Q1-25 Earnings: TeraWulf’s Laughably Bad Quarter

Summary TeraWulf’s Q1 2025 report shows a 19% YoY revenue decline and a staggering $59.6 million operating loss, driven by excessive stock-based compensation. The company’s break-even Bitcoin price soared to an unrealistic $277k per coin, highlighting severe operational inefficiencies and unsustainable cost structures. Despite a 2.7x price to forward sales multiple at $100k BTC, ongoing dilution and poor capital management make TeraWulf a poor investment choice. Downgrading WULF to ‘sell’ due to persistent losses, fresh ATM, and better alternatives in both HPC services and Bitcoin mining sectors. Five months ago in my prior coverage of the stock, I called TeraWulf ( WULF ) a ‘hold’ and spent time on the company’s pivot to HPC/AI revenue. Though I generally viewed the HPC/AI segment as a necessary revenue diversification strategy, I noted what I viewed to be a large overvaluation of the equity. Data by YCharts Fast forward to May, and we observe an equity that is trailing the biggest company in the sector as well as the industry as a whole. At least some of this under-performance is likely due to the HPC/AI narrative potentially breaking down . That’s a potential long term problem for TeraWulf but not the focus of today’s article. In this update, we’ll look at what I view to be an abysmal start to 2025 for TeraWulf based on the company’s Q1 report. Top and Bottom Lines For the quarter ended March 2025, TeraWulf reported $34.4 million in revenue from mining Bitcoin ( BTC-USD ) – a year over year reduction of 19%. To be sure, the April 2024 halving is partly to blame for this decline. However, the price of BTC spent all of Q1-25 at a substantially higher level than Q1-24. BTC Daily Chart (TrendSpider) Investors learned from the report that the company mined just 372 BTC in the quarter. As has been industry standard for years, TeraWulf had been providing monthly production updates during most of 2023 and 2024. That is apparently no longer going to happen this year as TeraWulf stopped sharing those releases starting with the January 2025 data: $ in millions Q1-25 Q1-24 YoY Revenue $34,405 $42,433 -18.9% Cost of revenue (exclusive of depreciation) $24,553 $14,408 70.4% Opex $2,892 $1,673 72.9% SG&A $50,144 $14,909 236.3% Depreciation $15,574 $15,088 3.2% Loss/gain on fair value of digital currency, net $870 -$1,329 -165.5% Total costs and expenses $94,033 $44,749 110.1% Operating loss -$59,628 -$2,316 2474.6% Source: TeraWulf After assessing the cost of revenue, opex, and depreciation, TeraWulf’s operating loss in the quarter was over $59.6 million. And this is not a result of a revaluation loss on digital assets held. Rather, simply by operating the business and paying themselves handsomely, TeraWulf managed to increase the quarterly operating loss to the company by almost 2,500% year over year. The SG&A is the glaring problem here. SG&A as a percentage of revenue comes in just shy of 150% during the quarter. This moonshot in SG&A year over year comes with $38.7 million in stock-based compensation. Which was a 458% increase year over year and more than double the $16.7 million in stock-based comp from Q4-24. The sad thing is, even if you eliminate stock-based comp entirely, TeraWulf still lost $21 million in the quarter. And keep in mind, this company has never produced a single quarter of positive earnings per share. Break-even and Valuation To further illustrate what I think is an absurdly high level of stock-based comp in Q1, consider what the company’s break-even Bitcoin price is over the last five quarters. Again, this is a very simple metric that aims to included all expenses and costs of revenue against the BTC mined in a quarter to determine what would be the Gold-miner equivalent of an ‘all-in sustaining cost.’ What’s not surprising is seeing this break-even figure moving higher quarter after quarter. What is more surprising is seeing just how outrageously high TeraWulf’s break-even price was in Q1: Q1-24 Q2-24 Q3-24 Q4-24 Q1-25 Cost of Revenues $14,400,000 $13,900,000 $14,700,000 $19,600,000 $34,405,000 Total Opex $26,500,000 $27,100,000 $28,700,000 $49,900,000 $68,610,000 BTC Mined 1,056 711 555 423 372 Breakeven Price $38,731 $57,665 $78,198 $164,303 $276,922 Source: Author’s calculations In this table, total opex includes depreciation and SG&A. Given the putrid year over year decline in BTC mined in Q1 coupled with the enormous stock-based comp, Bitcoin’s price would have had to be $277k per coin to produce a quarter of positive operations. Yet, it’s still worth wondering if the worst has now been priced in already. At a $100k BTC price, WULF is only trading at a 2.7x price to forward sales multiple using Q1’s BTC production figure: Stock WULF Market Capitalization $1,189,258,207 3 Month Avg Production 372 FWD P/S At $85k BTC 3.13 FWD P/S At $100k BTC 2.66 FWD P/S At $150k BTC 1.78 FWD P/S At $200k BTC 1.33 Source: Author’s calculations That’s admittedly not expensive relative to the sector median. But keep in mind, the company just announced yet another $200 million ATM and has already diluted the outstanding common stock by 32% year over year. To be sure, TeraWulf has authorization for another $200 million in common stock repurchases – but given the management of this same capital tool last year, I’m not terribly optimistic going forward. Closing Summary Shareholders can likely make any excuse they’d like for why the stock has under-performed, but the reality is very simple; TeraWulf issued convertible notes to overpay for its own stock last year and has paid out over $55 million in stock-based compensation in just six months while the company continues to lose millions of dollars quarter after quarter. While I’ll freely admit that the worst could be priced in at $3 per share, ultimately this comes down to opportunity cost for me. And unfortunately, this is not a company that I think is worth even a speculative flier at this point. If you want to invest in an HPC services company, there are likely better options. If you want to invest in a Bitcoin mining company, there are likely better options. And if you want to invest in a company that is a hybrid of the two, there are likely better options. And all of these ideas may still under-perform BTC when it is all said and done. Traders might be able to play some sort of dead cat bounce in WULF with BTC back above $100k, but I’m downgrading WULF to a ‘sell’ longer term.

Source: Seeking Alpha