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TeraWulf: Time To Join The WULF Pack

Sep. 14, 2023 7:35 PM ETTeraWulf Inc. (WULF) Stock15 Comments
Mike Fay profile picture
Mike Fay


  • TeraWulf's stock has experienced significant volatility, reaching highs of $4.04 and lows of $1.70.
  • The company's vertically integrated model and cheap energy costs position it as an outperformer in the BTC mining industry.
  • TeraWulf's high SG&A and potential dilution are risks to be aware of, but the company has stated it will only dilute if it is accretive.
Electronic components on PCB textured chain parts. Blockchain and crypto currency concept


When I last covered TeraWulf (NASDAQ:WULF) for Seeking Alpha in late-June, the stock was trading at $1.73 per share. In the time since, WULF shareholders have taken the full round trip from $1.73 up to $4.04 and back

This article was written by

Mike Fay profile picture
5 years as a media research analyst. Main coverage areas are crypto, BTC miners, and media equities. Outside of Seeking Alpha, I write the Heretic Speculator newsletter where I share additional thoughts on finance with more of a social backdrop.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of WULF, CLSK either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I'm not an investment advisor.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (15)

Mike Fay profile picture
Mike Fay
Article Update 06 Oct. 2023
Obviously, this has been a painful trade. I have been averaging down in chunks for what it's worth. Share registration since this article likely hasn't helped. But WULF was big outperformer on the way up this summer and that's likely the reason it's getting shredded to the degree that it is now - chart via my Substack to any interested:
Mo Money 2011 profile picture
@Mike Fay would you load up now that its revisiting valuation lows before the run-up?
Mike Fay profile picture
@Mo Money 2011 honestly, I think it may be going lower. The underperformance even as BTC rips over $36k is a bit concerning. As for loading up, I would be very cautious about getting over exposed or firing off too much powder at once. I generally try to average down in many increments as I work on cost basis. These companies are running out of time to make the move up and it may take a new ATH in Bitcoin to get it at this point
1) They didn't reduce debt, they increased it. Q1: $146m. Q2: $146.1m. They are paying $8m / quarter for that debt. Just electricity + debt nearly puts them in the read. Then they have payroll ($8.5m).

2) If you want to play the "liabilities decreased" game, also look at their assets. They decreased by $17m. This is because they have to decrease the book value of their mining hardware, which they somehow valued at $18/TH despite newer hardware that mines 40% more BTC for the same amount of wattage being cheaper than that.

3) In order to break-even, their revenue would basically need to double. If this happened, BTC would have doubled, and you can bet that hashrate will climb and result in starkly lower margins.

4) Once halving happens, even if BTC doubled, they'd be back to burning $8/quarter. Likely much more, as their revenues would have declined and costs would have gone up due to hashrate increasing.

5) "Looking at the balance sheet, cash levels were noticeably lower from $17.0 million at the end of Q1 to just $8.2 million at the end of Q2." They have $8.2m in cash left, $14m of liquidity. They burn $8m / quarter. They won't be able to keep the lights on without raising cash. Debt or dilution, take your pick!

6) Plans to expand this cash burning endeavor? Sure, why not double down! Well, first they need cash to burn.. so take your pick: debt or dilution.
RowerXX profile picture
@pennyether Wulf announcing earnings at EOD. I would be shocked if they weren't amazing given the price of BTC. I don't think there's any risk of bk, much of the debt is held by insiders. This is basically a trading operation.
@RowerXX Operating loss of $10m. Net loss of $20m. Is this amazing?
@RowerXX They raised ~$58m from dilution. None of these miners are at any real risk of bankruptcy, as they have massive shelf offerings that ignorant investors continually ignore, or see as "bullish" because it means they can "grow".
For principle/sovereignty direct holding is the best, but miners are a good idea for liquidity and other reasons, though you run the risk of capital gains taxes or confiscation in the future if you are a retirement device user. That said, what are you current top picks for asymmetry approaching the halving and beyond? This, CLSK? What about BitFarms? Should one just use MARA or RIOT to balance it out since risk might not be as smart with gains projected post halving anyway? Thanks.
@Fast Falcon I prefer the mid tier miners over the big boys. RIOT and MARA are maybe the least conservatively run
miners. Its a risky business by default. If management goes all in it just adds to that risk. WULF, CLSK, and BITF are my 3 biggest miner positions. Though I also own others. The biggest reason to own miners IMO is the large option premiums. Which is why I also own some MARA and RIOT despite considering them the riskiest. They have the most liquid options.
rppearson profile picture
@Mr Nobodi exactly!
EVERYONE says they will only dilute if it's accretive

If you take management commentary at face value you will get slaughtered in this space.
Off the Radar Investor profile picture
this is a great article. Cost of energy is everything post halving and they are hands down the lowest with the best assets. Really only miner whose management has their goals totally aligned with shareholders with 55% ownership.
FourDecadeStreetExec profile picture
Great summary. Have a toehold too, but really would like them to bring down SG&A.
Their debt really scares me. And I appreciate they don’t want to dilute, but what are their options?
Mike Fay profile picture
@FourDecadeStreetExec agreed on the dilution, it's probably coming. The debt is real the story, IMHO. If they can pull themselves out of that hole, their unit economics are so much better than their peers that I think they're one of the few that don't get wrecked in the halving.
@Mike Fay how do you think they deal with the debt if not (a) issuing substantial shares to bring leverage down and refinance (b) rolling the debt at a ridiculously high rate because lenders in the area now expect equity like returns for the risk profile?
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