Rosenblatt Securities has initiated coverage on Terawulf Inc. (NASDAQ: NASDAQ:WULF) with a Buy rating and a $5.00 price target. The firm recognizes the company's strategic move to expand its services beyond Bitcoin mining data centers to include high-performance computing (HPC) and artificial intelligence (AI) data center colocation. This expansion is seen as a key addition to Rosenblatt's coverage of the HPC/AI data center sector.
Terawulf's second quarter financial year 2024 performance showcased substantial operational growth, although it faced financial challenges. The company reported a revenue of $35.6 million, marking a significant year-over-year increase of 130.2%, which was approximately in line with the consensus. The growth in revenue is attributed to an increase in self-mining capacity, which reached 8.8 EH/s as of June 30, 2024, representing a 79.6% growth from the previous year.
The company has made notable progress in expanding its infrastructure. It has increased its total operational capacity to 245 megawatts (MW) with the completion of Building 4 at its Lake Mariner Facility. Moreover, construction of Building 5 is currently in progress and is anticipated to contribute an additional 50 MW by the first quarter of 2025. These developments are crucial for supporting both Bitcoin mining operations and the company's future HPC initiatives.
Terawulf is also advancing in the HPC and AI sectors, having committed an initial 2 MW block of power to support the latest generation of GPUs. The implementation of a closed-loop liquid cooling system and improved internet connectivity are strategic enhancements that position the company to take advantage of the increasing demand for AI and data center services.
In other recent news, Terawulf reported a strong second quarter for 2024, meeting revenue expectations and exceeding consensus estimates for adjusted EBITDA, which reached $19.5 million. The company also generated $16.4 million in operating cash flow, marking its fourth consecutive quarter of positive cash flow. Terawulf is not only focusing on mining but also actively pursuing opportunities in the AI/High-Performance Computing (HPC) sector.
According to Cantor Fitzgerald, Terawulf plans to expand its AI/HPC capacity by an additional 200 megawatts in the latter half of 2025, more than previously estimated. This strategic move is expected to lead to the announcement of the company's first AI/HPC customer agreements for a 20 megawatt and a 50 megawatt facility by the end of this year.
Despite a recent pullback in Terawulf's share price due to investor concerns about the timing and certainty of these AI/HPC deals, Cantor Fitzgerald sees this as an opportunity for investors. The firm anticipates that the demand for Terawulf's AI/HPC offerings could far exceed the current 570 megawatts of available capacity.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.