Bitcoin miner and data center operator TeraWulf (WULF) saw its stock jump nearly 11% after announcing that Alphabet-owned Google (GOOG, GOOGL) is upping its stake in the company to 14%.
Google is providing a $3.2 billion backstop for TeraWulf as it uses debt financing to expand a data center campus in western New York in return for warrants to purchase over 73 million shares of the company’s stock.
The deal was first unveiled in TeraWulf’s second quarter results last week. During its earnings call, TeraWulf initially said Google would provide a $1.8 billion backstop in exchange for an 8% stake in the company. Google upped that figure to $3.2 billion on Monday as AI cloud provider Fluidstack decided to expand its lease as part of its 10-year deal with TeraWulf.
In a post-earnings call with analysts last Thursday, CEO Paul Prager called Google’s support “an extraordinary vote of confidence from one of the most influential players in AI.”
TeraWulf’s Lake Mariner data center in Western New York will be one of the largest in the US. In connection with the project, TeraWulf announced a $400 million debt offering on Monday.
TeraWulf is one of many bitcoin miners transitioning to provide AI infrastructure. Analysts expect the data center market to hit roughly $585 billion by 2032, doubling in size from 2024, as tech firms race to introduce artificial intelligence software and use massive amounts of computing capacity from AI servers in data centers to do so.
TD Cowen analyst Mike Elias wrote in a July note to clients that the pipeline for US “hyperscale” data center leases — projects that are planned or under construction but not yet operational — is the largest in history.
Needham analyst John Todaro raised his price target on TeraWulf to $11 from $6 on Monday, writing in a note to clients that the company is “one of the best suited miners to convert data center capacity” for bitcoin mining to AI computing.
Todaro added, “At the same time, we have concerns around the fairly large stake Google is getting in WULF and the expected dilution … as a result of this and the converts, despite the capped call provision.”
TeraWulf stock is up more than 86% over the past five days. The company went public in 2021 with the backing of celebrity investors, including Gwyneth Paltrow and Mindy Kaling, and has drawn attention for its mission to sustainably power its operations.
Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.
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