October Report Highlights Big Gains in Crypto Mining Efficiency and Expansion

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Terawulf Inc. (WULF:NASDAQ) has reported its October 2024 production and operations. The report included significant advancements in self-mining with an operational capacity reaching 8.1 exahash per second (EH/s). This marks a 62% increase from the prior year. The company mined a total of 150 bitcoins during the month, averaging approximately 4.8 bitcoins per day, at a power cost of US$36,789 per bitcoin mined or about US$0.048 per kWh (kilowatt-hour). To improve efficiency, TeraWulf continued its miner refresh program at its Lake Mariner facility, replacing older models with upgraded S19 XP miners following its sale of interest in the Nautilus Cryptomine facility, which enabled additional hardware acquisitions.

Focusing on high-performance computing (HPC) infrastructure, TeraWulf's aim is to establish 72.5 MW HPC hosting capacity at Lake Mariner by Q2 2025. October's operational hash rate averaged 6.8 EH/s, with adjustments made for demand response events and performance optimization measures to enhance profitability. Construction on the company's 20 MW HPC hosting facility, CB-1, remains on schedule for Q1 2025, and a larger 50 MW HPC facility, CB-2, is expected by Q2 2025. The recent sale of TeraWulf's equity interest in Nautilus and new financing through convertible notes are anticipated to support these growth initiatives.

Sean Farrell, Senior Vice President of Operations at TeraWulf, explained in the press release, "October marked another productive month, with TeraWulf mining 150 bitcoin and sustaining an average daily production of around 5 bitcoin . . . In line with our previously outlined plans, we are accelerating the transition to more efficient mining hardware by replacing older miners at Lake Mariner with S19 XP models. We are also working closely with Bitmain's warranty department on a recovery plan to repair and replace 1.5 EH of mining equipment with a target completion by the end of the year. Furthermore, we have established a dedicated Business Development and Performance Optimization team focused on integrating advanced IT and software solutions to improve our operational hash rate and overall efficiency. Building 5, which has been designed to handle higher heat exhaust of the latest generation miners, remains on track to be operational in Q1 2025."

Why Crypto Mining?

The cryptocurrency mining sector has seen recent momentum, bolstered by the U.S. election results and the evolving landscape for Bitcoin. As Benzinga reported on November 6, bitcoin mining stocks experienced notable gains following the U.S. presidential election, which led to Bitcoin reaching record highs. The outcome was anticipated to benefit U.S.-focused mining companies as pro-crypto policies, including a preference for domestic bitcoin production, gained prominence. Benzinga noted that Trump had previously expressed support for more bitcoin mining within the U.S., a stance that influenced broader market optimism in the days following his election.

On November 4, Yahoo! Finance highlighted the growing trend among Bitcoin miners to integrate artificial intelligence (AI) to power a "new industrial revolution." As described by Rob Nelson, who emphasized the impact of cryptocurrency mining as a vehicle for both economic and technological change. This trend has driven miners to secure deals within the AI sector, given the synergies in computational power required for both cryptocurrency and AI initiatives. Nelson projected that this cross-industry expansion could have far-reaching effects, creating value for both miners and AI-focused enterprises.

Additionally, a November 6 report from Time explored the significance of the recent Presidential election outcome for the crypto industry's future regulatory environment. According to Time, Trump's support for the industry included ambitions to boost the country's bitcoin mining footprint, which aligned with crypto PACs' efforts to secure pro-crypto candidates. The article reported that these advocacy groups saw the election as an opportunity to reshape crypto regulation and encourage growth in U.S.-based bitcoin mining.

TeraWulf's Catalysts

TeraWulf's recent initiatives set a foundation for further growth and operational efficiency. According to the company's investor presentation, the sale of its 25% equity interest in the Nautilus facility enhances liquidity. This enables TeraWulf to reinvest in its flagship Lake Mariner site for both HPC and AI expansion.

The transaction also reduces exposure to the expiring Nautilus 2¢ power contract by 2027, positioning the company to benefit from projected power price increases at Lake Mariner. This strategic realignment is anticipated to improve fleet efficiency, with an upgraded mining fleet targeting 13 EH/s by Q1 2025, supported by the deployment of next-gen S21 Pro miners.

What Experts Are Saying...

On November 5, 2024, Roth MKM analyst Darren Aftahi assigned TeraWulf a "Buy" rating and set a price target of US$7.50. Roth highlighted optimism around the company's expansion and potential in high-performance computing (HPC) and bitcoin mining. Roth noted that TeraWulf's planned 72.5 MW of HPC capacity by Q2 2025 could generate annualized revenue of approximately US$90 million, with over US$60 million in profit.

The report highlighted the completion of TeraWulf's initial 2.5 MW HPC project and its upcoming 20 MW facility, which remains on track for Q1 2025. Roth analysts pointed to the operational progress at TeraWulf's Lake Mariner facility, emphasizing the company's improvements in mining efficiency with new S19 XP models, which brought its machine efficiency to 22 J/TH.

Ownership and Share Structure

According to Refinitiv, management and insiders hold 6.67% of TeraWulf. Of them, Co-founder, COO, and CTO Nazar M. Khan holds the most, with 4.43%.

Strategic investors hold 21.37%. Of them, Riesling Power LLC holds the most at 5.23%, Baryshore Capital LLC holds 4.77%, Revolve Capital LLC has 4.67%, Opportunity Four of Parabolic Ventures owns 2.46%, and Lake Harriet Holdings LLC has 1.90%.

Institutions have 45.11%. The largest holders there are The Vanguard Group at 6.12%, BlackRock Instituional Trust with 4.22%, Two Sigma Investments LP at 2.28%, Beryl Capital Management LLC holds 1.74%, and Geode Capital Management LLC has 1.66%. The rest is retail.

TeraWulf has a market cap of US$2,375.93 million and 275.29 million free float shares. Their 52-week range is US$ 0.8911 - 7.28.