086 and $9,892 per bitcoin mined for the years ended December 31, 2024 and 2023, respectively, bringing the total “cost to mine one bitcoin” to $47,354 and $18,598 for the years ended December 31, 2024 and 2023, respectively.
Digital currency, net Digital currency, net is comprised of bitcoin earned as noncash consideration in exchange for providing hash computation services to a mining pool as well as in exchange for data center hosting services which are accounted for in connection with the Company’s revenue recognition policy disclosed above.
Digital currency Digital currency is comprised of bitcoin earned as noncash consideration in exchange for providing hash computation services to a mining pool as well as consideration for bitcoin miner hosting services. From time to time, the Company also receives bitcoin as distributions-in-kind from its joint venture.
Proceeds from sales of digital currency are included within cash flows from operating activities on the consolidated statements of cash flows and any realized gains or losses from such sales are included in costs and operating expenses on the consolidated statements of operations.
Gains and losses from the remeasurement of digital currency are included within gain on fair value of digital currency, net in the consolidated statements of operations.
Impairment of digital currency for the years ended December 31, 2023 and 2022 was $3.0 million and $1.5 million, respectively. Impairment of digital currency represents the decline in bitcoin prices during the Company’s holding period of its bitcoin. Bitcoin impairment is not reversed during its holding period but instead a gain, if any, is recognized upon its liquidation.
Prior to the adoption of ASU 2023-08, the Company recorded impairment of digital currency of $3.0 million during the year ended December 31, 2023 representing the decline in bitcoin prices during the Company’s holding period of its bitcoin, which was not reversed during its holding period, and realized gain on sale of digital currency of $3.2 million during the year ended December 31, 2023 upon subsequent liquidation of bitcoin held.
Power prices are the most significant cost driver for our bitcoin mining operations, and energy expense represented 29.3% as expressed as a percentage of value of bitcoin mined during the year ended December 31, 2023.
Power costs are the most significant expense in our bitcoin mining operations, accounting for 40.1% and 29.4% of the total value of bitcoin mined for the years ended ended December 31, 2024 and 2023, respectively.
Income tax benefit for the years ended December 31, 2023 and 2022 was $0 and $0.3 million, respectively.
Investing activities Cash used in investing activities was $91.2 million and $78.0 million for the years ended December 31, 2024 and 2023, respectively.
If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. The Company has elected to bypass the optional qualitative impairment assessment and to track its bitcoin activity daily for impairment assessment purposes.
Prior to the adoption of ASU 2023-08, bitcoin was assessed for impairment annually, or more frequently if events or changes in circumstances indicate it is more likely than not that the asset is impaired. The Company elected to bypass the optional qualitative impairment assessment and to track its bitcoin activity daily for impairment assessment purposes.
The increase in interest expense during the year ended December 31, 2023 as compared to the prior year is primarily due to an increase of approximately $10.2 million of amortization of debt discount related to the term loan financing and an increase in related to the stated interest rate, which remained unchanged, on the term loan financing.
The decrease in interest expense during the year ended December 31, 2024 as compared to the prior year is primarily due to early repayments of the Term Loans principal balance resulting in a decrease of amortization of debt issuance costs and debt discount of $8.1 million.
The Company has one data center hosting contract with a customer, which expired in January 2024, for which the quoted price of bitcoin in the Company’s principal market at the time of contract inception was approximately $38,000. The Company recorded miner hosting revenue of $7.5 million and $4.6 million during the years ended December 31, 2023 and 2022, respectively.
During the years ended December 31, 2024 and 2023 revenue from bitcoin miner hosting was $0.8 million and $7.5 million, respectively, a decrease due to the expiration of the Company’s bitcoin miner hosting contract with a customer in February 2024.
As of December 31, 2023, our operating hashrate was approximately 0.9% of the total global hashrate, and we received approximately the same percentage of the global blockchain rewards, which as of that date, equaled approximately 10 to 11 bitcoin per day.
As of December 31, 2024, our operating hashrate represented approximately 1.4% of the total global hashrate, aligning with our share of global blockchain rewards. As of that date, this translated to approximately 6 bitcoin mined per day.
During the years ended December 31, 2023 and 2022, revenue from mining was $61.7 million and $10.5 million, respectively, and revenue from hosting was $7.5 million and $4.6 million, respectively. Cost of revenue (exclusive of depreciation) for the years ended December 31, 2023 and 2022 was $27.3 million and $11.1 million, respectively, an increase of approximately $16.2 million.
Costs and Expenses The following table presents cost of revenue (exclusive of deprecation) (in thousands): Year Ended December 31, 2024 2023 Cost of revenue (exclusive of depreciation) $ 62,608 $ 27,315 Cost of revenue (exclusive of depreciation) for the years ended December 31, 2024 and 2023 was $62.6 million and $27.3 million, respectively, an increase of approximately $35.3 million.
Pursuant to the CVR Agreement, each shareholder of IKONICS as of immediately prior to the Closing Date, received one CVR for each outstanding share of common stock of IKONICS then held.
As part of the Merger consideration, IKONICS shareholders received contractual contingent value rights (“CVR”) under a Contingent Value Rights Agreement (the “CVR Agreement”). Each IKONICS shareholder as of immediately prior to the Merger received one non-transferable CVR for each share of IKONICS common stock held at that time.
If not otherwise curtailed under demand response programs, we curtail when power prices exceed the value we would receive for the corresponding fixed bitcoin reward. This means if bitcoin’s value decreases or energy prices increase, our curtailment will increase; likewise, when bitcoin’s value increases and energy prices decrease, our curtailment will decrease.
If curtailment is not mandated under demand response programs, we make real-time decisions to curtail mining whenever power prices exceed the value of the fixed bitcoin reward. As a result, curtailment increases when bitcoin’s value declines or energy prices rise, and decreases when bitcoin’s value appreciates or energy costs fall.
See Note 2 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for a summary of the Company’s significant accounting policies. Revenue Recognition The Company recognizes revenue under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”).
Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. See Note 2 of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report for a summary of the Company’s significant accounting policies.
As of December 31, 2023, we owned approximately 30,100 miners, exclusive of the 4,800 hosted miners, of which approximately 28,300 are operational at the Lake Mariner Facility with the remainder undergoing maintenance or on standby to replace miners under repair.
Its strategic location and access to low-cost, predominantly zero-carbon energy make it a highly attractive site for both bitcoin mining and HPC workloads. As of December 31, 2024, we owned approximately 62,000 miners, of which approximately 58,800 are operational at the Lake Mariner Facility with the remainder undergoing maintenance, awaiting disposal or on standby to replace miners under repair.
The average aggregate power prices incurred at the Lake Mariner Facility and the Nautilus Cryptomine Facility during the year ended December 31, 2023 was $0.032 per kilowatt hour. The management team makes real-time determinations on the need and timing during which we should curtail.
For the years ended December 31, 2024, and 2023, the average aggregate realized power prices at the Lake Mariner Facility and Nautilus Cryptomine Facility were $0.043 and $0.032 per kilowatt hour, respectively. Our management team continuously monitors market conditions to determine when and for how long to curtail operations.
Upon the consummation of the business combination, RM 101 common stock ceased trading on the Nasdaq and TeraWulf Common Stock began trading on the Nasdaq on December 14, 2021 under the ticker symbol “WULF.” Results of Operations The Company generates revenue in the form of bitcoin by providing hash computation services to a mining pool operator to mine bitcoin and validate transactions on the global Bitcoin Network using application-specific integrated circuit computers owned by the Company.
Results of Operations - Comparative Results for the Years Ended December 31, 2024 and 2023 The Company generates revenue in the form of bitcoin by providing hash computation services to a mining pool operator to mine bitcoin and validate transactions on the global bitcoin network using miners owned by the Company. The earned bitcoin are routinely sold for U.S. dollars.
Combined Facilities As described above, there are a variety of factors that influence our ability to mine bitcoin profitably, including bitcoin’s value in USD, mining difficulty global hashrate, power prices, fleet energy efficiency, data center energy efficiency and other factors. The energy efficiency of a mining fleet drives profitability, because the most significant direct expense for bitcoin mining is power.
Following the sale, TeraWulf deployed 12,300 S19 XP miners and sold or otherwise disposed of 35,700 miners as of December 31, 2024. Bitcoin Mining - Combined Facilities As outlined above, several factors influence our ability to mine bitcoin profitably, including bitcoin’s USD value, mining difficulty, global hashrate, power costs, fleet energy efficiency, and overall data center efficiency.
The Company began mining bitcoin in March 2022 and had 5.5 EH/s of operating capacity across the Lake Mariner Facility and the Nautilus Cryptomine Facility as of December 31, 2023, which increased to 7.9 EH/s upon energization of the third building at the Lake Mariner Facility during the first quarter of 2024.
The Company incurred a net loss of $72.4 million for the year ended December 31, 2024. The Company began mining bitcoin in March 2022 and had 9.7 EH/s of operating capacity as of December 31, 2024.
In accordance with the CVR Agreement, as of December 31, 2023, all IKONICS’ net assets previously held for sale had been 33 Table of Contents sold and the Company has made all of the aggregate distributions of $11.0 million of proceeds to the CVR Holders such that the CVR Agreement was deemed terminated as of December 31, 2023.
As of December 31, 2023, the Company had completed all required distributions to CVR holders, and the CVR Agreement was deemed terminated.
The Business Combination TeraWulf completed its business combination with IKONICS Corporation (“IKONICS) on December 13, 2021 (the “Closing Date”) pursuant to which, among other things, TeraCub Inc. (“TeraCub,” formerly known as TeraWulf Inc.) would effectively acquire IKONICS and become a publicly traded company on the Nasdaq, which was the primary purpose of the business combination.
As of the date of this Annual Report, the Company has received all $90.0 million of Prepaid Rent. The Business Combination On December 13, 2021, TeraWulf completed its business combination (the “Merger”) with IKONICS Corporation (“IKONICS”), through which the Company effectively acquired IKONICS and became a publicly traded entity on Nasdaq, which was the primary objective of the business combination.
During the year ended December 31, 2023, operating expenses increased slightly due to increases in repair costs and property insurance offset by lower equipment lease expense as compared to the prior year, while operating expenses – related party, which is paid to a related party which provides services to its Lake Mariner Facility, increased due to increased staffing at the Lake Mariner Facility related to infrastructure constructed and placed in service between December 31, 2022 and 2023 and additionally, to a lesser degree, by an increase in ground lease expense.
Operating expenses increased primarily due to higher engineering expenses of $0.4 million and property insurance of $0.7 million. Operating expense - related party increased primarily due to $0.4 million in rent expense and $1.1 million due to increased staffing at the Lake Mariner Facility. These increases related to infrastructure constructed and placed in service between December 31, 2023 and 2024.
The Company incurred a net loss attributable to common stockholders of $74.5 million for the year ended December 31, 2023.
Financial Condition The Company incurred a net loss of $72.4 million and reported cash used in operating activities of $24.4 million for the year ended December 31, 2024.
Bitcoin and Blockchain Bitcoin, introduced in 2008, fundamentally transformed the landscape of digital currency by providing a decentralized mechanism for exchanging and preserving value. It operates on a consensus-based network, utilizing a public ledger termed as the “blockchain” to meticulously record every bitcoin transaction.
Bitcoin and Blockchain Bitcoin, introduced in 2008, revolutionized digital finance by enabling a decentralized system for exchanging and storing value without reliance on traditional financial institutions. It operates on a public ledger known as the “blockchain,” which records every transaction transparently and securely.
Accordingly, the Company has contributed approximately 1.9 EH/s of a total 5.2 EH/s of miners which results in an approximate 35.7% of the hashrate share attributed to the Company.
The Company had contributed approximately 1.9 EH/s of the facility’s total 5.2 EH/s capacity, representing approximately 35.7% of the total hashrate attributed to the Company. At the time of TeraWulf’s ownership, the Nautilus Cryptomine Facility deployed approximately 48,000 miners, of which 15,800 miners were attributed to TeraWulf’s contributions to utilize its 50 MW allotment.
When a determination has been made that an asset will be retired or extended before or after the end of its current estimated useful life, depreciation provisions will be accelerated or extended to reflect the shortened or lengthened estimated useful life, which could have a material unfavorable or favorable impact on future results of operations.
When an asset’s estimated useful life is adjusted—either shortened or extended—depreciation provisions are updated accordingly, which could have a material impact on future financial results.
The increases during the year ended December 31, 2023 as compared to the prior year were primarily due to increased expenses of (i) stock-based compensation of $4.3 million, (ii) employee compensation and benefits of $3.3 million, and (iii) related party expense to be settled with respect to common stock of $0.8 million.
Selling, general and administrative expenses increased primarily due to increased expense during the year ended December 31, 2024 as compared to the same period in the prior year of (i) stock-based compensation of $25.2 million, (ii) employee compensation and benefits of $5.7 million, (iii) travel expenses of $0.6 million, (iv) legal and other professional fees of $1.4 million, (v) charity, sponsorships and investor relations of $1.1 million and (vi) other public company costs of $1.1 million, partially offset by decreases in insurance expense of $0.9 million.

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