Why Google’s Backstop Just De-Risked TeraWulf’s $19B Anthropic Deal

TeraWulf reported Q3 revenue of $76.2 million, up about 70% quarter over quarter, with HPC lease revenue at $63 million — now 83% of total revenue.

Terrawolf investors got a strong earnings update Friday morning with AI revenue nearly doubling, construction at Lake Mariner moving forward, and a new agreement with Google that could significantly reduce the financial risks surrounding its $19 billion Anthropic deal.

The company reported Q3 revenue of $76.2 million, up 70% from this previous quarter. As it continues transforming its Bitcoin mining business into an AI data center company.

But the biggest story might be Google's new financial backstop, which could improve the economics and valuation of Terawolf's next major data center campus. Let's break down the numbers first.

Terawolf generated $63 million in HBC lease revenue, up 97% quarter over quarter.

AI infrastructure now accounts for 83%, again, 83% of the company's total revenue. At Lake Mariner in New York, Terawolf has 102 megawatts of operating IT capacity with another 336 megawatts coming online over the next two quarters.

Management expects to exit Q1 2027 with approximately 700 million in annualized leasing revenue as those buildings become operational.

And importantly, construction costs remain within guidance at roughly $8 to $10 million per megawatt. It's a big development given that a lot of investors have been worried about CAPEX costs and overruns recently.

Lastly, to the Google deal, which I think is the most interesting part of the earnings call. Terawolf recently signed a 20-year agreement worth approximately $19 billion with Anthropic at its justified campus in Kentucky. Represents about 401 megawatts of IT capacity.

Google has now agreed to financially backstop Anthropic's lease obligations. This is why it matters. If Anthropic defaults, Google can be required to assume the lease or make a termination payment designed to reduce outstanding project debt.

That gives Terrawolf that gives Terawolf a much stronger credit profile when approaching lenders to finance the campus, potentially lowering borrowing costs and reducing the risk of getting stuck with a massive data center and an unpaid lease. It also decreases the costs and opportunities, also decreases the opportunities for management to dilute shareholders.

Charlie, we got a few story lines here again to pick through. 700 million annualized leasing revenue, Google credit. What do you think about what happened with Terawolf on its earning call? Are you as bullish on Terawolf given the Google news as I am?

Yeah, yeah, I'm more bullish. I've been seeing this on the timeline. This is a Google, Google, Google story.

I think we all knew, like it was pretty telegraphed that Google was going to like backstop and that they were going to be the official announced signed counterparty to Terawolf here because of fluid stack. Um, but I think it can't be understated that in a meta where financing is the competitive edge with Google on the other end, you're incredibly well positioned. So

uh 700 million in annualized revenue now at Lake Mariner. That's huge. I think it's even bigger though that it's Google's revenue. So.

We got a great comment in the chat from Jason saying, Wolf had a great call today. Paul Prager is a great CEO. Talked about everything people wanted to hear about, no dilution, shareholders first. I've just heard what they have now and it goes online, the stock has a minimum of $17.

In my notes, I do see that there is some nice bull calls as well. Looks like we're seeing a price target for $20 from KBW, uh if my notes are correct. I haven't seen a lot of other notes out yet, but I expect to get a few on Monday, Tuesday. Uh, some of the banks take a few more days, might even take a few months to update, but we'll see, depends on how fast some of these bankers are post earnings.

Overall, Charlie, I think this was like a really positive earnings call for Terawolf, just like it was a really positive earnings call for uh for Iren earlier. And I I would put the differences, I I kind of like that we had the earnings call for Iren and Wolf on the same day because they are sort of the um two different ways you can build a business, right?

You have the neo cloud stack that verticalizes everything, GPUs, you're going to own the contracts, the AI labs. Uh you're going to be able to take financing against the GPUs, against the data centers in the public market. And then you have the Terawolf side, which is like, hey, we want to be uh land owner, energy provider, we want to basically build these things and lease out the site. We don't want to play the GPU game.

Interestingly, you kind of see a similar margin on the same businesses, uh year over year for the megawatts, but you do see a big drastic change in terms of like the revenue you can get, uh, where Iren's again, like 43, 44 million dollars per megawatt, and then Terawolf is looking, um, much smaller in in like about a few million dollars per megawatt. Uh but the the costs are a lot different there as well.

So I think that's a really important thing to note as well is like these costs are different. And so with the cost structure coming down, they're expecting to see a little bit of a drop there. Um, yeah, any any other thoughts from this, I can keep ripping if you if you want me to. Yeah,

I so I'm not the finance guy. I never will be. Honestly, y'all let me talk too much about finance as it is. But I will say I would like to know the terms of the Google deal. I don't think those were published and the terms do matter. It's like I was just very praising of Google on the other side, but then I'll follow that up with, um I want to know a few more details. So what does the actual financing look like?

Because that's there's always another question. There's always more clarification that can affect, you know, how this stock is positioned. Now it's down to the terms. You got Google, great. Check. You're probably leading the pack. They're probably mispriced relative to their competitors. So, I want to see those financing terms.

Yeah, and I'll go actually go back and just make it crystal clear for everyone listening to the show. The cost I was mentioning, um per megawatt, I was not as clear as I should be. Per megawatt build CAPEX for critical IT, it's like 8.9 million for the Lake Manor build. And then for the Horizon build, which I'm mimicking off of, it's like 43, 44 million per megawatt. Um so I was talking about the CAPEX there.

And then in terms of like the earnings per megawatt, it can kind of change. So on the Iron call side, right? We we talked about like you can do $20 million per megawatt, and then it goes all the way to $40 million per megawatt, just depends on the load build. Um for a company like Terawolf, which is just kind of focus on selling the power land, you're getting into like the low million dollars per megawatt.

Um but it stacks up over time, right? And like your risk profile is is reduced considerably. So we're just kind of flipping through here on the video if you're listening to audio and just kind of looking at their earnings deck and there's some some great color here. I think a big takeaway for me, Charlie, is like getting that investment grade backstop. They talked a lot a lot about that on the on the earnings call. Patrick Flurry was on uh discussing like they need a public company investment grade backstop.

That's why they didn't do it directly with Anthropic. Anthropic's not public yet. Great company, great tenant, they're not able to do that quite yet, but they needed to be able to have that. Now, the last thing I want to bring up on the call is like where is Terawolf going in the next two years and like what does construction uh look like for them in the future?

I think the biggest thing here is perhaps like an international build. Uh if we go back, we don't see anything on their map here clicking around. It is on slide six. You know, they have New York, they have, looks like Maryland, yeah, it's Maryland and then they have Kentucky.

There's rumors that they're looking internationally. Uh so we could expect something in Europe in the near future. That would be pretty bullish for the stock again getting to that that international perspective for the company and kind of derisking a little bit by going internationally. I think that could be a boost for them. Um they also said that they're going to continue to try to sign 250 to 500 megawatts per year.

Um and that just continues to add like a real estate company, adding more and more and more rental units to your portfolio with the future being like they're going to be a REIT with really high percentage uh of of possible dividend air quotes for investors. Um any thoughts on like the similarities with Iren or similarities with any of the other companies we're looking at on this model?

Uh, I no, I don't unfortunately, I don't have a whole lot of insight uh to give on the similarities. I will note that, um, I think if you work for Terrawolf, you probably want to live in Pittsburgh Pittsburgh, Pennsylvania, because that puts you smack dab in the middle of all their sites. So you can get there in uh a few hours each. So that's that's my insight looking at that map.

Yeah. Yeah, no, I don't have too much more. Like a very positive for them and uh I think like they're getting their stock price appreciated for that reason. So we can close out on that Terawolf segment. Um as we kind of close out the week, what a week it was.

Oh my god. What what an absolute week. Uh, I recommend everybody, turn your phone off, go outside, go touch some grass this weekend. The markets will be back on Monday, whether you want it to or not. But go, take a big deep breath. Don't post anything political on Facebook or X this weekend. Just go hang out with your family because the stocks will be there when you come back.

It's going to be a volatile winter. You know it.