Built 110 MW of mining infrastructure, with
another 50 MW targeted in Q2 2023.
Exited 2022 with 18,000 deployed miners with
2.0 EH/s of hash rate capacity.
Self-mined 524 Bitcoin in 2022 and 810 Bitcoin
since inception through February 2023.
Expects to nearly triple hash rate to 5.5 EH/s
and 160 MW at existing sites in Q2 2023.
Reiterates targeted blended cost of power of
$0.035 per kilowatt hour across its two sites.
TeraWulf Inc. (Nasdaq: WULF) (“TeraWulf” or the “Company”),
which owns and operates vertically integrated, domestic bitcoin
mining facilities powered by more than 91% zero-carbon energy,
today announced its financial results for the fourth quarter and
year ended December 31, 2022 and provided an operational
update.
Full Year 2022 and Recent Operational and Financial
Highlights
- Generated revenue of $15.0 million and self-mined 524 Bitcoin
in 2022.
- Commenced mining at the Company’s wholly owned Lake Mariner
facility in March 2022, with operational capacity of 60 MW and a
fleet of 18,000 miners, comprised of 13,000 self-miners and 5,000
hosted miners, as of February 28, 2023.
- Commenced mining at the Nautilus Cryptomine facility in
February 2023, a joint venture with Cumulus Coin, LLC and the first
behind the meter bitcoin mining facility powered by 100% nuclear
power in the U.S., with operational capacity of 25 MW and a fleet
of 8,000 self-miners as of February 28, 2023.
- Achieved a total self-mining hash rate of 1.4 EH/s as of
December 31, 2022 and 2.6 EH/s as of February 28, 2023,
representing an increase of 86% in just two months.
- Restructured miner purchase agreements with Bitmain, unlocking
substantial deposits and completing the procurement of miners
needed to fully utilize 160 MW of mining capacity.
- Entered into a beneficial debt restructuring with existing
lenders to eliminate principal payments and defer amortization to
April 2024 with ability to extend cash flow sweep mechanism to
maturity.
- Raised the final amount of growth capital needed to achieve 160
MW and 5.5 EH/s of bitcoin mining capacity across its two
facilities, which the Company expects to be fully energized in Q2
2023.
Management Commentary
“Despite the challenging macro backdrop, 2022 was a
transformational year for TeraWulf and we made significant progress
on our strategic plan to build the preeminent low-cost, zero-carbon
bitcoin miner,” stated Paul Prager, Founder and Chief Executive
Officer of TeraWulf. “We commenced mining in March 2022, completed
the construction and commissioning of 110 MW of world-class mining
facilities in NY and PA, restructured our debt, and raised the last
amount of external capital needed to achieve 160 MW and 5.5 EH/s of
sustainable, low-cost bitcoin mining capacity.”
Patrick Fleury, TeraWulf’s Chief Financial Officer stated, “We
are pleased with the financial performance of our first full year
as a public company. While steadfastly focused on completing
construction of our two bitcoin facilities, we remained financially
nimble and reached a number of crucial financial milestones to
improve the company’s liquidity position and increase financial
flexibility, with the goal of achieving positive free cash flow
once we are fully ramped to 160 MW.”
“Looking ahead, we plan to leverage our low-cost infrastructure
to expand our self-mining hash rate at our existing sites, while
also evaluating potential consolidation opportunities that enable
us to grow our mining capacity in a financially responsible
manner,” added Kerri Langlais, Chief Strategy Officer of
TeraWulf.
Production and Operations Update
As of February 28, 2023, the Company had a self-mining hash rate
of 2.6 EH/s with a total of approximately 26,000 miners deployed,
comprised of 18,000 operational miners at the Lake Mariner facility
(13,000 self-miners and 5,000 hosted miners) and approximately
8,000 self-miners at the Nautilus facility.
TeraWulf is currently expanding mining operations at its wholly
owned Lake Mariner facility in New York with the addition of
Building 2, which is expected to increase the facility’s
operational capacity from 60 MW currently to 110 MW in Q2 2023. The
Company has the ability to expand mining capacity at Lake Mariner
by an additional 80 MW, for a total of 190 MW, in the near
term.
The Company expects its full share in phase one of the Nautilus
facility – 50 MW and 1.9 EH/s – to also be online in Q2 2023.
TeraWulf has the option to add an additional 50 MW of bitcoin
mining capacity at the Nautilus facility, for a total of 100 MW,
which TeraWulf plans to deploy in future phases.
Across its two sites, the Company expects to have a total
operational capacity of 50,000 miners (5.5 EH/s) in Q2 2023,
representing approximately 160 MW of net mining infrastructure.
Fourth Quarter and Calendar 2022 Financial Results
Revenue in the fourth quarter of 2022 increased 146% to $9.6
million compared to $3.9 million in the third quarter of 2022. The
increase is attributable to the significant increase in mining
operations at the Lake Mariner facility following the August 2022
energization of Building 1 (50 MW), bringing online capacity at
Lake Mariner from 10 MW to 60 MW and the introduction of a profit
share component to short-term hosting agreements. Lake Mariner
commenced mining operations in March 2022 and revenue for the full
year 2022 was $15.0 million.
Cost of revenue as a percentage of revenue decreased to 55% in
the fourth quarter of 2022 compared to 134% in the third quarter of
2022 primarily driven by improved miner fleet efficiency, and the
normalization of unusually high NYISO Zone A energy prices. Cost of
revenue for the full year 2022 was $11.1 million or 74% as a
percentage of revenue.
Cost of Operations in the fourth quarter of 2022 increased by
46% to $17.7 million compared to $12.1 million in the third quarter
of 2022. The increase in Cost of Operations was primarily driven by
higher depreciation expenses, and higher Selling, General and
Administrative expenses associated with scaling mining operations
at the Lake Mariner facility in the fourth quarter of 2022. Cost of
Operations was $47.7 million for the full year 2022. The Company
continues to execute on its previously announced efforts to reduce
operating expenses, with the target of decreasing cash operating
costs by 25% over time.
Fourth Quarter and 2022 Financial Results Conference
Call
As previously announced, TeraWulf will host a conference call
today, Thursday, March 30, 2023, at 5:00 p.m. Eastern Time to
discuss its financial results for the fourth quarter and full year
2022 and provide a business and operational update. The conference
call will be broadcast live and will be available for replay via
“Events & Presentations” under the “Investors” section of the
Company’s website at
https://investors.terawulf.com/events-and-presentations/.
About TeraWulf
TeraWulf (Nasdaq: WULF) owns and operates vertically integrated,
environmentally clean Bitcoin mining facilities in the United
States. Led by an experienced group of energy entrepreneurs, the
Company currently has two Bitcoin mining facilities: the wholly
owned Lake Mariner facility in New York, and Nautilus Cryptomine
facility in Pennsylvania, a joint venture with Cumulus Coin, LLC.
TeraWulf generates domestically produced Bitcoin powered by
nuclear, hydro, and solar energy with a goal of utilizing 100%
zero-carbon energy. With a core focus on ESG that ties directly to
its business success, TeraWulf expects to offer attractive mining
economics at an industrial scale.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, as amended. Such
forward-looking statements include statements concerning
anticipated future events and expectations that are not historical
facts. All statements, other than statements of historical fact,
are statements that could be deemed forward-looking statements. In
addition, forward-looking statements are typically identified by
words such as “plan,” “believe,” “goal,” “target,” “aim,” “expect,”
“anticipate,” “intend,” “outlook,” “estimate,” “forecast,”
“project,” “continue,” “could,” “may,” “might,” “possible,”
“potential,” “predict,” “should,” “would” and other similar words
and expressions, although the absence of these words or expressions
does not mean that a statement is not forward-looking.
Forward-looking statements are based on the current expectations
and beliefs of TeraWulf’s management and are inherently subject to
a number of factors, risks, uncertainties and assumptions and their
potential effects. There can be no assurance that future
developments will be those that have been anticipated. Actual
results may vary materially from those expressed or implied by
forward-looking statements based on a number of factors, risks,
uncertainties and assumptions, including, among others: (1)
conditions in the cryptocurrency mining industry, including
fluctuation in the market pricing of bitcoin and other
cryptocurrencies, and the economics of cryptocurrency mining,
including as to variables or factors affecting the cost, efficiency
and profitability of cryptocurrency mining; (2) competition among
the various providers of cryptocurrency mining services; (3)
changes in applicable laws, regulations and/or permits affecting
TeraWulf’s operations or the industries in which it operates,
including regulation regarding power generation, cryptocurrency
usage and/or cryptocurrency mining; (4) the ability to implement
certain business objectives and to timely and cost-effectively
execute integrated projects; (5) failure to obtain adequate
financing on a timely basis and/or on acceptable terms with regard
to growth strategies or operations; (6) loss of public confidence
in bitcoin or other cryptocurrencies and the potential for
cryptocurrency market manipulation; (7) the potential of
cybercrime, money-laundering, malware infections and phishing
and/or loss and interference as a result of equipment malfunction
or break-down, physical disaster, data security breach, computer
malfunction or sabotage (and the costs associated with any of the
foregoing); (8) the availability, delivery schedule and cost of
equipment necessary to maintain and grow the business and
operations of TeraWulf, including mining equipment and
infrastructure equipment meeting the technical or other
specifications required to achieve its growth strategy; (9)
employment workforce factors, including the loss of key employees;
(10) litigation relating to TeraWulf, RM 101 f/k/a IKONICS
Corporation and/or the business combination; (11) the ability to
recognize the anticipated objectives and benefits of the business
combination; (12) potential differences between the unaudited
results disclosed in this release and the Company’s final results
when disclosed in its Annual Report on Form 10-K as a result of the
completion of the Company’s final adjustments, annual audit by the
Company’s independent registered public accounting firm, and other
developments arising between now and the disclosure of the final
results; and (13) other risks and uncertainties detailed from time
to time in the Company’s filings with the Securities and Exchange
Commission (“SEC”). Potential investors, stockholders and other
readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date on
which they were made. TeraWulf does not assume any obligation to
publicly update any forward-looking statement after it was made,
whether as a result of new information, future events or otherwise,
except as required by law or regulation. Investors are referred to
the full discussion of risks and uncertainties associated with
forward-looking statements and the discussion of risk factors
contained in the Company’s filings with the SEC, which are
available at www.sec.gov.
TERAWULF INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2022 AND
2021
(In thousands, except number of shares,
per share amounts and par value)
(Unaudited)
December 31, 2022
December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
1,279
$
43,448
Restricted cash
7,044
3,007
Digital currency, net
183
—
Prepaid expenses
5,095
1,494
Amounts due from related parties
—
647
Other current assets
543
108
Current assets held for sale
—
19,348
Total current assets
14,144
68,052
Equity in net assets of investee
98,741
104,280
Property, plant and equipment, net
191,521
91,446
Right-of-use asset
11,944
1,024
Other assets
1,337
109
TOTAL ASSETS
$
317,687
$
264,911
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
21,862
$
11,791
Accrued construction liabilities
2,903
3,892
Other accrued liabilities
14,963
3,771
Share based liabilities due to related
party
14,583
12,500
Other amounts due to related parties
3,295
60
Contingent value rights
10,900
12,000
Current portion of operating lease
liability
42
88
Insurance premium financing payable
2,117
—
Convertible promissory notes
3,416
—
Current portion of long-term debt
51,938
—
Current liabilities held for sale
—
1,755
Total current liabilities
126,019
45,857
Operating lease liability, net of current
portion
947
992
Deferred tax liabilities, net
—
256
Long-term debt
72,967
94,627
TOTAL LIABILITIES
199,933
141,732
Commitments and Contingencies (See Note
12)
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value,
25,000,000 authorized at December 31, 2022 and 2021; 9,566 and 0
shares issued and outstanding at December 31, 2022 and 2021,
respectively
10,056
—
Common stock, $0.001 par value,
200,000,000 authorized at December 31, 2022 and 2021; 145,492,971
and 99,976,253 issued and outstanding at December 31, 2022 and
2021, respectively
145
100
Additional paid-in capital
294,810
218,762
Accumulated deficit
(187,257
)
(95,683
)
Total stockholders' equity
117,754
123,179
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
317,687
$
264,911
TERAWULF INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2022
AND THE PERIOD
FEBRUARY 8, 2021 (DATE OF INCEPTION) TO
DECEMBER 31, 2021
(In thousands, except number of shares
and loss per common share)
(Unaudited)
Period February 8, 2021 (date
of
Year Ended
inception) to
December 31, 2022
December 31, 2021
Revenue
$
15,033
$
—
Cost of revenue (exclusive of depreciation
shown below)
11,083
—
Gross profit
3,950
—
Cost of operations:
Operating expenses
2,038
104
Operating expenses - related party
1,248
960
Selling, general and administrative
expenses
22,770
23,759
Selling, general and administrative
expenses - related party
13,280
18,576
Depreciation
6,667
—
Realized gain on sale of digital
currency
(569
)
—
Impairment of digital currency
1,457
—
Loss on nonmonetary miner exchange
804
—
Total cost of operations
47,695
43,399
Operating loss
(43,745
)
(43,399
)
Interest expense
(24,679
)
(2,255
)
Loss on extinguishment of debt
(2,054
)
—
Loss before income tax and equity in net
loss of investee
(70,478
)
(45,654
)
Income tax benefit
256
615
Equity in net loss of investee, net of
tax
(15,712
)
(1,538
)
Loss from continuing operations
(85,934
)
(46,577
)
Loss from discontinued operations, net of
tax
(4,857
)
(49,106
)
Net loss
(90,791
)
(95,683
)
Preferred stock dividends
(783
)
—
Net loss attributable to common
stockholders
$
(91,574
)
$
(95,683
)
Loss per common share:
Continuing operations
$
(0.78
)
$
(0.55
)
Discontinued operations
(0.04
)
(0.58
)
Basic and diluted
$
(0.82
)
$
(1.13
)
Weighted average common shares
outstanding:
Basic and diluted
110,638,792
85,200,032
TERAWULF INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2022
AND THE PERIOD
FEBRUARY 8, 2021 (DATE OF INCEPTION) TO
DECEMBER 31, 2021
(In thousands)
(Unaudited)
Year Ended
Period February 8, 2021 (date
of inception) to
December 31,
December 31,
2022
2021
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss
$
(90,791
)
$
(95,683
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization of debt issuance costs,
commitment fees and accretion of debt discount
11,676
921
Related party expense to be settled with
respect to common stock
2,083
12,500
Common stock issued for interest
expense
82
—
Stock-based compensation expense
1,568
—
Depreciation
6,667
—
Amortization of right-of-use asset
303
52
Increase in digital currency from
mining
(10,810
)
—
Impairment of digital currency
1,457
—
Realized gain on sale of digital
currency
(569
)
—
Proceeds from sale of digital currency
9,739
—
Loss on nonmonetary miner exchange
804
—
Loss on extinguishment of debt
2,054
—
Deferred income tax benefit
(256
)
(615
)
Equity in net loss of investee, net of
tax
15,712
1,538
Loss from discontinued operations, net of
tax
4,857
49,106
Changes in operating assets and
liabilities:
Increase in prepaid expenses
(3,601
)
(1,489
)
Decrease (increase) in amounts due from
related parties
815
(647
)
Increase in other current assets
(46
)
(113
)
Increase in other assets
(994
)
(109
)
Increase in accounts payable
10,197
9,729
Increase in other accrued liabilities
5,916
3,605
Increase in other amounts due to related
parties
700
60
Increase in operating lease liability
175
4
Net cash used in operating activities from
continuing operations
(32,262
)
(21,141
)
Net cash used in operating activities from
discontinued operations
(1,804
)
(2,958
)
Net cash used in operating activities
(34,066
)
(24,099
)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of a business, net of cash
acquired
—
(10,280
)
Investments in joint venture, including
direct payments made on behalf of joint venture
(46,172
)
(93,911
)
Reimbursable payments for deposits on
plant and equipment made on behalf of a joint venture or joint
venture partner
(11,741
)
(56,057
)
Reimbursement of payments for deposits on
plant and equipment made on behalf of a joint venture or joint
venture partner
11,716
56,057
Reimbursement from joint venture partner
for deposits on plant and equipment contributed to the joint
venture
—
11,850
Purchase of and deposits on plant and
equipment
(61,116
)
(109,072
)
Proceeds from sale of net assets held for
sale
13,266
—
Net cash used in investing activities
(94,047
)
(201,413
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance of long-term debt,
net of issuance costs paid of $38 and $0
22,462
118,276
Proceeds from insurance premium
financing
7,041
—
Principal payments on insurance premium
financing
(4,924
)
—
Proceeds from issuance of promissory notes
to stockholders
3,416
25,000
Repayment of promissory notes to
stockholders
—
(25,000
)
Proceeds from issuance of common stock,
net of issuance costs paid of $142 and $0
47,326
104,376
Proceeds from warrant issuances in
conjunction with equity offerings
5,700
—
Proceeds from issuance of preferred
stock
9,566
49,315
Proceeds from issuance of convertible
promissory note
14,700
—
Principal payments on convertible
promissory note
(15,306
)
—
Net cash provided by financing
activities
89,981
271,967
Net change in cash and cash equivalents
and restricted cash
(38,132
)
46,455
Cash and cash equivalents and restricted
cash at beginning of period
46,455
—
Cash and cash equivalents and restricted
cash at end of period
$
8,323
$
46,455
Cash paid during the period
for:
Interest
$
13,989
$
252
Income taxes
$
—
$
—
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230330005628/en/
Sandy Harrison harrison@terawulf.com (410) 770-9500
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