TeraWulf's HPC Shift Accelerates: Are Near-Term Revenues at Risk?

TeraWulf WULF is accelerating its strategic pivot from Bitcoin mining to high-performance computing (HPC), but the transition is accompanied by clear near-term revenue risks. While the shift is intended to improve long-term cash flow stability, current results underscore the financial drag of repositioning ahead of meaningful HPC scale.

In the third quarter of 2025, WULF began recognizing its first meaningful HPC lease revenues, generating about $7.2 million after energizing 22.5 MW of capacity at its Lake Mariner campus. Although this milestone validates the strategy, HPC revenues remain modest compared with the legacy Bitcoin mining segment, which still accounts for the bulk of quarterly revenues. At the same time, management deliberately reduced mining activity, selling miners and reallocating power infrastructure to support HPC deployments.

This decision weighed heavily on near-term performance. Bitcoin production fell 22% sequentially to 377 BTC, limiting exposure to favorable Bitcoin price movements during the quarter. The revenue impact was compounded by higher depreciation from repurposed mining assets, rising SG&A and additional staffing and construction costs tied to the HPC buildout. Many of these incremental costs were absorbed by the mining segment, creating a temporary income and revenue gap.

From an industry standpoint, WULF’s strategy aligns with strong demand for AI-driven, high-density compute and the appeal of long-duration, credit-enhanced contracts. Despite securing more than $17 billion in long-term HPC commitments and planning 250-500 MW of annual additions, most capacity will not be operational until 2026. This delay limits near-term revenue contribution even as investment accelerates, prolonging pressure on financial results.

How Rivals Are Addressing Near-Term Challenges

Applied Digital APLD is addressing near-term challenges by addressing its HPC and AI transition with diversified revenue streams and disciplined capital planning. Applied Digital continues to generate cash from legacy hosting operations while locking in long-term, hyperscaler-supported lease agreements like “CoreWeave” before the new data centers are fully operational. These pre-committed contracts provide revenue visibility and reduce implementation risk. Backed by significant institutional financing, Applied Digital can scale aggressively without over-reliance on near-term cash flow or dilutive equity issuance.

IREN Limited IREN manages short-term challenges by funding its HPC and AI transition through cash flow from profitable Bitcoin mining operations. IREN Limited leverages its vertically integrated, low-cost infrastructure while simultaneously utilizing customer prepayments, strategic loans and ATM facilities as backstops to limit funding drawdowns. Backed by fully renewable energy and industry-leading power costs, IREN Limited maintains financial flexibility during capital-intensive AI deployment growth.

WULF’s Share Price Performance, Valuation & Estimates

TeraWulf shares have surged 100.2% in the past year, outperforming the broader Zacks Finance sector’s return of 15.7% and the Zacks Financial Miscellaneous Services industry’s decline of 9%.

WULF’s One-Year Price Performance

WULF stock is trading at a premium, with a trailing 12-month price/book ratio of 21.37X, significantly higher than the industry’s 3.18X. TeraWulf has a Value Score of F.

WULF’s Valuation

The Zacks Consensus Estimate for the first-quarter 2026 loss is pegged at 18 cents per share, which remains unchanged over the past 30 days.The company reported a loss of 16 cents per share in the prior-year quarter.

TeraWulf currently carries a Zacks Rank #4 (Sell).

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This article originally published on Zacks Investment Research (zacks.com).

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