TeraWulf (NASDAQ:WULF) announced on Friday a landmark 20-year data-center lease agreement with AI company Anthropic, valued at $19 billion. However, the deal's structure includes a $3.5 billion debt component that has not been fully detailed, raising questions among investors about the financing costs and overall project viability.
The stock closed at $21.97 on Friday, marking a modest 3.7% gain from its July 2 close. Yet the shares fell 5.3% on Friday, as market attention shifted from the contract's size to the build-out expenses. The lease covers 401 megawatts of critical IT load, with rent payments set to begin as the power capacity is delivered between late 2027 and early 2028.
Anthropic's Chief Financial Officer, Patrick Fleury, indicated that the $3.5 billion debt package is expected to include a leveraged loan and high-yield bonds, which carry sub-investment ratings and higher interest costs. Morgan Stanley (NYSE:MS) is reportedly leading the financing, according to Bloomberg. The implied annual revenue from the lease is approximately $950 million, based on the contract's 20-year term and 401 MW capacity.
A key detail emerging from the deal is the revenue per megawatt-year: about $2.37 million for the Anthropic lease, compared to $1.86 million for TeraWulf's Lake Mariner agreement with Fluidstack. This represents a roughly 27% revenue-density premium. While this suggests a favorable pricing structure, analysts caution that higher margins are not guaranteed due to varying service mixes, pricing terms, and operational conditions.
CEO Paul Prager emphasized the scarcity of available power, stating, "You just cannot create overnight megawatts." Needham analyst John Todaro described the Anthropic deal as "one of the more attractive leases in the sector." The contract is a significant leap for TeraWulf, whose first-quarter revenue totaled $34 million—$21 million from HPC leasing and $13 million from bitcoin mining. Annualizing that run rate gives $136 million, meaning the Anthropic lease at $950 million annually is roughly seven times larger.
Market performance varied among AI-infrastructure peers. IREN Ltd. (NASDAQ:IREN) rose about 6% during the same period, while Applied Digital Corp. (NASDAQ:APLD) fell nearly 6%. TeraWulf's weekly trading was volatile, hitting an intraday high of $25.15 on Monday before a 8.9% drop on Tuesday, a 12.8% jump on Wednesday, and a 5.3% decline on Friday. Volume for the week reached approximately 251 million shares, with the stock closing 12.6% below its Monday peak.
Financing costs are a critical concern. TeraWulf's Lake Mariner arm raised $3.2 billion in secured notes at a 7.75% coupon in October, followed by $1.3 billion at 7.25% for the Abernathy JV in December. If the new $3.5 billion debt package secures similar terms, annual cash interest could range from $254 million to $271 million, representing 27% to 29% of the lease's average gross revenue per year. Terms may vary depending on the Kentucky project structure and credit backing.
Downside risks are significant. Construction delays, power equipment shortages, or cost overruns could push back rental income while interest expenses accumulate. TeraWulf has acknowledged the need for additional capital, timely completion of campus work, and securing power equipment at acceptable prices. Excessive debt costs or another equity raise could dilute returns for existing shareholders.
Looking ahead, no company events are scheduled for the upcoming week, placing focus on updates regarding financing, the Abernathy stake, and Anthropic credit support. Key economic data includes June CPI on Tuesday and retail sales on Thursday. A higher inflation print could pressure yields as TeraWulf prepares for its largest funding round.
