Crypto Currents: TeraWulf monetizes equity interest in Nautilus JV

As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week’s top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.

TERAWULF MONETIZES EQUITY INTEREST IN NAUTILUS JV: TeraWulf (WULF) announced Thursday it has (TLN). The transaction, valued at approximately $92M, will help fuel expansion of HPC/AI and bitcoin mining at the company’s wholly-owned Lake Mariner facility and position TeraWulf for substantial value creation. The transaction allows TeraWulf to achieve a 3.4x return on its investment in Nautilus. The $92M consideration consists of $85M in cash and approximately 30,000 Talen-contributed miners and related equipment valued at around $7M. TeraWulf intends to reinvest this capital into the construction of the 20 MW CB-1 facility at Lake Mariner, which is designed for hosting HPC/AI data centers. In addition to the CB-1 facility, TeraWulf aims to complete the construction of the mining building 5, “MB-5”, and maintains its operational target of over 13 EH/s by 1Q25. The company also plans to enhance the efficiency of its mining fleet to achieve 18.2 J/TH.

“This transaction further aligns TeraWulf’s focus and investments with where we have the most operational efficiency, the greatest growth potential, and the best opportunity to drive incremental value for shareholders,” said Paul Prager, CEO. “Monetizing our interest in Nautilus ahead of the 2027 expiration of the highly advantageous 2c/kWh power contract allows us to capture a significant premium for our investment, provide significant capital to invest into our HPC/AI infrastructure and capitalize on our favorably structured miner purchase agreement to upgrade our mining fleet at a discount to the current market price.”

PAYPAL SETTLES EY INVOICE WITH STABLECOIN: PayPal (PYPL) completed its first business transaction using its proprietary stablecoin to show how digital currencies can be used to improve commercial payments, Bloomberg’s Paige Smith reported Thursday, citing Jose Fernandez da Ponte, PayPal’s SVP of blockchain, cryptocurrency and digital currency group. The company paid an invoice to Ernst & Young using PYUSD, which has a market capitalization of roughly $700M. The invoice amount was not disclosed. Fernandez da Ponte said while consumer-facing benefits of stablecoins often command conversation, the payment displays other use cases for the currency. “The enterprise environment is very well-suited for it,” he said. “It’s a very rational conversation to have with the CFO.”

CLEANSPARK SEES ‘NO MATERIAL DAMAGE’ FROM HELENE: CleanSpark (CLSK) provided comments and updates on the impact of Hurricane Helene on Monday. CEO Zach Bradford said, “Most importantly, all our team members are safe. Additionally, our geographically diverse portfolio of sites allowed us to maintain approximately 10.5 EH/s at our sites in Northwest Georgia, Mississippi, and Tennessee throughout the storm. To ensure health and safety, and to avoid any undue pressure on the electrical grid, we shut 365 MW of our Southeast Georgia sites down as the hurricane began impacting the region. Since then, we have been in regular communication with the local utilities to safely bring up the sites in a manner that ensured the local community was supported throughout the process. Within 24 hours, we were able to bring hashrate back to over 17.5 EH/s. We have now brought approximately 200 MW back online and expect to bring the remaining 165 MW online in the coming week after the utilities and communities around us receive power. The majority of the 165 MW remaining offline is projected to be restored to communities no later than October 4, 2024. Our teams are prepared to promptly restore normal operations as soon as power becomes available. We have also thoroughly evaluated all of our sites and are pleased to report that we have experienced no material damage to any site infrastructure. We are not aware of any material losses related to our mining servers and will continue this evaluation as we energize the remaining sites. Our hashrate is currently at approximately 22 EH/s. When our sites are fully reenergized, we expect to reach standard operations at approximately 28 EH/s.”

HUT 8 PRICE TARGET RAISE: Craig-Hallum raised the firm’s price target on Hut 8 (HUT) on Wednesday to $15 from $14 and kept a Buy rating on the shares. The firm is also raising its estimates to reflect the new facility being built in Texas, the new miner and hosting agreement with Bitmain, and the swap of debt for stock. In Craig-Hallum’s view, all these moves continue to suggest a team that is thinking out of the box and aiming for shareholder-friendly solutions in everything they do.

IREN INITIATED WITH BUY: Roth MKM initiated coverage of Iris Energy (IREN) on Tuesday with a Buy rating and $14 price target. The firm believes Iris offers an attractive investment opportunity in the growing energy demand for digital infrastructure. The stock’s risk/reward is compelling just on Iris Energy’s bitcoin mining business, and if the company materially exploits its power portfolio towards high performance computing and artificial intelligence, “significant upside potential exists,” the analyst said.

CRYPTO STOCK PLAYS: Publicly traded companies in the space include Bit Digital (BTBT), Coinbase (COIN), Core Scientific (CORZ), Greenidge Generation (GREE), Mara Holdings (MARA), MicroStrategy, Riot Platforms (RIOT), Stronghold Digital Mining (SDIG) and TeraWulf.

PRICE ACTION: As of time of writing, bitcoin dropped about 6% this week to $61,792 in U.S. dollars, according to CoinDesk.