TeraWulf shares dropped 8% after Anthropic’s $19 billion lease came up against a $3.5 billion funding test.
- TeraWulf dropped 8.1% to $19.20, sliding more than double the losses seen at three other AI-infrastructure peers. The Nasdaq ended up about 0.7%.
- The Anthropic lease averages around $950 million in annual revenue over 20 years, or about $2.37 million per megawatt-year.
- A $3.5 billion project financing in Kentucky could push consolidated gross debt to around $9.3 billion, assuming no repayments offset the increase.
TeraWulf Inc. NASDAQ:WULF dropped 8.1% to $19.20 by Tuesday afternoon, sinking as low as $18.63, even while tech stocks benefited from softer inflation numbers. Volume was heavy, with more than 36.7 million shares changing hands by 1:16 p.m., already topping its usual daily pace. The disconnect raises questions for investors over how much AI revenue will flow to equity once construction debt is paid off. That’s the issue in focus.
TeraWulf hasn’t put out any fresh press releases or SEC filings since July 6, according to its investor-relations page. Traders are still weighing its 20-year lease deal with Anthropic and that report saying CFO Patrick Fleury expects around $3.5 billion in debt financing to get the Kentucky project up and running this year. Tuesday’s price action does not appear tied to new news about operations. It’s a reset on funding and execution risk. The market wants to see proof.
The lease is for 401 megawatts of critical computing load, with the first capacity expected in the back half of 2027 and the full campus slated for early 2028. TeraWulf says the deal brings about $19 billion in contracted revenue for the initial term, backed by an investment-grade credit. It hasn’t broken out the annual rent details. A straight split comes to about $950 million each year, or $2.37 million per megawatt-year. The borrowing plan comes out to about $8.7 million in debt per megawatt. This is a big contract and a big check.
The table breaks down the potential yearly interest costs at three sample rates. 7.75% lines up with the coupon on TeraWulf’s $3.2 billion WULF Compute secured notes. That’s the current note rate, not a projection for the new loan.
| Illustrative interest rate | Annual interest on $3.5 billion | Share of $950 million average annual lease revenue |
|---|---|---|
| 6.00% | $210 million | 22% |
| 7.75% | $271 million | 29% |
| 10.00% | $350 million | 37% |
These numbers leave out principal payments, underwriting costs, operating expenses, and maintenance capital. They also rely on a basic average of total contracted revenue instead of TeraWulf’s actual annual rent schedule. Still, this shows how changes in loan pricing can push the stock before the first server goes in.
TeraWulf said it had $5.8 billion in debt and $3.1 billion in cash, cash equivalents, and restricted cash as of March 31. The company’s first-quarter interest expense jumped to $67.1 million from $4 million last year. With the new Kentucky loan included and no repayment shown, gross debt would approach $9.3 billion, close to TeraWulf’s $9.5 billion equity value, based on Tuesday’s share price and 495.5 million shares outstanding as of May 5. Leverage is now basically the valuation.
TeraWulf lagged behind three other developers tied to the AI data-center expansion. As of 1:16 p.m. EDT, live prices showed:
| Company | Price | Tuesday move |
|---|---|---|
| TeraWulf Inc. NASDAQ:WULF | $19.20 | fell 8.1% |
| IREN Ltd. NASDAQ:IREN | $37.63 | dropped 3.5% |
| Applied Digital Corp. NASDAQ:APLD | $27.84 | down 3.5% |
| Core Scientific Inc. NASDAQ:CORZ | $22.16 | slipped 2.4% |
The peer group fell an average 3.1%, putting TeraWulf about five points lower. Bitcoin rose 3.7% to near $64,555. The gap points to issues with TeraWulf’s capital structure and timeline, not crypto prices. This was more than just a crypto dip.
TeraWulf’s planned sale of its 50.1% stake in the Abernathy venture throws the company a lifeline. The $530 million price tag gives TeraWulf almost an 18% gross premium over the $450 million it invested, before costs and taxes. But that’s just about 15% of its Kentucky debt exposure. The payout isn’t immediate either: $250 million was due 14 days after the July 6 agreement, $150 million is scheduled by year-end, and the last $130 million comes by April 30, 2027. So timing is key.
Chief Executive Paul Prager said the Anthropic deal “validates our strategy and establishes a long-duration revenue stream.” Clear Street’s Brian Dobson said the lease added to his view TeraWulf’s pipeline is worth “substantially more than today’s valuation implies.” Tuesday’s trading showed investors are pricing in the cash and time needed to finish that pipeline. TeraWulf Inc.
The risk goes both ways. With investment-grade credit support, TeraWulf might lock in lower-cost project debt. Fast delivery of the Abernathy payout and hitting deadlines could make the Anthropic lease deliver steady rent. But if borrowing costs rise, costs overrun, delivery is late, or credit support disappoints, payouts to common holders could shrink. There’s not much margin for error on this timeline.
Investors are now looking past the contract’s headline numbers. Instead, they’re watching the interest rate on the loan, how it pays down, what covenants are attached, and how much equity TeraWulf needs to put up. None of those terms are out yet. That means investors can guess at TeraWulf’s booked revenue, but it’s a lot harder to get a read on future equity cash flow. Those numbers are pointing in another direction.
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