TeraWulf Inc. (NASDAQ:WULF) shares edged higher Thursday after the company revealed plans to secure approximately $3.5 billion in debt financing for its massive AI data center project in Kentucky. The stock closed the regular session at $23.20, up 1.62%, and traded at $23.33 in late after-hours activity.
The financing package, reported by Investing.com citing Bloomberg News, is expected to be led by Morgan Stanley (NYSE:MS). The debt will fund the conversion of TeraWulf's $19 billion lease agreement with Anthropic into a fully operational AI campus at the Justified Data facility in Hawesville, Kentucky.
Key Financial Details
TeraWulf's 20-year lease with Anthropic is valued at roughly $19 billion, which translates to an average annual contracted revenue of about $950 million. The lease covers 401 megawatts of critical IT load, representing approximately $47.4 million per megawatt in locked-in revenue over the two-decade term. The reported $3.5 billion debt package equates to about $8.7 million per megawatt in initial financing and represents roughly 18% of the total lease value and 36% of TeraWulf's current market capitalization of $9.81 billion.
Financing Structure
The debt package is expected to include leveraged loans and high-yield bonds. Leveraged loans are typically used by companies with higher debt loads, while high-yield bonds offer higher interest rates to compensate lenders for increased credit risk. This structure reflects the capital-intensive nature of AI infrastructure projects.
Phased Capacity Delivery
Rent payments from Anthropic will not begin immediately. According to TeraWulf's filings, the capacity will come online in phases, starting in late 2027 and completing in early 2028. Anthropic will begin paying rent only after each leased site is ready for operation.
Market Context
TeraWulf's stock traded between $23.01 and $24.57 on volume exceeding 50 million shares. The broader AI infrastructure sector also saw gains, with Applied Digital Corporation (NASDAQ:APLD) rising 2.7% and Cipher Digital Inc. (NASDAQ:CIFR) climbing 6.5%. The Nasdaq Composite added 1.30%.
Analysts at Compass Point, including Michael Donovan and Ed Engel, noted that Applied Digital, TeraWulf, and Cipher are among AI-infrastructure stocks still trading below the value of their signed data-center deals. They advised investors to focus on locked-in rental income rather than traditional bitcoin-mining metrics.
Management Commentary
TeraWulf Chairman and CEO Paul Prager stated that the Anthropic lease "validates our strategy" and creates a "long-duration revenue stream." He added that the sale of the Abernathy site to a group led by Fluidstack allows TeraWulf to redeploy capital into projects where it retains direct ownership and operational control.
Financial Position and Risks
TeraWulf reported Q1 revenue of $34.0 million, with $21.0 million from high-performance computing (HPC) leases. As of March 31, the company had 60 MW of active critical IT HPC capacity at Lake Mariner, significantly below the 401 MW tied to the Anthropic lease.
Key risks include potential construction delays, cost overruns for power or equipment, and unfavorable loan terms that could delay rent payments and pressure the stock. TeraWulf cautioned that results may vary if it cannot complete campuses as planned, stay within budgets, secure favorable financing, or manage power and operational risks.
Looking Ahead
Investors are now focused on execution metrics: debt pricing, covenants, construction milestones, and the timing of first rent payments. TeraWulf has transitioned from a simple bitcoin miner pivoting to AI. The current trade revolves around credit execution, with a major tenant already secured.
