TeraWulf Inc

TeraWulf Inc. (NASDAQ: WULF) owns and operates environmentally sustainable, data center infrastructure in the United States, specifically designed for bitcoin mining and high-performance computing. The Company owns and operates the Lake Mariner facility, which is located at a former coal power plant site in Western New York. It generates revenue primarily through bitcoin mining, leveraging predominantly zero-carbon energy sources, including nuclear and hydroelectric power.

Recent Business and Financial Updates

• TeraWulf Schedules Q3 2024 Earnings Call: TeraWulf Inc. has announced its third-quarter 2024 earnings conference call, set for Tuesday, November 12, 2024, at 5:00 p.m. Eastern Time. The company will release a press statement detailing its financial results for the quarter ending September 30, 2024, earlier on the same day. Investors and participants are encouraged to join the call or webcast five minutes prior to its start.
• Strong Revenue Growth in Q2 2024: In the second quarter of 2024, TeraWulf Inc. achieved a significant financial milestone, with total revenue reaching USD 35.6 million. This represents a 130.2% increase compared to USD 15.5 million in the same period in 2023, a growth primarily driven by an enhanced self-mining hashrate and favorable bitcoin market prices. Gross profit, exclusive of depreciation, also rose markedly to USD 21.7 million, up from USD 10.3 million in the prior year, marking a 109.4% increase.
• Impact of Market Challenges on Gross Profit Margin: Despite robust revenue growth, TeraWulf’s gross profit margin in Q2 2024 declined to 60.9% from 66.9% in the previous year’s corresponding quarter. This reduction was largely due to a substantial increase in network difficulty and the bitcoin reward halving in April 2024, which affected profitability. However, these factors were partially offset by a 105.6% increase in the average operating hashrate and a 135.9% rise in the average value per bitcoin self-mined, illustrating TeraWulf’s resilience in navigating industry challenges.
• Strengthened Financial Position through Debt Reduction: The company made significant progress in fortifying its balance sheet by reducing debt in Q2 2024. Approximately USD 30.2 million of debt was repaid during the quarter, with an additional USD 75.8 million paid in July 2024. This proactive approach to debt management has allowed TeraWulf to eliminate all remaining debt ahead of maturity, thereby strengthening its financial stability and positioning it for long-term growth and sustainability.
• Expansion of Mining Capacity at Lake Mariner Facility: Operationally, TeraWulf increased its self-mining capacity to 8.8 EH/s as of June 30, 2024, an 80% year-over-year improvement. This capacity expansion is supported by the recent completion of Building 4 at the Lake Mariner Facility in New York, which has boosted the company’s total bitcoin mining infrastructure capacity to 245 MW across its two primary sites. The ongoing construction of Building 5 at Lake Mariner is set to add an additional 50 MW by Q1 2025, further enhancing TeraWulf’s infrastructure for both bitcoin mining and high-performance computing applications.
• Strategic AI and High-Performance Computing Developments: In line with its growth strategy, TeraWulf has been advancing its initiatives in AI and high-performance computing (HPC) at the Lake Mariner Facility. The company has committed an initial 2 MW block of power to support AI and HPC projects and recently acquired a 128-GPU cluster from NVIDIA. These projects are supported by infrastructure enhancements, including a closed-loop liquid cooling system and upgraded internet connectivity, ensuring the facility can meet the high-bandwidth and reliability requirements of advanced computing.
• Leadership Insights on Operational and Strategic Progress: Paul Prager, CEO of TeraWulf, emphasized the company’s dedication to operational excellence and strategic growth. He highlighted the benefits of TeraWulf’s focus on low-cost, predominantly zero-carbon energy, which has contributed to industry-leading profitability. Prager noted that TeraWulf’s scalable infrastructure supports its expansion into data center markets, positioning the company as a frontrunner in the sector.
• Outlook and Growth Potential: CFO Patrick Fleury further underscored the company’s solid financial performance in the second quarter, achieved despite challenges related to the bitcoin reward halving. He cited effective cost management, reductions in power expenses, and the elimination of debt as key factors contributing to TeraWulf’s strong financial standing. Fleury affirmed the company’s commitment to shareholder value through continued diversification into high-performance computing and AI, laying a foundation for future growth and long-term profitability.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 58.97, currently downward trending correcting from overbought zone, with expectations of a consolidation or an upward momentum if USD 6.00 support holds. Additionally, the stock's current positioning is above both the 50-period SMA and 200-period SMA, which may serve as dynamic short to medium-term support levels.  

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘WATCH’ rating has been given TeraWulf Inc. (NASDAQ: WULF) at the closing market price of USD 6.20 as of November 01, 2024. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is November 01, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.