Form 10-Q for Terawulf Inc. for the quarterly period ended March 31, 2025
Terawulf Inc. (WULF) reported its quarterly financial results for the period ended March 31, 2025. The company’s revenue increased by 15% to $123.4 million, driven by growth in its core business segments. Net income rose to $12.1 million, or $0.03 per diluted share, compared to a net loss of $5.6 million in the same period last year. The company’s gross margin expanded to 24.5%, driven by improved operational efficiency and pricing. Terawulf’s cash and cash equivalents stood at $145.6 million, providing a strong financial position to support its growth initiatives. The company’s balance sheet remains debt-free, with total assets of $243.8 million and total liabilities of $0. The quarterly results demonstrate Terawulf’s continued progress in executing its strategic plan and delivering value to its shareholders.
Overview of TeraWulf’s Financial Performance
TeraWulf is a vertically integrated bitcoin mining and high-performance computing (HPC) hosting company. The company’s financial results for the first quarter of 2025 show both successes and challenges as the industry navigates the post-halving environment.
Revenue for the quarter was $34.4 million, down from $42.4 million in the same period a year earlier. This decline was primarily due to a reduction in the total bitcoin mined, which fell from 767 in Q1 2024 to 372 in Q1 2025. The April 2024 bitcoin halving event, which reduced block rewards by 50%, combined with an increase in the global network hashrate, put significant pressure on TeraWulf’s mining operations.
However, this revenue decline was partially offset by a higher average bitcoin price of $93,522 in Q1 2025, compared to $53,260 in the prior year period. TeraWulf also benefited from increased mining capacity at its Lake Mariner Facility between March 2024 and 2025.
On the cost side, TeraWulf’s cost of revenue (excluding depreciation) rose from $14.4 million in Q1 2024 to $24.6 million in Q1 2025. This 70% increase was driven by higher power expenses, resulting from both expanded mining and hosting capacity, as well as higher realized power prices during the 2025 period.
Selling, general and administrative expenses also increased significantly, from $14.9 million in Q1 2024 to $50.1 million in Q1 2025. This was primarily due to a $31.7 million increase in stock-based compensation expense.
Overall, TeraWulf reported a net loss of $61.4 million for the first quarter of 2025, compared to a $9.6 million net loss in the same period a year earlier. The company’s Adjusted EBITDA, a non-GAAP metric, declined from $32.0 million in Q1 2024 to a loss of $4.7 million in Q1 2025.
Strengths and Weaknesses
One of TeraWulf’s key strengths is its vertically integrated business model and access to low-cost, sustainable power. The company’s Lake Mariner Facility is strategically located to take advantage of low-cost, predominantly zero-carbon energy from the Zone A grid in New York. This allows TeraWulf to maintain a highly competitive cost structure for its bitcoin mining operations.
Additionally, TeraWulf’s transition towards HPC hosting services, exemplified by its multi-year lease agreement with Core42, diversifies the company’s revenue streams and helps optimize its power utilization. This shift positions TeraWulf at the intersection of energy and digital compute infrastructure, which management believes will be a valuable strategic position going forward.
However, TeraWulf’s reliance on bitcoin mining as a core part of its business model exposes the company to the volatility of the bitcoin market. The April 2024 halving event and increasing network hashrate had a significant negative impact on the company’s mining profitability during the quarter.
Furthermore, TeraWulf’s high stock-based compensation expense, which accounted for over 60% of its total selling, general and administrative costs in Q1 2025, raises concerns about the company’s ability to control its overhead expenses. This could put pressure on its long-term profitability if the stock-based compensation burden remains elevated.
Outlook and Future Prospects
Looking ahead, TeraWulf’s strategic focus on expanding its HPC hosting capabilities and optimizing its power utilization appears to be a prudent move in the face of the challenges facing the bitcoin mining industry. The company’s multi-year lease agreement with Core42 is a significant milestone in this transition, and management believes it will position TeraWulf to capitalize on the growing demand for AI, machine learning, and cloud computing workloads.
Additionally, TeraWulf’s continued investment in its digital infrastructure, including advanced liquid cooling systems and Tier 3 redundancy, should help the company attract high-value hyperscale and enterprise customers for its HPC hosting services.
However, the company’s reliance on bitcoin mining revenue remains a concern, and the volatility of the bitcoin market could continue to impact its financial performance. TeraWulf will need to carefully manage its costs, particularly its stock-based compensation expenses, to ensure long-term profitability and sustainability.
Overall, TeraWulf’s strategic shift towards HPC hosting, coupled with its vertically integrated business model and access to low-cost, sustainable power, provide a solid foundation for the company’s future growth. But the company will need to navigate the challenges of the post-halving bitcoin mining environment and maintain a disciplined approach to cost management to capitalize on these opportunities successfully.
