The artificial intelligence (AI) revolution is driving unprecedented demand for energy-intensive data centers. The International Energy Agency predicts that data centers could account for a third of the expected increase in U.S. electricity demand through 2026.
Big tech companies, such as Microsoft, AmazonAnd Alphabetare racing to secure clean energy sources, such as nuclear power, to meet their growing energy needs. One under-the-radar company with an established sustainable infrastructure is uniquely positioned to benefit from this accelerating trend.
TeraWulf (NASDAQ:WULF) works Bitcoin (CRYPTO: BTC) mining facilities powered by approximately 95% by carbon-free energy sources, primarily hydropower. The company’s revenue rose 130% year over year to $35.6 million in the second quarter of 2024, driven by an 80% increase in operational mining capacity and higher Bitcoin prices.
In addition, TeraWulf has significantly strengthened its financial position by repaying its debts ahead of schedule. This clean balance sheet positions TeraWulf to fund its ambitious expansion plans in both cryptocurrency mining and AI infrastructure.
TeraWulf is leveraging its existing clean energy infrastructure to enter the high-performance computing and AI market. The company has already completed a 2.5 megawatt (MW) proof-of-concept project designed for next-generation graphics processing unit (GPU) technology.
In addition, a 20 MW colocation facility designed to support AI workloads is under construction. The facility includes advanced features such as liquid cooling and redundant power systems typical of premium data centers. According to the company, the company will launch in the first quarter of 2025.
TeraWulf recently raised $425 million through the offering of convertible notes at a reasonable interest rate of 2.75%, reflecting strong confidence from institutional investors. The company plans to use these funds for strategic acquisitions and data center infrastructure expansion to support its AI computing initiatives.
Additionally, TeraWulf’s board recently authorized a $200 million share repurchase program through December 2025, indicating management’s belief that the stock may be undervalued, despite up about 165% year to date.
TeraWulf’s clean energy sources give it a unique advantage in the fast-growing AI infrastructure market. Major technology companies are actively seeking sustainable energy sources for their energy-intensive AI activities, which makes TeraWulf’s carbon-free data centers particularly attractive.
Wall Street expects this strategic advantage to drive TeraWulf’s growth, projecting revenue to increase 214% through 2025 as the company expands from Bitcoin mining into AI computing services. The timing appears ideal as demand for sustainable data center capacity continues to exceed available supply.
TeraWulf’s core bitcoin mining business faces significant challenges, as evidenced by the reward halving in April 2024, which had a significant impact on miners’ profitability. This vulnerability to the dynamics of the cryptocurrency market highlights why the company is diversifying into AI infrastructure.
While promising, the move to AI computing comes with its own risks. TeraWulf must prove it can turn its Bitcoin mining expertise into successful partnerships with major tech companies. The company’s ability to operate reliable, high-performance data centers at scale is also a work in progress.
The case for buying TeraWulf largely rests on whether you believe the company can successfully transform its carbon-free Bitcoin mining operations into a thriving AI infrastructure company. While the company has removed key investment risks by eliminating debt and raising substantial capital, it is still early in this transition.
For investors convinced that AI’s growing energy needs will drive demand for sustainable data centers, TeraWulf could offer a significant upside at current prices. However, given the execution risks involved in this transformation, each position should be sized as a speculative portion of a diversified portfolio.
Consider the following before purchasing shares in TeraWulf:
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. George Budwell has positions at Microsoft. The Motley Fool holds positions in and recommends Alphabet, Amazon, Bitcoin, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
Why This Green Bitcoin Miner Could Be the Next Big AI Infrastructure Stock was originally published by The Motley Fool
