TeraWulf Expands Into AI Amid Rising Bitcoin Mining Costs

According to Cointelegraph, Bitcoin miner TeraWulf is set to lease over 70 megawatts of data center infrastructure to enhance its artificial intelligence (AI) revenue streams. This strategic move comes as the company grapples with increasing Bitcoin mining costs. On December 23, TeraWulf announced that AI and cloud provider Core42 would lease the infrastructure at its Lake Mariner facility in upstate New York. This announcement coincided with a 12% drop in TeraWulf's share price, reflecting a broader market downturn. TeraWulf emphasized that the data center leases signify a strategic expansion into AI-driven computing, which complements its existing Bitcoin mining operations. The infrastructure is expected to be operational in phases between the first and third quarters of 2025. CEO Paul Prager highlighted the growing demand for scalable, energy-efficient infrastructure, noting that the partnership with Core42 offers significant opportunities in both AI and Bitcoin mining. Prager stated that this agreement not only diversifies TeraWulf's revenue streams but also enhances its long-term earnings potential. The company's foray into AI comes at a time when the average cash cost to mine one Bitcoin has risen by 13% to $55,950 in the third quarter of 2024, as reported by CoinShares. This increase in production costs has led to public Bitcoin miners losing market share of the Bitcoin network's hashrate. CoinShares also noted that several Bitcoin miners have reduced hashrate growth to invest more in AI, a technology that is increasingly attracting the attention of traders and venture firms. Some crypto miners have opted to issue convertible notes to acquire more Bitcoin rather than expanding their operations. The rising Bitcoin mining costs have impacted TeraWulf's financial performance, with the company reporting earnings of minus 6 cents per share in the third quarter, falling short of the expected minus 3 cents per share. Despite these challenges, TeraWulf has likely benefited from Bitcoin's 48% price surge this quarter, which saw the cryptocurrency reach six figures for the first time. In July, TeraWulf expressed openness to a merger to boost its operating hashrate but emphasized a focus on organic growth and shareholder returns. On December 23, TeraWulf's stock was among the hardest-hit Bitcoin miners, closing down 12.1% at $5.81, though it recovered 2% after hours. Despite this, the company's share price has increased by 152.6% in 2024, making it one of the industry's top performers this year.