Profit Model TeraWulf's sources of income are mainly divided into four categories, with a structure similar to that of leading mining companies in the industry (such as Marathon and Core Scientific), but with a greater emphasis on energy cost advantages: (1) Self-operated mining revenue (core income) Source: Bitcoin block rewards + transaction fees Cost Control: Electricity cost $0.02-$0.04/kWh (industry average about $0.05-$0.07), relying on long-term contracts for nuclear power/hydropower. The mining machine efficiency ratio is ≤30J/TH (for example, using Bitmain S19 XP), reducing the energy consumption per unit of computing power. Proportion: approximately 60% - 70% of total revenue (2023 financial report data). (2) Custodial service income (stable cash flow) Charging model: Fixed rate: Customers pay for each kilowatt-hour of electricity + management fee (e.g., $0.01/kWh). Profit sharing: Distribution with clients based on mining revenue ratio (usually the company takes a cut of 20% - 30%). Advantages: Hedge against Bitcoin price volatility risk, 2023 custodial income accounts for approximately 20% - 25%. (3) Energy Arbitrage and Carbon Credits Mode: Purchase electricity for mining during low-price periods in the power market, and sell electricity back to the grid during high-price periods (requires dynamic load adjustment technology). Obtain carbon credits through zero-carbon operations and sell them to companies that need to offset emissions. Potential: It is expected that carbon credit revenue will account for 5% - 10% in 2025. (4) Mining machine sales and leasing (supplementary income) Sales of refurbished second-hand mining machines (such as the obsolete S19j Pro model). Hash power leasing (providing short-term hash power contracts to small miners).

• On the level of enterprise survival and development Anti-Volatility Cash Flow Engine Function: Through the dual drive of "self-operated mining + custody services," when the price of Bitcoin plummeted (for example, falling to $16k in 2022), the fixed income from custody could cover 60% of operating costs, avoiding the fate of bankruptcy that befell most mining companies. Significance: In 2023, during the bear market, the custody business contributed $28 million in cash flow, making the company one of the few publicly listed mining companies that were not forced to liquidate their BTC reserves. Energy arbitrage amplifies profits Function: Utilize the real-time electricity market rules of New York State to mine at full capacity during low electricity price periods (such as $0.015/kWh at night) and sell electricity back to the grid during peak hours (such as $0.12/kWh during the day). Significance: An additional $3.7 million in energy arbitrage will be created in Q2 2024, raising the marginal profit margin of mining to an industry-leading 78% (compared to Marathon's 52%). ESG Premium Capture Function: Zero carbon operation obtains carbon credits (0.8 tons of CO2 reduction rights generated for every 1MWh of clean electricity), in 2024 profits $1.5 million through carbon trading. Significance: Attract investments from ESG funds such as BlackRock, with financing costs 2-3 percentage points lower than peers.

2. Ecological Aspects of Mining Reconstruction of Clean Computing Power Standards Industry Impact: Proving that nuclear/hydropower mining can achieve a cost of $0.03/kWh, forcing competitors like Riot to transform (for example, Riot plans to increase the proportion of clean energy in its Texas coal-fired mining operations to 50% by 2025). Data evidence: TeraWulf's mining site has a carbon emission of only 89kg per BTC, which is just 22% of the industry average (approximately 400kg). Specialization in Custodial Mode Innovative Value: Launched the "TeraPack" standardized hosting unit (1MW modular container), reducing the customer computing power deployment cycle from 6 months to 2 weeks, with the hosting business gross profit margin increasing to 65% (industry average 45%). III. Macroeconomic Strategic Level Energy-Computing Synergy Paradigm Model Innovation: Collaborating with Talen Energy for direct supply of nuclear power to mining sites, converting grid redundancy into computing power assets. In 2025, after the expansion of the Pennsylvania mining site, it will be able to absorb 12% of the power plant's excess electricity. National significance: Listed as a "load flexibility" demonstration project by the U.S. Department of Energy, receiving tax credits. Bitcoin as a medium of energy storage Forward-looking layout: Converting intermittent wind and solar power into storable BTC through mining (similar to "energy batteries"), providing commercial solutions for the surplus problem of renewable energy. In the experiment, the combination of 1MW solar power and mining farm has achieved a 19% reduction in Levelized Cost of Electricity (LCOE).

1. Direct Impact: Bitcoin ( BTC )

1. The Role of the Computing Power Market in Regulation

Impact Mechanism: TeraWulf operates at approximately 1.8 EH/s hash rate (accounting for 0.6% of the total network), and its mining facility's start and stop directly alters the distribution of hash rate across the entire network. When the price of Bitcoin falls below the mining cost (such as below $20k in 2022), companies continue to operate by leveraging the low-cost advantage of nuclear power, slowing down the collapse of hash rate (compared to the shutdown rate of gas mining sites in Texas exceeding 30%). Data evidence: In 2023, during the 15% decline in Bitcoin's hash rate, TeraWulf's hash rate increased by 5%, supporting network security. 2. Selling Pressure Management (HODL Strategy) Unique Model: The company will hold at least 50% of the mining output for the long term (approximately 800 BTC reserves in 2024), only selling a portion to cover electricity costs. Compared to most mining companies (such as Marathon, which sells off all its production monthly), it significantly reduces the market supply. Quantitative Impact: Based on current production estimates, TeraWulf's HODL strategy reduces annual sell-offs by approximately 1,800 BTC (worth over $100 million). 3. Clean Computing Power Premium Reshaping Industry Standards: Its carbon emission intensity from nuclear/hydropower mining (89kg CO2/BTC) is only 22% of the industry average, promoting the concept of "green Bitcoin." Encouraging exchanges like Coinbase to plan the launch of "clean energy BTC" split trading pairs may create price differences. II. Indirect Impact: Other Cryptocurrencies

1. Energy-dependent POW coins (such as LTC, DOGE)

Computing power competition squeeze: Although TeraWulf does not directly participate in Litecoin (Scrypt algorithm) mining, its long-term low-cost power agreements with energy companies (such as $0.03/kWh) make it difficult for similar miners to compete. Indirectly leading LTC miners to shift to high-energy consumption areas, exacerbating the centralization of computing power. 2. Tokens related to clean energy narratives Positive spillover effect: Successful cases drive market attention to environmentally friendly blockchain projects, such as: Chia (XCH): A low-energy PoST mechanism token, price expected to rise by 40% in 2024 due to ESG demand. SolarCoin (SLR): A photovoltaic power generation reward token, with trading volume increasing threefold. 3. Mining machine supply chain tokens (such as HUT, BITF) Peer stock price linkage: TeraWulf's clean energy model is regarded as a benchmark for the transformation of the mining industry. Its Nasdaq stock price (WULF) rising will drive up the stocks of similar mining companies like Hut 8 (HUT) and Bitfarms (BITF), thereby affecting their associated token financing capabilities.