Despite expectations for robust crypto growth, the recent decline in Bitcoin and the correction in tech stocks have weighed down the share price for Bitcoin mining company TeraWulf (WULF), pushing it down by over 23% in the past month. Still, the stock has been up over 217% in the past year, and the company recently announced it has signed long-term data center lease agreements with Core42, intending to deliver more than 70 MW of turnkey data center infrastructure.
Stay Ahead of the Market:
- Discover outperforming stocks and invest smarter with Top Smart Score Stocks
- Filter, analyze, and streamline your search for investment opportunities using Tipranks' Stock Screener
This move marks TeraWulf’s strategic extension into AI-driven computing, supplementing its profitable Bitcoin mining operations as it expands the potential for future scalability and revenue growth through additional hosting capacity for Core42. Long-term investors might find the current price decline a window of opportunity to acquire the stock.
Scalability and Growth
TeraWulf primarily generates revenue through Bitcoin mining. The company also develops, owns, and operates environmentally sustainable data center infrastructure in the United States. It heavily relies on zero-carbon energy sources, including hydroelectric and nuclear power, for its operations. It owns and operates the Lake Mariner facility on the now-defunct coal plant in Western New York.
In a strategic move, TeraWulf partnered with Core42, a company specializing in sovereign cloud, AI infrastructure, and digital services, under long-term data center lease agreements. TeraWulf will host Core42’s High-Performance Computing (HPC) operations at the Lake Mariner facility in Upstate New York by supplying over 70 MW of turn-key data center infrastructure, set to come online between Q1 and Q3 2025.
Lease Agreements and Hash Rate
Financially, the data center leases offer TeraWulf a stable, high-margin revenue stream with two five-year renewal options. The lease agreements also include provisions for expanding capacity by an additional 135 MW, demonstrating potential for future scalability and revenue growth.
In December 2024, TeraWulf self-mined 158 Bitcoin at a daily average of approximately 5.1 Bitcoin, with a 94.0% year-over-year increase in self-mining capacity at 9.7 EH/s. The company’s operational bitcoin mining capacity reached 195 MW, resulting in an average hash rate of 8.4 EH/s. An additional 50 MW miner building (MB-5) is under construction, with completion slated for Q1 2025.
Growing Revenue From an Increased Hash Rate
In the third quarter of 2024, the company reported revenue rose to $27.1 million, marking a 42.8% increase from $19.0 million in the same period the previous year. This growth was primarily due to an increased self-mining hash rate and a higher average bitcoin price than Q3 2023.
On the other hand, revenue costs surged by 77.3% to $14.7 million, compared to $8.3 million in Q3 2023. This represents 54.2% of revenue, an increase from 43.6% in Q3 2023. The increase is mainly due to a doubling of network difficulty and the halving of the Bitcoin reward in April 2024. However, these were partially offset by a 62.0% increase in the average operating hash rate and a 117.3% increase in the average value per self-mined Bitcoin.
As of the quarter’s end, the company reported cash and cash equivalents of $23.9 million. It also successfully paid its remaining balance on its term loans, repaying $75.8 million of debt ahead of the maturity date in Q3 2024.
Bullish Analyst Outlook
The stock is highly volatile, posting a beta of 3.10 as it bounced around the past few years. It trades near the middle of its 52-week price range of $1.24 – $9.30, and the strength of the recent downturn has caused it to show ongoing negative price momentum by trading below most major moving averages.
Analysts following the company have been bullish on WULF stock. For instance, Roth MKM analyst Darren Aftahi recently reiterated a Buy rating with a price target of $11.00, noting the company’s significant new deal with Core42. This indicates that high-performance computing (HPC) could account for 50% of revenue by the second half of 2026.
Nine analysts recently recommended TeraWulf as a Strong Buy. Their average price target for WULF stock is $9.83 over the next 12 months, representing a potential upside of 82.04% from current levels.
WULF in Review
TeraWulf’s strategic expansion into AI-driven computing through a long-term data center lease agreement with Core42 and its existing Bitcoin mining operations place it in a strong position for future scalability and revenue growth. Despite recent challenges in the crypto and tech sectors that led to a temporary decline in its share price, its stock is still up significantly over the past year, and its trajectory of growth suggests that the current dip could be an opportune moment for long-term investors.
