Google Boosts Stake In Bitcoin Miner TeraWulf To 14%, Shares Hit 52-Week High

TeraWulf stock surged as much as 12% to a fresh 52-week high Monday after Google disclosed it had become one of the Bitcoin miner’s largest shareholders.

The tech giant raised its stake to 14% by upping its backstop commitment in a lease deal between TeraWulf and AI infrastructure provider Fluidstack.

That news sent shares soaring intraday before after-hours selling trimmed gains, and the stock has eased slightly on Tuesday. Even so, TeraWulf remains up more than 72% in the past week and 87% over the past month.

TeraWulf share price (Source: Google Finance)

TeraWulf Inks Deal With FluidStack

In an Aug. 14 press release, the Bitcoin miner said it had entered two 10-year high-performance computing (HPC) colocation agreements with the AI cloud platform.

As part of the initial agreements, Terawulf was expected to deliver more than 200 MV of critical IT load at its Lake Mariner data center campus that is located in Western New York. 

According to that announcement, the facility is “purpose-built for liquid-cooled” workloads, making it suitable for computationally-demanding AI models. 

The facility is also “engineered to meet the scale, density and resiliency required for next-generation compute,” TeraWulf added.

The financial implications of the initial agreements were substantial. TeraWulf estimated that it would be able to generate around $3.7 billion in contracted revenue over the initial 10-year terms. Additionally, there were options for two five-year extensions that would have boosted the total contract revenue to approximately $8.7 billion.

Google Steps In To Facilitate The Deal, Ups Its Commitment

Google stepped in to facilitate the lease agreement by backstopping Fluidstack’s lease obligations. 

In finance, a backstop is a commitment made by one party to provide a secondary source of funds in a deal or transaction in case the primary source falls short.

Initially, Google had committed to backstopping $1.8 billion of the AI firm’s obligations in exchange for warrants to acquire approximately 41 million shares of Terawulf common stock. This represents about an 8% equity stake.

However, the tech giant recently increased its backstop commitment to $3.2 billion, according to an Aug. 18 press release. It has also upped its share ask to 73 million TeraWulf shares, pushing its ownership stake in the Bitcoin mining company to 14%. This makes Google one of TeraWulf’s largest shareholders.

In addition to Google increasing its backstopping commitment and share ask, Fluidstack also exercised the option it received in the initial agreements for a CB-5 expansion, increasing TeraWulf’s compute obligations by another 160 MW. 

“With CB-5, total contracted critical IT load for Fluidstack at the campus increases to approximately 360 MW, reinforcing Lake Mariner’s position as one of the largest high-performance computing (HPC) campuses in the US,” Terawulf wrote in yesterday’s press release.

As a result of the recent changes in the deal, the expected contract value has jumped to $6.7 billion as well, with the potential to reach $16 billion if there are lease extensions.

Mining Firms Pivot To AIH

TeraWulf’s move is the latest in a trend that has seen Bitcoin miners diversify their income streams outside of solely mining BTC after the latest Bitcoin halving in April 2024.

With that halving, mining rewards were slashed in half, down to 3.125 BTC. This undercut Bitcoin miners’ profitability, prompting them to explore alternative avenues to monetize their computing resources. 

Among the Bitcoin mining firms that diversified into AI is Hut 8, which launched a GPU-as-a-Service offering in September last year. As part of this launch, it deployed 1,000 NVIDIA H100 GPUs for an AI cloud developer through its subsidiary, Highrise AI.

In the same month, Iris Energy announced the purchase of 1,080 NVIDIA H200 GPUs for about $43.9 million to expand its AI Cloud Services business.

Bitdeer has also expanded into HPC/AI services and started offering NVIDIA-powered cloud solutions.

Earlier this year, Cipher Mining said in a business update that it is now focused on industrial-scale data centers for both Bitcoin mining and HPC hosting.