TeraWulf (US:WULF)2025-08-08 20:14PART I — FINANCIAL INFORMATION Financial Statements (Unaudited) TeraWulf reported increased revenue but a significantly widened net loss for H1 2025, primarily due to higher costs, while total assets grew and cash decreased Condensed Consolidated Balance Sheets Total assets increased to $869.4 million as of June 30, 2025, while cash decreased and total liabilities rose Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $89,993 | $274,065 | | Property, plant and equipment, net | $604,760 | $411,869 | | Goodwill | $55,457 | $0 | | Total Assets | $869,408 | $787,511 | | Liabilities | | | | Total current liabilities | $151,304 | $51,845 | | Convertible notes | $488,716 | $487,502 | | Deferred rent liability | $90,000 | $0 | | Total Liabilities | $695,076 | $543,066 | | Total stockholders' equity | $174,332 | $244,445 | Condensed Consolidated Statements of Operations Revenue increased for H1 2025, but net loss significantly widened, primarily due to higher cost of revenue and increased SG&A expenses Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $47,636 | $35,574 | $82,041 | $78,007 | | Cost of revenue | $22,094 | $13,918 | $46,647 | $28,326 | | Selling, general and administrative expenses | $9,996 | $9,113 | $56,569 | $21,402 | | Operating loss | $(15,590) | $(6,765) | $(75,218) | $(9,081) | | Net loss | $(18,370) | $(10,876) | $(79,788) | $(20,489) | | Loss per common share (Basic and diluted) | $(0.05) | $(0.03) | $(0.21) | $(0.07) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased for H1 2025, primarily due to net loss and treasury stock repurchases - Key activities impacting stockholders' equity in the first six months of 2025 include a $79.8 million net loss, $33.3 million in treasury stock repurchases, $19.6 million in common stock issued for a business acquisition, and $40.0 million in stock-based compensation16 Condensed Consolidated Statements of Cash Flows Net cash decreased by $182.6 million for H1 2025, driven by lower operating cash flow and increased investing activities Condensed Consolidated Statements of Cash Flows Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,677 | $39,227 | | Net cash used in investing activities | $(132,096) | $(93,579) | | Net cash (used in) provided by financing activities | $(52,228) | $104,022 | | Net change in cash and cash equivalents | $(182,647) | $49,670 | - A major change in cash flow presentation occurred: proceeds from the sale of digital currency ($82.4 million) are now classified as an investing activity in 2025, whereas they were an operating activity ($97.6 million) in 2024. This is because the company no longer immediately converts bitcoin to cash following a debt repayment in July 20242054219 Notes to Condensed Consolidated Financial Statements The notes detail the company's business, Beowulf E&D acquisition, digital currency fair value accounting, debt, and new HPC leases - On May 21, 2025, the Company acquired 100% of Beowulf E&D for total consideration of approximately $54.6 million, which included cash, common stock, and contingent payments. The acquisition resulted in the recognition of $55.5 million in goodwill287179 - The company elected to early adopt ASU 2023-08 effective January 1, 2024, which requires digital currency to be measured at fair value with changes recognized in net income495051 - In October 2024, the company sold its 25% equity interest in the Nautilus joint venture for total consideration of $102.1 million29136 - The company entered into long-term HPC lease agreements and received $90.0 million in prepaid rent during the first six months of 202541111113 - In October 2024, the company completed a private offering of $500.0 million of 2.75% Convertible Senior Notes due 2030123124 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's dual strategy in bitcoin mining and HPC, noting revenue growth offset by increased costs and reduced liquidity Overview and Business Strategy TeraWulf's strategy focuses on vertically integrated bitcoin mining and HPC hosting, leveraging its Lake Mariner Facility and recent acquisition - The company's strategy is a dual focus on bitcoin mining and expanding into HPC hosting to capitalize on growing demand for AI and cloud computing171172 - A key strategic development is the signing of multi-year data center lease agreements with Core42 for 72.5 MW of HPC hosting capacity at the Lake Mariner Facility173 - The acquisition of Beowulf E&D on May 21, 2025, vertically integrates a team of 94 employees with expertise in power generation and electrical infrastructure, supporting the company's growth strategy165 Facilities and Operations The Lake Mariner Facility has 245 MW bitcoin mining and 72.5 MW HPC capacity; operational hashrate was 12.2 EH/s Operational Hashrate and Efficiency | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Global hashrate (EH/s) | 843.0 | 566.0 | | TeraWulf operational hashrate (EH/s) | 12.2 | 8.0 | | TeraWulf percentage of global hashrate | 1.4% | 1.4% | | Miner efficiency (j/th) | 17.7 | 23.2 | Cost to Mine One Bitcoin | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Cost to mine one bitcoin | $45,608 | $22,994 | $54,494 | $18,506 | | Value of each bitcoin mined | $98,219 | $65,984 | $95,730 | $58,622 | | Cost per kWh | $0.053 | $0.037 | $0.065 | $0.039 | - The company recorded $3.1 million and $5.9 million from demand response programs in the three and six months ended June 30, 2025, respectively, which are treated as a reduction in cost of revenue188 Results of Operations Revenue increased in H1 2025 due to higher bitcoin prices, but cost of revenue and SG&A surged, leading to a wider operating loss - Revenue increased in Q2 and H1 2025 due to higher average bitcoin prices, despite mining fewer bitcoins (857 in H1 2025 vs. 1,750 in H1 2024) because of the April 2024 halving and increased network difficulty197 - Cost of revenue for H1 2025 increased by $18.3 million year-over-year, driven by higher power expenses from expanded mining capacity and higher realized power prices199 - Selling, general and administrative expenses for H1 2025 increased by $37.6 million year-over-year, mainly due to a $28.2 million increase in stock-based compensation, $1.5 million in acquisition costs, and higher employee-related expenses202 - Depreciation expense increased by $5.2 million in H1 2025 compared to H1 2024 due to new infrastructure placed in service204 Non-GAAP Measure and Liquidity The company reported Adjusted EBITDA of $14.5 million for Q2 2025; liquidity tightened, with cash decreasing to $90.0 million due to capital expenditures Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(18,370) | $(10,876) | $(79,788) | $(20,489) | | Non-GAAP Adjusted EBITDA | $14,531 | $19,526 | $9,836 | $51,503 | - Cash and cash equivalents decreased by $182.6 million during the first six months of 2025, primarily due to significant investments in plant and equipment ($213.6 million) and share repurchases ($33.3 million)219220221 - As of June 30, 2025, the company had cash of $90.0 million and a working capital deficit of $52.2 million222 Critical Accounting Estimates Management highlights critical accounting estimates including fair value of digital currency, asset impairment, stock-based compensation, and business combinations - Key estimates include fair value of digital currency, impairment of long-lived assets, stock-based compensation, income taxes, and accounting for business combinations and goodwill223225227 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are bitcoin price and power cost, with a 10% change impacting H1 2025 net loss by $8.2 million and $4.7 million respectively - A 10% change in the price of bitcoin would have impacted H1 2025 net loss by approximately $8.2 million236 - A 10% change in power prices would have impacted H1 2025 net loss by approximately $4.7 million236 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - Management concluded that disclosure controls and procedures were effective as of the end of the period237 - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025238 PART II — OTHER INFORMATION Legal Proceedings The company was not subject to any material pending legal proceedings during the reporting period - As of the reporting date, TeraWulf was not involved in any material legal proceedings240 Risk Factors No material changes to the risk factors from the Annual Report on Form 10-K have been reported - No material changes to the risk factors from the Annual Report on Form 10-K have been reported242 Unregistered Sales of Equity Securities and Use of Proceeds The company's $200.0 million share repurchase program had no repurchases in Q2 2025, with the full amount available - The company did not repurchase any shares of its common stock during the second quarter of 2025244 - As of June 30, 2025, the maximum value of shares that may yet be purchased under the program is $200.0 million243244 Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - The company reported no defaults upon senior securities245 Mine Safety Disclosures The company reported no mine safety disclosures during the period - The company reported no mine safety disclosures246 Other Information The company reported no other information under this item - The company reported no other information under this item247 Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including agreements and officer certifications