TERAWULF INC

Previous wording

We are a leading digital asset technology firm that specializes in digital infrastructure and sustainable energy development. Our primary focus is supporting environmentally conscious bitcoin mining operations by developing and operating state-of-the-art facilities within the United States. Our bitcoin mining facilities are powered by clean, affordable, and reliable energy sources, underscoring our commitment to sustainable practices within the cryptocurrency mining industry. In 2024, the Company established WULF Compute as its internal innovation center, with a specific focus on the research, development, and deployment of its expansive and scalable digital infrastructure intended to support a broader high-performance computing (“HPC”) initiative, strategically aimed at diversifying the Company’s revenue streams. Given the increasing demand from high density compute loads, the Company's assets are well positioned to supply energy infrastructure with low cost, zero-carbon power.

Current wording

We are a leading digital asset technology firm that specializes in digital infrastructure and sustainable energy development. Our primary focus is supporting environmentally conscious bitcoin mining operations by developing and operating state-of-the-art facilities within the United States. Our bitcoin mining facilities are powered by predominantly clean, affordable, and reliable energy sources, underscoring our commitment to sustainable practices within the cryptocurrency mining industry. In 2024, the Company established WULF Compute as its internal innovation center, with a specific focus on the research, development, and deployment of its expansive and scalable digital infrastructure intended to support a broader high-performance computing (“HPC”) initiative, strategically aimed at diversifying the Company’s revenue streams. Given the increasing demand from high density compute loads, the Company's assets are well positioned to supply energy infrastructure targeting low cost, zero-carbon power.

Previous wording

Bitcoin, introduced in 2008, fundamentally transformed the landscape of digital currency by providing a decentralized mechanism for exchanging and preserving value. It operates on a consensus-based network, utilizing a public ledger termed as the “blockchain” to meticulously record every bitcoin transaction. TeraWulf’s fully integrated bitcoin mining facilities capitalize on zero-carbon energy sources, primarily sourced from baseload nuclear and hydroelectric power.

Current wording

Bitcoin, introduced in 2008, fundamentally transformed the landscape of digital currency by providing a decentralized mechanism for exchanging and preserving value. It operates on a consensus-based network, utilizing a public ledger termed as the “blockchain” to meticulously record every bitcoin transaction, allowing users to send and receive payments without the need for banks and other intermediaries. Bitcoin is not linked to any fiat currency or country’s monetary policy, therefore serves as a store of value outside of government control. TeraWulf’s vertically integrated bitcoin mining facilities capitalize on predominantly zero-carbon energy sources, primarily sourced from baseload nuclear and hydroelectric power.

Previous wording

Bitcoin mining involves validating transactions through a proof-of-work consensus method, where miners solve complex mathematical problems to add transactions to the blockchain. TeraWulf invests in computation networks (mining rigs) equipped with application-specific integrated circuit (“ASIC”) chips and secures power to validate transactions and maintain the bitcoin ledger. Factors such as computing capacity, electricity costs, and location play pivotal roles in mining operations.

Current wording

Bitcoin mining involves validating transactions through a proof-of-work consensus method, where miners solve complex mathematical problems to add transactions to the blockchain. The blockchain is maintained by a robust and public open-source architecture consisting of a network of computers, known as nodes, that work together to verify and validate new transactions. Because the blockchain is decentralized and transparent, all users can verify the legitimacy of a transaction without having to rely on a third party. This eliminates the need for intermediaries, which can be slow and expensive, and makes the network resistant to censorship and fraud. Bitcoin mining plays a key role in the maintenance and growth of the Bitcoin network by providing the computational power needed to verify transactions and add new blocks to the blockchain. TeraWulf invests in computation networks (mining rigs) equipped with application-specific integrated circuit (“ASIC”) chips and secures power to validate transactions and maintain the bitcoin ledger. Factors such as computing capacity, electricity costs, and location play pivotal roles in mining operations. Generally, the greater the share a single mining rig can capture of the blockchain’s total network hashrate, or the aggregate hashrate deployed to solving a block on the Bitcoin blockchain, the greater the rig’s chances of solving a block and therefore earning the reward.

Previous wording

On April 20, 2024, the bitcoin rewards issued for each block solved dropped from 6.25 to 3.125, effectively reducing the non-cash consideration received from bitcoin mining by 50% (excluding transactions fee rewards).

Current wording

The bitcoin subsidy issued by the Bitcoin network for solving a block is subject to periodic incremental halving. The network halving is a preprogrammed, fixed process of the Bitcoin network where the bitcoin subsidy for solving a block received by miners is reduced by half approximately every four years. The network halving is a process designed to implement a periodic decreasing schedule of the issuance of new bitcoin into the market, which results in a predictable and controlled inflationary rate. The network halving will continue to occur on this schedule until the amount of bitcoin in existence reaches the cap of 21.0 million. After each halving, the decrease in the subsidy provided to miners from the Bitcoin network leads to fewer rewards for miners and therefore a decrease in revenues should the price of bitcoin remain the same. Transaction fees, which together with the block subsidy comprise the block reward for successfully solving a block, is not directly impacted by the halving. On April 19, 2024, the bitcoin rewards issued for each block solved dropped from 6.25 to 3.125, effectively reducing the bitcoin earned from bitcoin mining by 50% (excluding transactions fee rewards).

Previous wording

As of March 31, 2024, these two industrial scale projects had a combined operating capacity of 8.0 EH/s with approximately 66,900 miners deployed, comprised of 51,100 operational miners at the Lake Mariner Facility and 15,800 self-miners at the Nautilus Cryptomine Facility. As of the date of this Quarterly Report, the Company has a total operational capacity of 210 megawatts (“MW”) and is currently constructing an additional 35 MW at its Lake Mariner Facility, which is expected to be operational in mid-2024.

Current wording

As of June 30, 2024, these two industrial scale projects had a combined operating capacity of 8.8 EH/s with approximately 71,700 miners deployed, comprised of 55,900 deployed miners at the Lake Mariner Facility and 15,800 deployed at the Nautilus Cryptomine Facility. As of the date of this Quarterly Report, the Company has a total operational capacity of 245 megawatts (“MW”) and is currently constructing an additional 50 MW at its Lake Mariner Facility, which is expected to be substantially complete by the end of 2024.

Previous wording

Located at a site adjacent to the now decommissioned coal-fired power plant in Barker, New York, the Lake Mariner Facility began sustainably mining bitcoin in March 2022. As of the date of this Quarterly Report, the Lake Mariner Facility is operating approximately 160 MW of bitcoin mining capacity and the Company has an agreement in place with the Power Authority of the State of New York (“NYPA”) for 90 MW of high load factor power to support its bitcoin mining operations (the “PPA”). The PPA was executed in February 2022 and has a term of ten years from the date of commencement of NYPA’s power delivery. The Lake Mariner Facility is situated on an expansive site on the shores of Lake Ontario and has the ability to scale up to 500 MW of capacity.

Current wording

Located at a site adjacent to the now decommissioned coal-fired power plant in Barker, New York, the Lake Mariner Facility began sustainably mining bitcoin in March 2022. As of the date of this Quarterly Report, the Lake Mariner Facility is operating approximately 195 MW of bitcoin mining capacity and the Company has an agreement in place with the Power Authority of the State of New York (“NYPA”) for 90 MW of high load factor power to support its bitcoin mining operations (the “PPA”). The PPA was executed in February 2022 and has a term of ten years from the date of commencement of NYPA’s power delivery. The Lake Mariner Facility is situated on an expansive site on the shores of Lake Ontario and has the ability to scale up to 500 MW of capacity.

Previous wording

As of March 31, 2024, we own approximately 51,100 miners of which approximately 47,200 are operational at the Lake Mariner Facility with the remainder undergoing maintenance, awaiting disposal or on standby to replace miners under repair. These miners were comprised as follows:

Current wording

As of June 30, 2024, we own approximately 55,900 miners of which approximately 51,300 are operational at the Lake Mariner Facility with the remainder undergoing maintenance, awaiting disposal or on standby to replace miners under repair. These miners were comprised as follows:

Previous wording

As of March 31, 2024, our fleet of miners ranged in age from 0.1 to 1.8 years with an average age of approximately 0.7 years. We do not have scheduled downtime for our miners; however, while we periodically perform unscheduled maintenance on our miners, such downtime has not been significant historically. When performing unscheduled maintenance, depending on the length of estimated repair time, we may replace a miner with a substitute miner to limit overall downtime. As of March 31, 2024, our fleet of miners at the Lake Mariner Facility had a range of energy efficiency from 22 to 39 joules per terahash (“"j/th”) and has an average energy efficiency of 25.2 j/th.

Current wording

As of June 30, 2024, our fleet of miners ranged in age from 0.1 to 2.1 years with an average age of approximately 0.8 year. We do not have scheduled downtime for our miners; however, while we periodically perform unscheduled maintenance on our miners, such downtime has not been significant historically. When performing unscheduled maintenance, depending on the length of estimated repair time, we may replace a miner with a substitute miner to limit overall downtime. As of June 30, 2024, our fleet of miners at the Lake Mariner Facility had a range of energy efficiency from 15 to 31 joules per terahash (“"j/th”) and has an average energy efficiency of 23.1 j/th.

Previous wording

As of March 31, 2024, these miners ranged in age from 1.0 to 1.1 years with an average age of approximately 1.0 year. Nautilus does not have scheduled downtime for our miners; however, while Nautilus periodically performs unscheduled maintenance on miners, such downtime has not been significant historically. When performing unscheduled maintenance, depending on the length of estimated repair time, Nautilus may replace a miner with a substitute miner to limit overall downtime. As of March 31, 2024, these miners had a range of energy efficiency from 22 to 30 j/th and an average energy efficiency of 25.5 j/th. While the Company holds a 25% equity interest in Nautilus, the distributions of mined bitcoin are determined by each of TeraWulf’s and Talen’s respective hashrate contributions. Accordingly, the Company has contributed approximately 1.9 EH/s of a total 5.2 EH/s of miners which results in an approximate 35.7% of the hashrate share attributed to the Company.

Current wording

As of June 30, 2024, these miners ranged in age from 1.2 to 1.3 years with an average age of approximately 1.3 years. Nautilus does not have scheduled downtime for our miners; however, while Nautilus periodically performs unscheduled maintenance on miners, such downtime has not been significant historically. When performing unscheduled maintenance, depending on the length of estimated repair time, Nautilus may replace a miner with a substitute miner to limit overall downtime. As of June 30, 2024, these miners had a range of energy efficiency from 22 to 30 j/th and an average energy efficiency of 25.5 j/th. While the Company holds a 25% equity interest in Nautilus, the distributions of mined bitcoin are determined by each of TeraWulf’s and Talen’s respective hashrate contributions. Accordingly, the Company has contributed approximately 1.9 EH/s of a total 5.2 EH/s of miners which results in an approximate 35.7% of the hashrate share attributed to the Company.

Previous wording

4 While nameplate inventory for TeraWulf’s two facilities is 8.0 EH/s, inclusive of gross total hosted miners, actual monthly hashrate performance depends on a variety of factors, including (but not limited to) performance tuning to increase efficiency and maximize margin, scheduled outages (scopes to improve reliability or performance), unscheduled outages, curtailment due to participation in various cash generating demand response programs, derate of ASICS due to adverse weather and ASIC maintenance and repair.

Current wording

4 While nameplate inventory for TeraWulf’s two facilities is 8.8 EH/s, inclusive of gross total hosted miners, actual monthly hashrate performance depends on a variety of factors, including (but not limited to) performance tuning to increase efficiency and maximize margin, scheduled outages (scopes to improve reliability or performance), unscheduled outages, curtailment due to participation in various cash generating demand response programs, derate of ASICS due to adverse weather and ASIC maintenance and repair.

Previous wording

As of March 31, 2024 our operating hashrate was approximately 1.4% of the total global hashrate, and we received approximately the same percentage of the global blockchain rewards, which as of that date, equaled approximately 10 to 13 bitcoin per day. Ultimately, in order to mine profitably, we work to ensure that these mining rewards cover our direct operating costs.

Current wording

As of June 30, 2024 our operating hashrate was approximately 1.4% of the total global hashrate, and we received approximately the same percentage of the global blockchain rewards, which as of that date, equaled approximately 6 to 7 bitcoin per day. Ultimately, in order to mine profitably, we work to ensure that these mining rewards cover our direct operating costs.

Previous wording

The table below presents the average cost of mining each bitcoin, including bitcoin mined at the Lake Mariner Facility and the Company’s net share of bitcoin mined at the Nautilus Cryptomine Facility, for the three months ended March 31, 2024 and 2023 and the total energy cost per kWh utilized within the facilities:

Current wording

The table below presents the average cost of mining each bitcoin, including bitcoin mined at the Lake Mariner Facility and the Company’s net share of bitcoin mined at the Nautilus Cryptomine Facility, for the three and six months ended June 30, 2024 and 2023 and the total energy cost per kWh utilized within the facilities:

Previous wording

(1) “Cost to mine one bitcoin” is a cash cost metric and does not include depreciation. Although the Company recognizes depreciation with respect to its mining assets, it does not consider depreciation in determining whether it is economical to operate its mining equipment. As a result, the Company does not consider the sunk costs or depreciation of past capital investments in its historical or forecasted breakeven analysis. If depreciation of our miner fleet were factored into the above cost of mining analysis, it would add $15,092 and $10,349 per bitcoin mined for the three months ended March 31, 2024 and 2023, respectively, bringing the total “cost to mine one bitcoin” to $30,621 and $18,246 for the three months ended March 31, 2024 and 2023, respectively.

Current wording

(1) “Cost to mine one bitcoin” is a cash cost metric and does not include depreciation. Although the Company recognizes depreciation with respect to its mining assets, it does not consider depreciation in determining whether it is economical to operate its mining equipment. As a result, the Company does not consider the sunk costs or depreciation of past capital investments in its historical or forecasted breakeven analysis. If depreciation of our miner fleet were factored into the above cost of mining analysis, it would add $21,532 and $17,660 per bitcoin mined for the three and six months ended June 30, 2024, respectively, bringing the total “cost to mine one bitcoin” to $44,527 and $36,166 for the three and six months ended June 30, 2024, respectively. If depreciation of our miner fleet were factored into the above cost of mining analysis, it would add $9,513 and $9,820 per bitcoin mined for the three and six months ended June 30, 2023, respectively, bringing the total “cost to mine one bitcoin” to $16,235 and $16,972 for the three and six months ended June 30, 2023, respectively.

Previous wording

(3) Excludes bitcoin earned from profit sharing associated with a hosting agreement that expired in February 2024 at the Lake Mariner Facility of 6 and 20 bitcoin for the three months ended March 31, 2024 and 2023, respectively, and includes TeraWulf’s net share of bitcoin mined at the Nautilus Cryptomine Facility, based on the hashrate share attributed to the Company.

Current wording

(3) Excludes bitcoin earned from profit sharing associated with a hosting agreement that expired in February 2024 at the Lake Mariner Facility of 0 and 17 bitcoin for the three months ended June 30, 2024 and 2023, respectively, and 6 and 37 bitcoin for the six months ended June 30, 2024 and 2023, respectively, and includes TeraWulf’s net share of bitcoin mined at the Nautilus Cryptomine Facility, based on the hashrate share attributed to the Company.

Previous wording

Power prices are the most significant cost driver for our bitcoin mining operations, and energy costs represented 28.8% and 34.0% as expressed as a percentage of bitcoin mining during the three months ended March 31, 2024 and 2023, respectively.

Current wording

Power prices are the most significant cost driver for our bitcoin mining operations, and energy costs represented 34.8% and 31.5% as expressed as a percentage of value of total bitcoin mined during the three and six months ended June 30, 2024, respectively, and 23.9% and 27.2% during the three and six months ended June 30, 2023, respectively. Power prices expressed as a percentage of value of total bitcoin mined during the three and six months ended June 30, 2024 increased as compared to the same periods in 2023 primarily due to an approximate doubling in network difficulty and the bitcoin reward halving in April 2024, partially offset by increases in average operating hashrate and increases in average value of each bitcoin mined.

Previous wording

Energy prices can be highly volatile and global events (including the war in Ukraine and the resulting natural gas shortage) have caused power prices to increase nationwide over the past year. Our wholly-owned Lake Mariner Facility in New York is subject to variable prices and market rate fluctuations with respect to wholesale power costs. Such prices are governed by market power prices and said prices can change hour to hour. While this renders energy prices less predictable, it also gives us greater ability and flexibility to actively manage the energy we consume with an eye towards increasing profitability and energy efficiency. Energy prices are also highly sensitive to weather events, such as winter storms and polar vortices, which increase the demand for power regionally. When such events occur, we may curtail our operations to avoid using power at increased rates or we may be curtailed under demand response programs in which we participate. The average power prices incurred at the Lake Mariner Facility and the Nautilus Cryptomine Facility during each of the three months ended March 31, 2024 and 2023 was $0.041 and $0.039 per kilowatt hour, respectively.

Current wording

Energy prices can be highly volatile and global events can cause power prices to increase or decrease nationwide. Our wholly-owned Lake Mariner Facility in New York is subject to variable prices and market rate fluctuations with respect to wholesale power costs. Such prices are governed by market power prices and said prices can change hour to hour. While this renders energy prices less predictable, it also gives us greater ability and flexibility to actively manage the energy we consume with an eye towards increasing profitability and energy efficiency. Energy prices are also highly sensitive to weather events, such as winter storms and polar vortices, which increase the demand for power regionally. When such events occur, we may curtail our operations to avoid using power at increased rates or we may be curtailed under demand response programs in which we participate. The average power prices incurred at the Lake Mariner Facility and the Nautilus Cryptomine Facility was $0.037 and $0.039 during each of the three and six months ended June 30, 2024, respectively, and $0.027 and $0.031 per kilowatt hour during each of the three and six months ended June 30, 2023, respectively.

Previous wording

During the three months ended March 31, 2024 and 2023, the Company curtailed operations at the Lake Mariner Facility due to weather events, energy price spikes, and demand response program participation. The Company records expected payments to be received for demand response programs as a reduction in cost of revenue, which amounted to $1.2 million and $0.1 million for the three months ended March 31, 2024 and 2023, respectively.

Current wording

During the three and six months ended June 30, 2024 and 2023, the Company curtailed operations at the Lake Mariner Facility due to weather events, energy price spikes, and demand response program participation. The Company records expected payments to be received for demand response programs as a reduction in cost of revenue, which amounted to $1.9 million and $3.2 million for the three and six months ended June 30, 2024, respectively, and $0.6 million and $0.7 million for the three and six months ended June 30, 2023, respectively.

Previous wording

The Company has purchased all miners with cash and has not used limited recourse equipment financing to complete its miner purchases. The Company has raised capital through both the issuance of equity and corporate level debt. These funds have been utilized to support operations, invest in our joint ventures, and purchase miners and other fixed assets. Costs related to such issuances are not included in this analysis. Additionally, miner acquisition costs, or capital expenditures, are not factored into the above cost of mining analysis as capital expenditures do not impact the marginal cost of production of one bitcoin. Miner acquisition costs, or capital expenditures, are generally recorded at cost in property, plant and equipment in the consolidated balance sheets. Depreciation of property, plant and equipment is computed using the straight-line method over the estimated useful lives of the equipment: generally 4 years for miners and 5 years for computer equipment. Additionally, during the three months ended March 31, 2024, the Company recorded accelerated depreciation expense of $3.8 million related to certain miners of which the Company shortened their estimated useful lives based on expected replacement by April 30, 2024. While we currently depreciate our miners over a 4-year period, given our historical low cost of power ($0.041 and $0.039 per kilowatt-hour for the three months ended March 31, 2024 and 2023, respectively), it is possible the average actual useful life of our miners may exceed the depreciation period in certain circumstances. Nevertheless, if depreciation of our miner fleet were factored into the above cost of mining analysis, it would add $15,092 and $10,349 per bitcoin mined in the three months ended March 31, 2024 and 2023, respectively.

Current wording

The Company has purchased all miners with cash and has not used limited recourse equipment financing to complete its miner purchases. The Company has raised capital through both the issuance of equity and corporate level debt. These funds have been utilized to support operations, invest in our joint venture, and purchase miners and other fixed assets. Costs related to such issuances are not included in this analysis. Additionally, miner acquisition costs, or capital expenditures, are not factored into the above cost of mining analysis as capital expenditures do not impact the marginal cost of production of one bitcoin. Miner acquisition costs, or capital expenditures, are generally recorded at cost in property, plant and equipment in the consolidated balance sheets. Depreciation of property, plant and equipment is computed using the straight-line method over the estimated useful lives of the equipment: generally 4 years for miners and 5 years for computer equipment. Additionally, during the three and six months ended June 30, 2024, the Company recorded accelerated depreciation expense of $1.3 million and $5.1 million, respectively, related to certain miners of which the Company shortened their estimated useful lives based on replacement by April 30, 2024. While we currently depreciate our miners over a 4-year period, given our historical low cost of power, it is possible the average actual useful life of our miners may exceed the depreciation period in certain circumstances. Nevertheless, if depreciation of our miner fleet were factored into the above cost of mining analysis, it would add $21,532 and $17,660 per bitcoin mined in the three and six months ended June 30, 2024, respectively, and $9,513 and $9,820 per bitcoin mined in the three and six months ended June 30, 2023, respectively.

Previous wording

TeraWulf completed its business combination with IKONICS Corporation (“IKONICS”) on December 13, 2021 pursuant to which, among other things, the Company effectively acquired IKONICS and became a publicly traded company on the Nasdaq, which was the primary purpose of the business combination. The consideration in the Merger included, among other things, contractual contingent value rights (“CVR”) per a Contingent Value Rights Agreement (the “CVR Agreement”) pursuant to which each shareholder of IKONICS as of immediately prior to the Merger, received one non-transferable CVR for each outstanding share of common stock of IKONICS then held. The holders of the CVRs were entitled to receive 95% of the Net Proceeds (as defined in the CVR Agreement), if any, from the sale, transfer, disposition, spin-off, or license of all or any part of the pre-merger business of IKONICS. Payments under the CVR Agreement were calculated quarterly, paid on the sixtieth day after the respective quarterly calculation period and were subject to a reserve of up to 10% of the Gross Proceeds (as defined in the CVR Agreement) from such transaction or more under certain conditions. The CVRs did not confer to their holders thereof any voting or equity or ownership interest in TeraWulf, were not transferable, except in limited circumstances, and were not listed on any quotation system or traded on any securities exchange. During the three months ended March 31, 2023, the Company made payments of the CVR liability related to proceeds from sales of net assets held for sale of $3.9 million. Additionally, the Company made payments of the CVR liability of $5.7 million and $1.4 million in May and November 2023, respectively, such that as of December 31, 2023, the Company had made all of the aggregate required distributions of $11.0 million of proceeds to the CVR Holders and the CVR Agreement was deemed terminated.

Current wording

TeraWulf completed its business combination with IKONICS Corporation (“IKONICS”) on December 13, 2021 pursuant to which, among other things, the Company effectively acquired IKONICS and became a publicly traded company on the Nasdaq, which was the primary purpose of the business combination. The consideration in the Merger included, among other things, contractual contingent value rights (“CVR”) per a Contingent Value Rights Agreement (the “CVR Agreement”) pursuant to which each shareholder of IKONICS as of immediately prior to the Merger, received one non-transferable CVR for each outstanding share of common stock of IKONICS then held. The holders of the CVRs were entitled to receive 95% of the Net Proceeds (as defined in the CVR Agreement), if any, from the sale, transfer, disposition, spin-off, or license of all or any part of the pre-merger business of IKONICS. During the six months ended June 30, 2023, the Company made payments of the CVR liability related to proceeds from sales of net assets held for sale of $9.6 million. Additionally, the Company made payments of the CVR liability of $1.4 million in November 2023 such that as of December 31, 2023, the Company had made all of the aggregate required distributions of $11.0 million of proceeds to the CVR Holders and the CVR Agreement was deemed terminated.

Previous wording

The Company generates revenue in the form of bitcoin by providing hash computation services to a mining pool operator to mine bitcoin and validate transactions on the global Bitcoin Network using application-specific integrated circuit computers owned by the Company. The earned bitcoin are routinely sold for U.S. dollars. The Company also earned revenue by providing miner hosting services to third parties. While the Company may choose to mine other digital currencies, it has no plans to do so currently. The Company's plan of operation for the next twelve months is to continue to increase the mining capacity at its operating mining facilities, including completion of the construction of the fourth building at its Lake Mariner Facility.

Current wording

The Company generates revenue in the form of bitcoin by providing hash computation services to a mining pool operator to mine bitcoin and validate transactions on the global Bitcoin network using application-specific integrated circuit computers owned by the Company. The earned bitcoin are routinely sold for U.S. dollars. The Company also earned revenue by providing miner hosting services to third parties. While the Company may choose to mine other digital currencies, it has no plans to do so currently. The Company's plan of operation for the next twelve months is to continue to increase the mining capacity at its operating mining facilities, including completion of the construction of the fifth building at its Lake Mariner Facility.

Previous wording

Revenue for the three months ended March 31, 2024 and 2023 was $42.4 million and $11.5 million, respectively, an increase of $30.9 million due primarily to the increase in mining capacity due to infrastructure constructed and placed in service between March 31, 2023 and March 31, 2024 as well as an increase in the quoted price of bitcoin. The Company began mining bitcoin at the Lake Mariner Facility in March 2022 and, as of March 31, 2024, the Company had energized three buildings and additional infrastructure comprising 160 MW of capacity as compared to 60 MW of capacity as of March 31, 2023. During the three months ended March 31, 2024, revenue from mining was $41.6 million as compared to $9.2 million during the same period in 2023. During the three months ended March 31, 2024, revenue from hosting was $0.8 million as compared to $2.3 million, a decrease of $1.5 million due to the expiration of the Company’s one data center hosting contract with a customer in February 2024.

Current wording

Revenue for the three months ended June 30, 2024 and 2023 was $35.6 million and $15.5 million, respectively, an increase of $20.1 million. Revenue for the six months ended June 30, 2024 and 2023 was $78.0 million and $27.0 million, respectively, an increase of $51.0 million. These increases were primarily due to the increase in mining capacity due to infrastructure constructed and placed in service between June 30, 2023 and June 30, 2024 as well as an increase in the quoted price of bitcoin, partially offset by the impact of the halving in April 2024. The Company began mining bitcoin at the Lake Mariner Facility in March 2022 and, as of June 30, 2024, the Company had energized four buildings and additional infrastructure comprising 195 MW of capacity as compared to 110 MW of capacity as of June 30, 2023. Bitcoin prices averaged $65,771 and $59,515 per bitcoin during the three and six months ended June 30, 2024, respectively, as compared to $28,009 and $25,390 per bitcoin during the three and six months ended June 30, 2023, respectively. During the three and six months ended June 30, 2024 the Company mined 539 and 1,312 bitcoin, respectively, as compared to 508 and 936 bitcoin during the three and six months ended June 30, 2023, respectively. During the three and six months ended June 30, 2024, revenue from mining was $35.6 million and $77.2 million, respectively, as compared to $13.8 million and $23.0 million during the three and six months ended June 30, 2023, respectively. During the three and six months ended June 30, 2024, revenue from hosting was $0 and $0.8 million, respectively, as compared to $1.7 million and $4.0 million during the three and six months ended June 30, 2023, respectively, a decrease due to the expiration of the Company’s one data center hosting contract with a customer in February 2024.

Previous wording

Cost of revenue (exclusive of depreciation) for the three months ended March 31, 2024 and 2023, was $14.4 million and $5.0 million, respectively, an increase of approximately $9.4 million. The increase was primarily due to the increase in mining and hosting capacity due to infrastructure constructed and placed in service between March 31, 2023 and March 31, 2024. Cost of revenues is primarily comprised of power expense. The Company records proceeds related to participation in demand response programs as a reduction in cost of revenue in the period corresponding to the underlying demand response program period; the amount of aggregate proceeds received or expected to be received were $1.2 million and $0.1 million for the three months ended March 31, 2024 and 2023, respectively. The Company is actively expanding its enrollment in such available programs in New York State.

Current wording

Cost of revenue (exclusive of depreciation) for the three months ended June 30, 2024 and 2023 was $13.9 million and $5.1 million, respectively, an increase of $8.8 million. Cost of revenue (exclusive of depreciation) for the six months ended June 30, 2024 and 2023, was $28.3 million and $10.1 million, respectively, an increase of approximately $18.2 million. Cost of revenues is primarily comprised of power expense and the increases were primarily due to the increase in mining and hosting capacity due to infrastructure constructed and placed in service between June 30, 2023 and June 30, 2024 and, to a lesser extent, slight increase in realized power prices during the three and six months ended June 30, 2024 as compared to the same periods in 2023. The Company records proceeds related to participation in demand response programs as a reduction in cost of revenue in the period corresponding to the underlying demand response program period; the amount of aggregate proceeds received or expected to be received were $1.9 million and $3.2 million for the three and six months ended June 30, 2024, respectively, and $0.6 million and $0.7 million for the three and six months ended June 30, 2023, respectively. The Company is actively expanding its enrollment in such available programs in New York State.

Previous wording

Operating expenses (including related party expenses) for the three months ended March 31, 2024 and 2023, were $1.7 million and $0.9 million, respectively, a net increase of $0.8 million. Operating expenses increased due to higher property insurance, miner repair costs, and spare parts. Operating expenses – related party increased due to increased staffing at the Lake Mariner Facility. These increases related to infrastructure constructed and placed in service between March 31, 2023 and 2024.

Current wording

Operating expenses (including related party expenses) for the three months ended June 30, 2024 and 2023, were $1.7 million and $1.1 million, respectively, a net increase of $0.6 million. Operating expenses (including related party expenses) for the six months ended June 30, 2024 and 2023, were $3.3 million and $2.0 million, respectively, a net increase of $1.3 million. Operating expenses increased due to higher property insurance and miner repair costs. Operating expenses – related party increased due to increased staffing at the Lake Mariner Facility. These increases related to infrastructure constructed and placed in service between June 30, 2023 and 2024.

Previous wording

Selling, general and administrative expenses (including related party expenses) for the three months ended March 31, 2024 and 2023 were $14.9 million and $9.4 million, respectively, a net increase of $5.5 million. Selling, general and administrative expenses are comprised primarily of professional fees, legal fees, employee compensation and benefits, stock-based compensation to employees and consultants, insurance and general corporate expenses. The increase was primarily due to increased expense during the three months ended March 31, 2024 as compared to the same period in the prior year of stock-based compensation of $6.2 million and employee compensation and benefits of $0.3 million. These increases were partially offset by decreased expenses during the three months ended March 31, 2024 as compared to the same period in the prior year of legal fees of $0.2 million and insurance expense of $0.2 million. Selling, general and administrative expenses – related party decreased due to performance milestone expense of $0.3 million under the Administrative and Infrastructure Services Agreement with Beowulf Electricity & Data Inc. As previously disclosed, the Company has undertaken cost reduction initiatives targeted at reducing its overall selling, general and administrative expenses that are expected to benefit its operating profitability going forward.

Current wording

Selling, general and administrative expenses (including related party expenses) for the three months ended June 30, 2024 and 2023 were $11.9 million and $8.6 million, respectively, a net increase of $3.3 million. Selling, general and administrative expenses are comprised primarily of professional fees, legal fees, employee compensation and benefits, stock-based compensation to employees and consultants, insurance and general corporate expenses. The increase was primarily due to increased expense during the three months ended June 30, 2024 as compared to the same period in the prior year of stock-based compensation of $3.1 million and employee compensation and benefits of $0.4 million. These increases were partially offset by decreased expenses during the three months ended June 30, 2024 as compared to the same period in the prior year of legal fees of $0.6 million and insurance expense of $0.2 million.

Previous wording

Depreciation for the three months ended March 31, 2024 and 2023 was $15.1 million and $5.4 million, respectively, an increase of $9.7 million primarily due to the increase in mining capacity due to infrastructure constructed and placed in service between March 31, 2023 and March 31, 2024. Additionally, during the three months ended March 31, 2024, the Company recorded accelerated depreciation expense of $3.8 million related to certain miners of which the Company shortened their estimated useful lives based on expected replacement by April 30, 2024.

Current wording

Depreciation for the three months ended June 30, 2024 and 2023 was $14.1 million and $6.4 million, respectively, an increase of $7.7 million. Depreciation for the six months ended June 30, 2024 and 2023 was $29.2 million and $11.9 million, respectively, an increase of $17.3 million. The increases were primarily due to the increase in mining capacity due to infrastructure constructed and placed in service between June 30, 2023 and June 30, 2024. Additionally, during the three and six months ended June 30, 2024, the Company recorded accelerated depreciation expense of $1.3 million and $5.1 million, respectively, related to certain miners of which the Company shortened their estimated useful lives based on expected replacement by April 30, 2024.

Previous wording

Gain on fair value of digital currency, net was $1.3 million during the three months ended March 31, 2024 as a result of the Company adopting Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2023-08, Intangible – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”) on January 1, 2024 which requires entities with certain crypto assets to subsequently measure such assets at fair value, with changes in fair value recorded in net income in each reporting period. Prior to the adoption of ASU 2023-08, the Company recorded Impairment of digital currency and Realized gain on sale of digital currency for the three months ended March 31, 2023 of $0.6 million and $0.6 million, respectively, representing the decline in bitcoin prices during the Company’s holding period of its bitcoin, which was not reversed during its holding period, and gains recognized upon subsequent liquidation of bitcoin held. The Company elected to early adopt ASU 2023-08 effective January 1, 2024, resulting in a cumulative-effect change of $37,000 to increase the balance of digital currency with a corresponding decrease in the opening balance of accumulated deficit in the consolidated balance sheet as of January 1, 2024.

Current wording

Loss (gain) on fair value of digital currency, net during the three and six months ended June 30, 2024 was $0.7 million and $(0.6) million, respectively, as a result of the Company adopting Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2023-08, Intangible – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”) on January 1, 2024 which requires entities with certain crypto assets to subsequently measure such assets at fair value, with changes in fair value recorded in net income in each reporting period. Prior to the adoption of ASU 2023-08, the Company recorded impairment of digital currency of $0.7 million and $1.3 million during the three and six months ended June 30, 2023, respectively, representing the decline in bitcoin prices during the Company’s holding period of its bitcoin, which was not reversed during its holding period, and realized gain on sale of digital currency for the three and six months ended June 30, 2023 of $0.6 million and $1.2 million, respectively, upon subsequent liquidation of bitcoin held. The Company elected to early adopt ASU 2023-08 effective January 1, 2024, resulting in a cumulative-effect change of $37,000 to increase the balance of digital currency with a corresponding decrease in the opening balance of accumulated deficit in the consolidated balance sheet as of January 1, 2024.

Previous wording

Interest expense was $11.0 million and $6.8 million for the three months ended March 31, 2024 and 2023, respectively, an increase of $4.2 million. Interest expense relates primarily to the Company’s Term Loans which had a principal balance of $106.0 million as of March 31, 2024. The increase in interest expense for the three months ended March 31, 2024 as compared to the same period in the prior year is primarily due to (i) an increase of amortization of debt issuance costs and debt discount of $5.0 million during the three months ended March 31, 2024 as compared to the same period in 2023 due to the recognition of debt discount in March 2023 in connection with the issuance of warrants concurrent with the Fifth Amendment to the LGSA, partially offset by (ii) a decrease of $0.8 million in interest expense related to the stated interest rate, which remained unchanged, on the Term Loans resulting from the reduction in principal balance due to principal repayments made between March 31, 2023 and March 31, 2024. The Company’s term loan financing has a maturity date of December 1, 2024.

Current wording

Interest expense was $5.3 million and $8.5 million for the three months ended June 30, 2024 and 2023, respectively, a decrease of $3.2 million primarily due to a decrease in amortization of debt issuance costs and debt discount as well as decrease in cash interest expense related to the stated interest rate, which remained unchanged, on the Term Loans, each resulting from the reduction in principal balance due to principal repayments made between June 30, 2023 and June 30, 2024. Interest expense was $16.4 million and $15.3 million for the six months ended June 30, 2024 and 2023, respectively, an increase of $1.1 million. Interest expense relates primarily to the Company’s Term Loans which had a principal balance of $75.8 million as of June 30, 2024. The increase in interest expense for the six months ended June 30, 2024 as compared to the same period in the prior year is primarily due to (i) an increase of amortization of debt issuance costs and debt discount of $2.4 million during the six months ended June 30, 2024 as compared to the same period in 2023 due to the recognition of debt discount in March 2023 in connection with the issuance of warrants concurrent with the Fifth Amendment to the LGSA, partially offset by (ii) a decrease of $1.4 million in interest expense related to the stated interest rate, which remained unchanged, on the Term Loans resulting from the reduction in principal balance due to principal repayments made between June 30, 2023 and June 30, 2024. The Company’s term loan financing had a maturity date of December 1, 2024. In July 2024, the Company fully repaid the remaining outstanding balance of the Term Loans.

Previous wording

Loss on extinguishment of debt was $2.0 million for the three months ended March 31, 2024 related to prepayment fees of $0.3 million incurred to voluntarily prepay $18.6 million of the Company’s Term Loans during the three months ended March 31, 2024 and the derecognition of unamortized debt discount of $1.7 million associated with the principal repaid. The Company made no repayments on the principal balance of the Term Loans during the three months ended March 31, 2023.

Current wording

Loss on extinguishment of debt was $0 and $2.0 million for the three and six months ended June 30, 2024, respectively, related to prepayment fees of $0.3 million incurred to voluntarily prepay $18.6 million of the Company’s Term Loans in February 2024 and the derecognition of unamortized debt discount of $1.7 million associated with the principal repaid. The Company made no repayments on the principal balance of the Term Loans during the three and six months ended June 30, 2023.

Previous wording

Income tax benefit was $0 for the three months ended March 31, 2024 and 2023. Based upon the level of historical U.S. losses and future projections over the period in which the net deferred tax assets are deductible, at this time, management believes it is more likely than not that the Company will not realize the benefits of the remaining deductible temporary differences, and as a result the Company has recorded a full valuation allowance against its gross deferred tax assets as of March 31, 2024 and December 31, 2023.

Current wording

Income tax benefit was $0 for the three and six months ended June 30, 2024 and 2023. Based upon the level of historical U.S. losses and future projections over the period in which the net deferred tax assets are deductible, at this time, management believes it is more likely than not that the Company will not realize the benefits of the remaining deductible temporary differences, and as a result the Company has recorded a full valuation allowance against its gross deferred tax assets as of June 30, 2024 and December 31, 2023.

Previous wording

Equity in net income (loss) of investee, net of tax for the three months ended March 31, 2024 and 2023 was $5.3 million and $(10.2) million, respectively, which represents TeraWulf’s proportional share of income or losses of Nautilus, which commenced principal operations in February 2023. For the three months ended March 31, 2023, the amount also includes an impairment loss of $8.9 million on the distribution of miners from Nautilus to the Company whereby the miners were marked to fair value from book value on the date distributed. The impairment loss was the result of decreasing prices for miners between initial purchase and distribution.

Current wording

Equity in net income (loss) of investee, net of tax for the three and six months ended June 30, 2024 was $0.8 million and $6.0 million, respectively as compared to $(3.3) million and $(13.5) million for the three and six months ended June 30, 2023, respectively, which represents TeraWulf’s proportional share of income or losses of Nautilus, which commenced principal operations in February 2023. For the three and six months ended June 30, 2023, the amount also includes an impairment loss of $4.6 million and $13.6 million, respectively, on the distribution of miners from Nautilus to the Company whereby the miners were marked to fair value from book value on the date distributed. The impairment loss was the result of decreasing prices for miners between initial purchase and distribution.

Previous wording

We define Adjusted EBITDA as income (loss) from continuing operations adjusted for (i) impacts of interest, taxes, depreciation and amortization; (ii) preferred stock dividends, stock-based compensation expense and related party expense to be settled with respect to common stock, all of which are non-cash items that the Company believes are not reflective of its general business performance, and for which the accounting requires management judgment, and the resulting expenses could vary significantly in comparison to other companies; (iii) equity in net income (loss) of investee, net of tax, related to Nautilus; (iv) other income which is related to interest income or income for which management believes is not reflective of the Company’s ongoing operating activities; (v) loss on extinguishment of debt, which is not reflective of the Company’s general business performance and (vi) loss from discontinued operations, net of tax, which is not be applicable to the Company’s future business activities. The Company’s Adjusted EBITDA also includes the impact of distributions from investee received in bitcoin related to a return on the Nautilus investment, which management believes, in conjunction with excluding the impact of equity in net income (loss) of investee, net of tax, is reflective of assets available for the Company’s use in its ongoing operations as a result of its investment in Nautilus.

Current wording

We define Adjusted EBITDA as net loss attributable to common stockholders adjusted for (i) impacts of interest, taxes, depreciation and amortization; (ii) preferred stock dividends, stock-based compensation expense and related party expense to be settled with respect to common stock, all of which are non-cash items that the Company believes are not reflective of its general business performance, and for which the accounting requires management judgment, and the resulting expenses could vary significantly in comparison to other companies; (iii) equity in net income (loss) of investee, net of tax, related to Nautilus; (iv) other income which is related to interest income or income for which management believes is not reflective of the Company’s ongoing operating activities; (v) loss on extinguishment of debt, which is not reflective of the Company’s general business performance and (vi) loss from discontinued operations, net of tax, which is not be applicable to the Company’s future business activities. The Company’s Adjusted EBITDA also includes the impact of distributions from investee received in bitcoin related to a return on the Nautilus investment, which management believes, in conjunction with excluding the impact of equity in net income (loss) of investee, net of tax, is reflective of assets available for the Company’s use in its ongoing operations as a result of its investment in Nautilus.

Previous wording

As of March 31, 2024, the Company had cash and cash equivalents of $45.8 million, a working capital deficiency of $67.8 million, total stockholders’ equity of $272.3 million and an accumulated deficit of $269.5 million. The Company incurred a net loss attributable to common stockholders of $9.9 million for the three months ended March 31, 2024. The Company began mining bitcoin in March 2022 and had 8.0 EH/s of operating capacity across the Lake Mariner Facility and the Nautilus Cryptomine Facility as of March 31, 2024. To date, the Company has relied primarily on proceeds from its issuances of debt and equity and sale of bitcoin, both self-mined and distributed from the joint venture which owns the Nautilus Cryptomine Facility, to fund its principal operations.

Current wording

As of June 30, 2024, the Company had cash and cash equivalents of $104.1 million, a working capital balance of $18.5 million, total stockholders’ equity of $386.2 million and an accumulated deficit of $280.3 million. The Company incurred a net loss attributable to common stockholders of $21.1 million for the six months ended June 30, 2024. The Company began mining bitcoin in March 2022 and had 8.8 EH/s of operating capacity across the Lake Mariner Facility and the Nautilus Cryptomine Facility as of June 30, 2024. To date, the Company has relied primarily on proceeds from its issuances of debt and equity and sale of bitcoin, both self-mined and distributed from the joint venture which owns the Nautilus Cryptomine Facility, to fund its principal operations.

Previous wording

Certain amounts in the unaudited interim consolidated statement of cash flows for the three months ended March 31, 2023 were restated as previously disclosed in the restated unaudited interim consolidated statement of cash flows for the three months ended March 31, 2023 included in the Company’s Amendment No. 1 to its Quarterly Report on Form 10-Q for the period ended September 30, 2023.

Current wording

Certain amounts in the unaudited interim consolidated statement of cash flows for the six months ended June 30, 2023 were restated as previously disclosed in the restated unaudited interim consolidated statement of cash flows for the six months ended June 30, 2023 included in the Company’s Amendment No. 1 to its Quarterly Report on Form 10-Q for the period ended September 30, 2023.

Previous wording

Cash provided by (used in) operating activities for continuing operations was $22.8 million and $(8.7) million for the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024, cash used in operations resulted from a net loss of $9.6 million less non-cash expenses, net of $16.3 million, adjusted for changes in certain asset and liability balances and increased by proceeds from sale of bitcoin of $54.4 million. The non-cash expenses were primarily comprised of (i) amortization of debt issuance cost, commitment fees and accretion of debt discount of $7.6 million, (ii) stock-based compensation of $6.9 million, (iii) depreciation of $15.1 million, (iv) amortization of right-of-use asset of $0.3 million, (v) increase in digital currency from mining and hosting services of $41.5 million, (vi) gain on fair value of digital currency, net of $1.3 million, (vii) loss on extinguishment of debt of $2.0 million and (viii) $5.3 million related to the Company’s equity in net income, net of tax of Nautilus. The changes in certain assets and liabilities were primarily comprised of a net increase in current assets of $0.2 million (which includes prepaid expenses, other receivables, and other current assets) and a net decrease in current liabilities (which includes accounts payable, other accrued liabilities and other amounts due to related parties) of $5.5 million. For the three months ended March 31, 2023, cash used in operations resulted from a net loss of $26.3 million plus non-cash expenses, net of $10.7 million, adjusted for changes in certain asset and liability balances and increased by proceeds from sale of bitcoin of $10.0 million. The non-cash expenses were primarily comprised of (i) amortization of debt issuance cost, commitment fees and accretion of debt discount of $3.5 million, (ii) related party expense to be settled with respect to common stock of $0.3 million (iii) stock-based compensation of $0.9 million, (iv) depreciation of $5.4 million, (v) amortization of right-of-use asset of $0.3 million, (vi) increase in digital currency from mining and hosting services of $9.9 million, and (vii) $10.2 million related to the Company’s equity in net loss, net of tax of Nautilus. The changes in certain assets and liabilities were primarily comprised of a net decrease in current liabilities (which includes accounts payable, other accrued liabilities and other amounts due to related parties) of $3.5 million, a net decrease in current assets (which includes prepaid expenses and other current assets) of $0.5 million and an increase in other assets of $0.1 million.

Current wording

Cash provided by (used in) operating activities for continuing operations was $39.2 million and $(9.3) million for the six months ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024, cash provided by operating activities resulted from a net loss of $20.5 million less non-cash expenses, net of $29.7 million, adjusted for changes in certain asset and liability balances and increased by proceeds from sale of bitcoin of $97.6 million. The non-cash expenses were primarily comprised of (i) amortization of debt issuance cost, commitment fees and accretion of debt discount of $10.7 million, (ii) stock-based compensation of $11.8 million, (iii) depreciation of $29.2 million, (iv) amortization of right-of-use asset of $0.5 million, (v) increase in digital currency from mining and hosting services of $77.5 million, (vi) gain on fair value of digital currency, net of $0.6 million, (vii) loss on extinguishment of debt of $2.0 million and (viii) $6.0 million related to the Company’s equity in net income, net of tax of Nautilus. The changes in certain assets and liabilities were primarily comprised of a net increase in other receivables of $1.6 million, decrease in accounts payable of $6.3 million, and decrease in other accrued liabilities of $1.9 million, partially offset by decreases in prepaid expenses of $1.7 million. For the six months ended June 30, 2023, cash used in operations resulted from a net loss of $43.8 million plus non-cash expenses, net of $13.1 million, adjusted for changes in certain asset and liability balances and increased by proceeds from sale of bitcoin of $28.5 million. The non-cash expenses were primarily comprised of (i) amortization of debt issuance cost, commitment fees and accretion of debt discount of $8.3 million, (ii) related party expense to be settled with respect to common stock of $0.4 million (iii) stock-based compensation of $2.6 million, (iv) depreciation of $11.9 million, (v) amortization of right-of-use asset of $0.5 million, (vi) increase in digital currency from mining and hosting services of $24.2 million, and (vii) $13.5 million related to the Company’s equity in net loss, net of tax of Nautilus. The changes in certain assets and liabilities were primarily comprised of a net increase in other current assets of $1.3 million, decrease in accounts payable of $3.8 million, decrease in accrued liabilities of $2.3 million, and decrease in other amounts due to related parties of $1.3 million, partially offset by decrease in prepaid expenses of $1.6 million.

Previous wording

Cash used in investing activities for continuing operations was $47.0 million and $12.3 million for the three months ended March 31, 2024 and 2023, respectively. The Company invested $47.0 million and $10.0 million in the buildout of its mining facilities at the Lake Mariner Facility for the three months ended March 31, 2024 and 2023, respectively. Additionally, during the three months ended March 31, 2023, the Company invested $2.3 million, on a net basis, in its joint venture.

Current wording

Cash used in investing activities for continuing operations was $93.6 million and $18.8 million for the six months ended June 30, 2024 and 2023, respectively. The Company invested $93.6 million and $16.0 million in the buildout of its mining facilities at the Lake Mariner Facility for the six months ended June 30, 2024 and 2023, respectively. Additionally, during the six months ended June 30, 2023, the Company invested $2.8 million, on a net basis, in its joint venture.

Previous wording

Cash provided by financing activities for continuing operations was $15.5 million and $29.6 million for the three months ended March 31, 2024 and 2023, respectively primarily related to proceeds from Common Stock issued or to be issued, net of issuance costs, of $50.7 million and $31.0 million for the three months ended March 31, 2024 and 2023, respectively. The Company made principal payments in excess of proceeds from insurance premium financings of $0.8 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively. In addition, for the three months ended March 31, 2024, the Company made principal payments on long-term debt of $33.4 million and payments of $0.7 million related to tax withholdings related to net share settlements of stock-based compensation awards. For the three months ended March 31, 2023, the Company (i) received proceeds from warrant issuances of $2.5 million, (ii) received proceeds from issuance of a convertible promissory note of $1.3 million, and (iii) made payments of contingent value rights liability related to proceeds from sale of net assets held for sale of $3.9 million.

Current wording

Cash provided by financing activities for continuing operations was $104.0 million and $27.8 million for the six months ended June 30, 2024 and 2023, respectively primarily related to proceeds from Common Stock issued, net of issuance costs, of $173.2 million and $36.1 million for the six months ended June 30, 2024 and 2023, respectively. The Company also received proceeds from warrant exercises of $1.9 million and $2.5 million for the six months ended June 30, 2024 and 2023, respectively. The Company made principal payments in excess of proceeds from insurance premium financings of $1.6 million and $1.7 million for the six months ended June 30, 2024 and 2023, respectively. In addition, for the six months ended June 30, 2024, the Company made principal payments on long-term debt of $63.6 million and payments of $5.7 million related to tax withholdings related to net share settlements of stock-based compensation awards. For the six months ended June 30, 2023, the Company (i) received proceeds from issuance of a convertible promissory note of $1.3 million, and (ii) made payments of contingent value rights liability related to proceeds from sale of net assets held for sale of $9.6 million.

Previous wording

In March 2024, the Company entered into a Future Sales and Purchase Agreement (the “March 2024 Bitmain Purchase Agreement”) with Bitmain Technologies Delaware Limited (“Bitmain Delaware”) for the purchase of 5,000 S21 miners for a total purchase price of $17.5 million. As of March 31, 2024, the Company made payments of $3.5 million. Subsequent to March 31, 2024 the Company paid the remaining $14.0 million of the purchase price. The March 2024 Bitmain Purchase Agreement also provides the Company the right, but not the obligation, to purchase up to an additional 6,000 PH (approximately 30,000 miners), pursuant to certain payment timing conditions, by December 31, 2024 for a purchase price of $96.0 million (“Bitmain Call Option”). Pursuant to the Bitmain Call Option, the Company paid $9.6 million, calculated as 10% of the purchase price, as consideration for the Bitmain Call Option during the three months ended March 31, 2024 (the “Call Option Fee”). The Call Option Fee shall be applied to the settlement of future down payments of purchases under the Bitmain Call Option, in whole or in part in proportion to the ratio of quantity to be purchased to the maximum PH available under the Bitmain Call Option. TeraWulf plans to use the new miners to expand mining capacity at its Lake Mariner Facility.

Current wording

As of June 30, 2024, the Company has one Future Sales and Purchase Agreement (the “March 2024 Bitmain Purchase Agreement”) with Bitmain Technologies Delaware Limited (“Bitmain Delaware”) which, as supplemented, provides the Company has the right, but not the obligation, to purchase up to 6,000 PH (approximately 30,000 miners) of S21 Pro miners, pursuant to certain payment timing conditions, by December 31, 2024 for a purchase price of $112.3 million. As of June 30, 2024, the Company had paid Bitmain Delaware $11.2 million, calculated as 10% of the purchase price (the “Call Option Fee”). The Call Option Fee shall be applied to the settlement of future down payments of purchases under the Bitmain Call Option, in whole or in part in proportion to the ratio of quantity to be purchased to the maximum PH available under the Bitmain Call Option. In May 2024, the Company exercised an option to purchase 5,000 S21 Pro units and, prior to June 30, 2024, paid Bitmain Delaware an additional $16.8 million for these units.

Previous wording

The Company is counterparty to the Amended and Restated Talen Joint Venture Agreement dated August 27, 2022 (“A/R Joint Venture Agreement”). Under this A/R Joint Venture Agreement, the Company has invested $113.1 million on a net basis and has right-sized its equity ownership interest to 25% of the joint venture. The Company does not expect any additional material capital contributions to be required for the existing operations at the Nautilus Cryptomine Facility.

Current wording

The Company is counterparty to the Amended and Restated Talen Joint Venture Agreement dated August 27, 2022 (“A/R Joint Venture Agreement”). Under this A/R Joint Venture Agreement, the Company has invested $106.1 million on a net basis and has right-sized its equity ownership interest to 25% of the joint venture. The Company does not expect any additional material capital contributions to be required for the existing operations at the Nautilus Cryptomine Facility.

Previous wording

As of March 31, 2024, the Company had balances of cash and cash equivalents of $45.8 million, a working capital deficiency of $67.8 million, total stockholders’ equity of $272.3 million and an accumulated deficit of $269.5 million. As of March 31, 2024, the working capital deficiency included the then outstanding $106.0 million principal balance of the Company’s Term Loans which mature on December 1, 2024. To date, the Company has relied primarily on proceeds from its issuances of debt and equity and sale of bitcoin, both self-mined and distributed from the joint venture which owns the Nautilus Cryptomine Facility, to fund its principal operations.

Current wording

The Company incurred a net loss attributable to common stockholders of $21.1 million and generated cash flows from continuing operations of $39.2 million for the six months ended June 30, 2024. As of June 30, 2024, the Company had balances of cash and cash equivalents of $104.1 million, a working capital balance of $18.5 million, total stockholders’ equity of $386.2 million and an accumulated deficit of $280.3 million. As of June 30, 2024, the working capital balance included the then outstanding $75.8 million principal balance of the Company’s Term Loans which the Company repaid in July 2024 prior to its maturity on December 1, 2024. The Company had 8.8 EH/s of operating capacity across the Lake Mariner Facility and the Nautilus Cryptomine Facility as of June 2024. To date, the Company has relied primarily on proceeds from its issuances of debt and equity and sale of bitcoin, both self-mined and distributed from the joint venture which owns the Nautilus Cryptomine Facility, to fund its principal operations.

Previous wording

During the year ended December 31, 2023, the Company achieved significant milestones by initiating and delivering rapid organic growth at the Lake Mariner Facility, and commencing operations at the Nautilus Cryptomine Facility, resulting in positive cash flows from continuing operations. During the three months ended March 31, 2024, the Company additionally accomplished several notable steps to continue to achieve positive cash flows from operations, namely: (1) the Company repaid $33.4 million of outstanding principal of the Company’s Term Loans to remove the fixed principal amortization and extend the excess cash flow sweep through maturity, (2) the Company received net proceeds of $50.7 million through the issuance of shares of our Common Stock, par value $0.001 per share, (3) the Company received bitcoin distributions of $12.0 million from the joint venture which owns the Nautilus Cryptomine Facility, (4) the Company received substantially all contracted miners from the miner suppliers and has no remaining outstanding financial commitments under the miner purchase agreements for the existing operations at the Lake Mariner Facility and the Nautilus Cryptomine Facility, (5) the construction activities at the Lake Mariner Facility for buildings one, two and three and at the Nautilus Cryptomine Facility are complete as of March 31, 2024, although the Company intends to expand its infrastructure. Additionally, if a business need requires its use, the Company has an active at-the-market sales agreement for sale of shares of Common Stock having an aggregate offering price of up to $200.0 million (the “ATM Sales Agreement”), which had a remaining capacity of $28.9 million as of March 31, 2024. The issuance of Common Stock under this agreement would be made pursuant to the Company’s effective registration statement on Form S-3 (Registration statement No. 333-262226).

Current wording

During the year ended December 31, 2023, the Company achieved significant milestones by initiating and delivering rapid organic growth at the Lake Mariner Facility, and commencing operations at the Nautilus Cryptomine Facility, resulting in positive cash flows from continuing operations. During the six months ended June 30, 2024, the Company additionally accomplished several notable steps to continue to achieve positive cash flows from operations, namely: (1) the Company repaid $63.6 million of outstanding principal of the Company’s Term Loans to remove the fixed principal amortization and extend the excess cash flow sweep through maturity, (2) the Company received net proceeds of $175.1 million through the issuance of shares of our Common Stock, par value $0.001 per share, (3) the Company received bitcoin distributions with a fair value of $19.1 million at the time of distribution from the joint venture which owns the Nautilus Cryptomine Facility, (4) the Company received substantially all contracted miners from the miner suppliers and has no remaining outstanding financial commitments under the miner purchase agreements for the existing operations at the Lake Mariner Facility and the Nautilus Cryptomine Facility, (5) the construction activities at the Lake Mariner Facility for buildings one through four are substantially complete as of June 30, 2024, although the Company intends to expand its infrastructure. Additionally, if a business need requires its use, the Company has an active at-the-market sales agreement for sale of shares of Common Stock having an aggregate offering price of up to $200.0 million (the “ATM Program”), which had a remaining capacity of $103.0 million as of June 30, 2024. The issuance of Common Stock under this agreement would be made pursuant to the Company’s effective registration statement on Form S-3 (Registration statement No. 333-262226).