TeraWulf Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead. Good morning, welcome to TeraWulf's second quarter 2026 earnings call.

Joining me today are Chairman and CEO, Paul Prager, our CTO, Nasir Khan, our CFO, Patrick Fleury. Before we begin, please note that our remarks today may include forward-looking statements. These statements are subject to risks and uncertainties, actual results may differ materially. Words such as anticipate, expect, believe, intend, estimate, project, could, should, will, and similar expressions are intended to identify forward-looking statements. For a discussion of these risks, please refer to our filings with the SEC, available at sec.gov and in the investor relations section of our website. We will also reference certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are available in our earnings release filings. With that, I will turn the call over to our Chairman and CEO, Paul Prager.

Thanks, John, good morning, everyone. The second quarter was defined by execution and expansion. At Lake Mariner, we converted additional contracted capacity into operating infrastructure recurring lease revenue. At the same time, we expanded the platform through the acquisition of Muskie. Following quarter end, we executed a 401-megawatt lease with Anthropic at the Justified Data campus and entered into an agreement to monetize our interest in the Abernathy Joint Venture. Taken together, these developments demonstrate the model we've been building, which is to secure power-advantaged infrastructure, contract with high-quality customers, deliver capacity in phases, selectively recycle capital into the next generation of growth. Our number 1 priority remains execution. You see that most clearly at Lake Mariner. CB3 was fully delivered and generating lease revenue in early July, bringing total revenue-generating critical IT capacity at the campus to 102 megawatts.

That delivery also satisfied the applicable conditions for $600 million of Google's credit support for Fluidstack's obligations to become effective. CB3, therefore, represents more than just a construction milestone. It is another building delivered, another contracted revenue stream online, a significant portion of the credit support behind the project now effective. Following quarter end, we also amended certain Fluidstack leases. Those amendments increased contracted capacity, added rent associated with tenant-requested scope changes, established updated delivery schedules on a data hall by data hall basis. Nasir will cover construction and commissioning in greater detail, the key milestones are straightforward. At CB4, we remain on track to begin energizing the first data hall in late September. At CB5, we expect to begin energizing the first data hall in very early January.

The first data hall at CB4 is already in commissioning, and we continue to work closely with Fluidstack, Google, and the broader project team to align infrastructure readiness with hardware deployment. The important point here is that CB3 is online and generating revenue, CB4 is in commissioning, and CB5 is advancing against the updated customer-aligned schedule. That is execution. It is increasingly visible in our financial profile, with high-power compute leasing representing the majority of our revenue during the quarter. While Lake Mariner continues to deliver, the second major theme is expansion. Nowhere is this more evident than in Kentucky. Following quarter end, we executed a long-term lease with Anthropic for approximately 401 megawatts of critical IT capacity at our Justified Data campus in Hawesville. The agreement expands our relationship with Anthropic and represents approximately $19 billion of contracted revenue over the initial 20-year lease term.

The economics are highly attractive for our shareholders and reflect the value of controlling large-scale, power-secured infrastructure in a market where capacity is increasingly scarce. The significance of the agreement goes well beyond its size. Lake Mariner demonstrates that we can take a legacy industrial power site and convert it into a large-scale operating high-power compute campus. Justified demonstrates that we can repeat the model in a new region. We secured the site, controlled the power infrastructure, and converted that position into long-duration contract with one of the leading companies in artificial intelligence. That is our model: control the infrastructure, contract capacity, finance it against long-duration revenue, and deliver it in phases. We also expanded our Kentucky platform through the acquisition of the Muskie Data Campus in Eastern Kentucky.

Muskie is a gigawatt-scale development site and a prime example of the utility partnership path to power that we discussed on our last earnings call. The campus is located within an established industrial park and is being developed in partnership with investment-grade Kentucky Power, an AEP company. Our electric service arrangements were entered into under a data center tariff approved by the Kentucky Public Service Commission, which provides for one gigawatt of electric service. Kentucky Power is expected to construct a new 345-kilovolt substation connected to AEP's existing 765 kV transmission network, with initial electric service expected in the fourth quarter of 2028. This is not simply land with a queue position. It is utility-supported development pathway with contracted electric service, defined infrastructure obligations, and a state-approved framework for large-scale data center development.

The market too often treats a queue position or inclusion in a batch study as equivalent to available power. It is not. The relevant and important questions are: when can the power be actually delivered, under what contract or commercial framework, and with what degree of infrastructure certainty? Muskie provides considerably greater visibility for each of these points. Muskie also builds on the substantial momentum and relationships we've developed in Kentucky. The Commonwealth is increasingly attractive to prospective tenants because of its power infrastructure, business environment, and the constructive engagement we have seen from state, utility, and local stakeholders. Justified provides our near-term contracted delivery opportunity in Kentucky. Muskie provides the next gigawatt-scale platform in our pipeline, and we are actively advancing commercialization discussions for the site.

Given its near-term power availability, we are increasingly optimistic about the potential to expand the Muskie Data Campus to as much as 2 gigawatts and accelerate portions of the current development timeline. In addition to Muskie, our pipeline includes additional expansion opportunities at Lake Mariner and Lake Hawkeye in New York, Chesapeake in Maryland, and there are many other sites we are actively evaluating. Each is at a different stage, but collectively they provide multiple paths to power, customer contracting, and phased delivery rather than dependence on a single market or interconnection process. As we expand the platform, we are also being disciplined about where we spend our time and capital. That's what drove our decision on Abernathy. Following quarter end, we entered into an agreement to sell our entire interest in the Abernathy Joint Venture for approximately $530 million.

Abernathy is a great project, but at this point in TeraWulf's development, it is simply not the right project or the best project for us to continue to own. Our strategy is increasingly focused on large-scale opportunities where we control the site, control the power infrastructure, the development process, and the customer relationship. All that drives long-term economics. The Abernathy transaction allows us to focus our management resources and capital on those opportunities. It also demonstrates our ability to create value through development and selectively recycle capital into larger scale projects that we directly control. The Anthropic lease demonstrates our ability to create long-duration contracted value. The Abernathy transaction demonstrated our ability to realize value and redeploy that capital into the next generation of growth. We've also recently cleared an important milestone at Chesapeake.

On July 29th, the Federal Energy Regulatory Commission, FERC, authorized our proposed acquisition of the Morgantown site. That approval clears a significant regulatory condition towards closing. The site includes approximately 210 megawatts of existing grid-connected generation, substantial electrical infrastructure, and meaningful long-term expansion potential in one of the most power-constrained regions in the country. Subject to the remaining closing conditions and required consents, Chesapeake offers the potential to develop an integrated generation, storage, and data center campus capable of supporting up to 1 gigawatt of data center capacity while serving large-scale compute demand in the most competitive region while supporting regional grid reliability. We have developed our pipeline this way deliberately. Regional diversity gives us access to different power markets and utility partners, but it also provides greater operational and security resilience. We do not want the platform dependent on one grid, one regulatory regime, or one source of generation.

Our portfolio includes utility-supported, grid-connected campuses, sites with existing generation infrastructure, and locations capable of integrating generation and storage or supporting additional generation on the broader grid. We view behind-the-meter power primarily as a bridge to a utility-supported, grid-connected campus. Over time, we believe the most reliable, resilient, and economically sustainable power solutions will be those interconnected with a larger utility system. That concept is becoming increasingly important. The constraint on AI infrastructure is not demand. It is power, transmission, interconnection, and the ability to bring new infrastructure online responsibly. We have consistently said that data center infrastructure should be an asset to the grid, not a burden to it, and that is how we view Governor Hochul's recent executive order in New York. We do not believe the executive order will disrupt our development timing at either Lake Mariner or Lake Hawkeye.

The WULF Compute build-out at Lake Mariner is already permitted, and Lake Hawkeye's is in the early stage of development, and it has not been impacted. Importantly, the governor has described the order as an effort to establish a framework, not a permanent ban on future data center development. We welcome such a framework. Responsible development at this scale necessarily requires careful consideration of environmental impact, grid reliability, cost allocation, and community priorities. We do not view those considerations as a binary choice between development and responsibility. Instead, we work constructively with regulators, utilities, and local communities to address legitimate concerns, operate responsibly, and be an active and valuable long-term member and neighbor within the communities in which we operate. A clear framework should establish the rules of the road around reliability, cost allocation, resource use, generation, storage, and community impact so that credible projects can move forward responsibly.