TeraWulf’s AI lease revenue grows as financing risks draw scrutiny

Data center operator TeraWulf reported sharply higher computing lease revenue Friday as executives outlined financing for a $19 billion contract with Anthropic, the developer of the Claude AI assistant, and addressed investor concerns about borrowing costs and returns on AI infrastructure.

The Easton, Maryland-based company’s earnings announcement showed revenue rose about 51 percent to $76.2 million. High-performance computing leases contributed $63 million, about 83 percent of sales, up from $7.2 million a year earlier and $31.9 million in the second quarter. The $63 million included $46 million in rent, $11.3 million in tenant fit-out revenue and $5.4 million in power pass-through revenue.

Bitcoin-mining revenue fell to $13.2 million from $43.4 million.

“We protect our economics; that is fundamental to how we operate,” Chairman and CEO Paul Prager told analysts on the company’s earnings call.

Prager said investors were questioning leverage, financing costs, and whether AI infrastructure returns would justify investment. The International Monetary Fund’s October Global Financial Stability Report warned that weaker AI investment and profitability could trigger an asset-price correction amplified by leverage. Its accompanying analysis flagged circular financing: stress at key companies receiving investment could weaken revenue forecasts, investment values, and associated debt.

Anthropic’s 20-year lease at Terawulf’s Justified campus in Hawesville, Kentucky, covers about 401 megawatts of computing capacity. Phased completions are expected from late 2027 through the second quarter of 2028. Prager said TeraWulf has the required equity and expects project debt to fund the balance. Chief Financial Officer Patrick Fleury put equity contributed through September at about $550 million. Fluor will handle engineering, procurement and construction.

“Cash flow is ramping,” Fleury said. He said liquidity and remaining proceeds from the completed Abernathy joint-venture sale should cover Lake Mariner commitments, Justified equity needs and interim letter-of-credit requirements at Muskie without accessing the equity capital markets. Fleury said about $300 million of parent cash collateralizes Muskie letters of credit. He said recycling capital from operating assets would become a priority in 2027.

TeraWulf received $250 million from the sale to an investor group led by Fluidstack, with $150 million expected by Dec. 31 and about $130 million, subject to adjustments, by April 30, 2027. The venture is developing a 168-megawatt campus in Abernathy, Texas.

Net income reached $709.9 million, primarily driven by a noncash fair-value adjustment to Google warrants. A $95 million Abernathy gain also contributed. The operating loss was $88.2 million. Adjusted earnings before interest, taxes, depreciation and amortization were negative $12.8 million, compared with positive $18.1 million a year earlier.

Lake Mariner in Barker, New York, had 102 megawatts generating revenue and 336 megawatts under construction at quarter-end. Tenants include Fluidstack, whose leases carry Google credit support, and Core42. The next two buildings are targeted for phased delivery this quarter and in the first quarter of 2027.

At Muskie in Grayson, Kentucky, amended Kentucky Power agreements doubled contracted power to 1,000 megawatts, subject to Kentucky Public Service Commission approval. The first 500-megawatt phase is targeted to begin ramping up in the fourth quarter of 2028. The second phase is targeted for 2029, a year earlier than previously planned. TeraWulf reaffirmed its annual target of signing leases for 250 to 500 megawatts of additional computing capacity.