TeraWulf

Business Model TeraWulf is a company focused on clean energy Bitcoin mining and high-performance computing (HPC) infrastructure. Its business model revolves around self-mining, third-party hosting, and energy optimization, as detailed below:

1. Core Business Segment Business Type
   Operating Model
   Technical/Resource Dependency
   Self-operated Bitcoin mining
   The company owns mining machines (such as Bitmain Antminer S19 series) deployed in mining sites in New York and Pennsylvania, directly participating in Bitcoin network verification and obtaining block rewards.
   Relying on clean energy (hydropower + nuclear energy) and efficient mining machine operation and maintenance. Mining machine hosting services provide external clients with hosting for mining machines, including power supply, cooling, maintenance, etc., charging hosting fees or profit sharing. Scaled power procurement (long-term low-price contracts), data center management capabilities. Clean energy solutions collaborate with energy companies (such as Talen Energy) to convert redundant power into computing power, reducing carbon footprints and enhancing energy efficiency. Grid-level energy management technology and policy support (such as carbon credits).

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. Mining machine efficiency ratio ≤30J/TH (for example, using Bitmain S19 XP), reducing 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 20% - 30% cut). 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 electricity 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 plummets (such as in 2022 when it fell to $16k), the fixed income from custody can cover 60% of operating costs, avoiding the fate of bankruptcy that many mining companies faced. 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 earnings from energy arbitrage in Q2 2024 will raise the mining margin profit rate 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 investment 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 forces 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 of Custodial Model 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%). 3. 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 surplus electricity. National significance: Listed as a "load flexibility" demonstration project by the U.S. Department of Energy, receiving tax credits. Bitcoin as a storage medium Forward-looking layout: Converting intermittent wind and solar power into storable BTC through mining (similar to "energy batteries") provides a commercial solution to the problem of excess renewable energy. In experiments, a combination of 1MW solar power and mining facilities has achieved a 19% reduction in Levelized Cost of Electricity (LCOE).

1. Direct Impact: Bitcoin (BTC)

1. The Role of Computing Power Market Regulation

Impact Mechanism: TeraWulf operates at approximately 1.8 EH/s hash rate (accounting for 0.6% of the total network), and its mining farm's start and stop directly changes the distribution of the entire network's hash rate. 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, Bitcoin's hash rate decreased by 15%, while 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 in reserves for 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 the current production estimate, 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 for nuclear power/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, trading volume increased threefold. 3. Mining machine supply chain tokens (such as HUT, BITF) Peer stock price correlation: 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.