TeraWulf reported second-quarter revenue of $44.8 million with an HPC occupancy rate of 71%

TeraWulf Inc. (Nasdaq: WULF) announced second-quarter 2026 revenue of $44.8 million, a 32% increase from $34.0 million in the first quarter of 2026, but a 6% decrease from $47.6 million in the second quarter of 2025.

8/11/20265 min read

Non-cash losses amounted to $755.7 million.

The $939.9 million GAAP net loss will receive disproportionate attention given to its operational importance, because $755.7 million of the total represents a non-cash accounting adjustment that does not affect the company's cash position or operating trajectory. When TeraWulf issued warrants to Google as part of their data center partnership, these warrants were recorded at fair value on the date of issuance. As TeraWulf's stock price subsequently rose, GAAP required the company to adjust the warrant liability to the new fair value in each reporting period, recording the difference as a non-cash loss on the income statement. Chief Financial Officer Patrick Fleury directly addressed the earnings report: the adjustment does not affect liquidity.

The remaining unsecured loss of $184.2 million reflects pre-revenue operating costs, development costs, and conversion costs related to building AI infrastructure capacity that will not generate revenue until delivered to tenants. Developing HPC infrastructure requires significant capital and operating expenses before leasing begins, creating a cost structure that is expected to improve as contracted capacity becomes operational and begins generating lease revenue, which helps determine the company's valuation.

Capacity reached 81 MW by the end of the quarter and 102 MW after completion of CB-3.

As of June 30th – the official closing date for the quarter – TeraWulf's key data center at Lake Mariner (New York) was operating 81 megawatts of revenue-generating critical IT capacity. The handover of CB-3, the company's third computing facility at Lake Mariner, was completed in early July, bringing revenue-generating capacity to 102 MW; this increase will be reflected in the Q3 figures rather than the Q2 financial report.

The completion of CB-3 also fulfills the conditions for the $600 million credit support package from Google (tied to Fluidstack's lease obligations) to officially take effect. CFO Fleury described this as a milestone that strengthens the contractual revenue profile for the Lake Mariner project. The credit support from Google acts as a credit enhancement for Fluidstack's lease; meaning Fluidstack's payment obligations to TeraWulf are secured by Google's creditworthiness rather than solely relying on Fluidstack's own balance sheet. For a lessee operating in the rapidly expanding "neocloud" market, this credit enhancement gives TeraWulf's lease the characteristics of an investment-grade credit partner, regardless of Fluidstack's independent credit profile.

TeraWulf is currently deploying an additional 336 megawatts of capacity at the CB-4 and CB-5 buildings in Lake Mariner. The first data hall at CB-4 has entered commissioning, with phased deliveries and commencement of rent collection expected in the second half of 2026. CB-5 is expected to begin phased deliveries in early 2027. Management reaffirmed its cost benchmark of $8 to $10 million per megawatt of essential IT capacity, maintaining cost discipline that gives TeraWulf a competitive edge over the $15 million/MW cost of liquid-cooled AI infrastructure – a type of infrastructure requiring the higher technical standards of hyperscale data centers.

Amendments to the lease agreement with Fluidstack, made in early July, increased the contracted capacity at both CB-4 and CB-5 from 162 megawatts to 168 megawatts. TeraWulf will spend approximately $150 million on tenant-serving site completion items (incurred as of June 30) in exchange for an additional lease revenue of over $300 million over the original 10-year term of the contract. Including the increased contracted capacity, these amendments are expected to generate an additional $500 million in lease revenue over the original lease term.

Kentucky Energy Portfolio

In the second quarter, TeraWulf acquired Muskie Data Campus in eastern Kentucky and finalized power supply agreements for up to 1 gigawatt with Kentucky Power Company. This transaction expands TeraWulf's energy infrastructure into eastern Kentucky, supplementing its Justified Data Campus in Hawesville; thus forming a Kentucky energy portfolio alongside its Lake Mariner facility in New York, and creating geographic diversification across two separate electricity markets with different grid characteristics and energy source structures.

The agreement to supply up to 1 gigawatt of electricity in Kentucky makes Muskie one of the largest committed capacity projects at a single location in TeraWulf's portfolio, although details regarding development progress, capital requirements, and tenant allocation plans for the Muskie project were not fully disclosed in the Q2 earnings report. This acquisition reflects management's strategy of tailoring capital deployment to contractual needs while flexibly repurposing capital when it enhances control, scales up, and optimizes long-term shareholder returns.

HPC's rental segment profit margin reached 28%.

The profit margin for TeraWulf's HPC leasing segment reached approximately 28% in Q2. Mr. Fleury noted that this figure included revenue and site preparation costs for tenants, $6.8 million in pre-revenue operating costs at WULF Compute, and $6.0 million in development costs at uncontracted sites. Excluding these development costs, the actual financial performance from HPC leases would yield a higher profit margin than the reported 28%; general management costs for development are creating a temporary drag, but this impact will diminish as uncontracted capacity is filled and the pre-revenue operating phase concludes.

Total HPC leasing revenue reached $53.0 million in the first half of 2026 (including $31.9 million from Q2 plus Q1 results), marking the first two full quarters of significant HPC revenue for a company that had no HPC leasing revenue in the first half of 2025. This year-on-year revenue shift – from $47.6 million primarily from Bitcoin mining in Q2 2025 to $31.9 million primarily from HPC leasing in Q2 2026 – represents one of the fastest business model transformations in the mainstream Bitcoin mining industry. This achievement was accomplished without abandoning existing mining operations, instead through the systematic reallocation of new development capacity to AI data center leasing.

Assessment and Conclusion

TeraWulf's Q2 earnings provide the clearest financial evidence to date of a successful transition to an AI-powered Bitcoin mining infrastructure model in its early operational phase: HPC (high-performance computing) revenue increased while Bitcoin mining revenue declined; large GAAP losses were primarily due to non-cash adjusting entries rather than operational failures; adjusted EBITDA was negative during the construction phase and before contract capacity reached its maximum; and the backlog of projected revenue from signed contracts reached billions of USD – a figure not reflected in the earnings report as revenue is only recognized when tenants begin using the infrastructure, not at the time of contract signing.

The valuation framework for companies in this position must be forward-looking: a $19 billion lease agreement with Anthropic, capacity adjustments with Fluidstack adding over $500 million in value, and a $600 million credit commitment from Google – all paint a picture of future revenue that is entirely different from the current quarterly earnings report. This requires investors to evaluate the business based on the volume of contracts signed and project progress rather than on current GAAP-based profits. TeraWulf's 47% year-to-date stock performance – achieved despite a GAAP-based net loss of $939.9 million – is a prime example of this forward-looking valuation approach.

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