TERAWULF INC.

NOTE 1 –ORGANIZATION

TeraWulf Inc. (“TeraWulf” or the “Company”) is a vertically integrated owner and operator of next-generation digital infrastructure, primarily powered by zero-carbon energy. The Company develops and operates high-performance data centers optimized for bitcoin mining and high-performance computing (“HPC”) workloads, leveraging clean, cost-effective, and reliable energy sources to promote long-term sustainability in digital infrastructure.

TeraWulf generates revenue by providing hash computation services to a mining pool operator, facilitating transaction validation of transactions on the global bitcoin network using the Company’s fleet of application-specific integrated circuit (“ASIC”) miners. Bitcoin earned as consideration is routinely converted to U.S. dollars. The Company also previously generated revenue by hosting third-party bitcoin miners. While capable of mining other digital currencies, the Company has no current plans to do so.

In 2024, the Company launched WULF Compute, which is focused on development and deployment of scalable digital infrastructure to support a broader HPC strategy. This business aims to diversify revenue by offering HPC hosting and colocation, cloud, and connectivity services for GPU-based workloads (see Note 8). With growing demand for high-density compute, TeraWulf’s assets are well-positioned to deliver low-cost, predominantly zero-carbon power to support these workloads.

As of June 30, 2025, TeraWulf owned and operated bitcoin mining activities at the Lake Mariner Facility in upstate New York (the “Lake Mariner Facility”), which began operations in March 2022. Currently, the Company has energized 245 MW of capacity across five buildings and supporting infrastructure at the site.

On May 21, 2025 (the “Acquisition Date”), the Company acquired 100% of the membership interests of each of Beowulf Electricity & Data LLC, Beowulf E&D (MD) LLC, and Beowulf E&D (NY) LLC (collectively, “Beowulf E&D”). The fair value of total consideration for the transaction was approximately $54.6 million, including $3.0 million in cash and 5.0 million shares of the Company’s common stock (“Common Stock”) issued on the Acquisition Date. The purchase agreement also includes up to $19.0 million in contingent cash payments and up to $13.0 million in additional Common Stock, subject to the achievement of several earnout milestones related to the expansion of the Company’s data center business and project financing initiative (see Note 3). As part of the acquisition,94 employees of Beowulf E&D, including site staff at the Lake Mariner Facility and corporate personnel, were transitioned to TeraWulf. In addition, the existing Administrative and Infrastructure Services Agreement (the “Services Agreement”) (see Note 16) with Beowulf E&D was terminated on the Acquisition Date.

The Company previously had bitcoin mining activities at the Nautilus Cryptomine Facility in central Pennsylvania (the “Nautilus Cryptomine Facility”), developed through a joint venture (see Note 11). The Nautilus Cryptomine Facility commenced operations in February 2023 and achieved full energization of TeraWulf’s 50 MW share by April 2023. In October 2024, TeraWulf sold its 25% equity interest in the joint venture, reallocating capital to expand its wholly owned infrastructure and advance its HPC strategy at the Lake Mariner Facility.

NOTE 2 –SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. In the opinion of the Company, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair statement of such interim results. All intercompany balances and transactions have been eliminated. Certain prior period amounts have been reclassified to conform with current period presentation.

The results for the unaudited interim condensed consolidated statements of operations are not necessarily indicative of results to be expected for the year ending December 31, 2025 or for any future interim period. The unaudited interim condensed consolidated financial statements do not include all the information and notes required by U.S. GAAP for complete presentation of annual financial statements. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Use of Estimates in the Financial Statements

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for (but are not limited to) such items as the fair values of assets acquired and liabilities assumed in business combinations, establishment of useful lives for property, plant and equipment, the fair value of leased assets, the fair value of equity securities or warrants to purchase the Company’s Common Stock issued individually or as a component of a debt or equity offering, the fair value of changes to the conversion terms of embedded conversion features, the fair value and requisite service periods of stock-based compensation, the fair value of assets received in nonmonetary transactions, the establishment of right-of-use assets and lease liabilities that arise from leasing arrangements, the fair value of contingent consideration liabilities, the timing of commencement of capitalization for plant and equipment, impairment of long-lived assets, impairment of goodwill, recoverability of deferred tax assets, amortization of deferred issuance costs and debt discount, and the recording of various accruals. These estimates are made after considering past and current events and assumptions about future events. Actual results could differ from those estimates.

Significant Accounting Policies

Except for the updates noted below, see the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for a detailed discussion of the Company’s significant accounting policies.

Revenue Recognition

Mining Pool

The Company has entered into an arrangement with a cryptocurrency mining pool (the “Foundry USA Pool”) to perform hash computation (i.e. hashrate) for the mining pool in exchange for consideration. Providing hash computation services to a mining pool is an output of the Company’s ordinary activities. The provision of such hash computation services is the sole performance obligation. The mining pool arrangement is terminable at any time without substantial penalty by Foundry USA Pool and may be terminated without substantial penalty by the Company upon providing one Contract Day’s, as defined, prior written notice. The Company’s enforceable right to compensation only begins when and continues while the Company provides hash computation services to its customer, the mining pool operator. Accordingly, the contract term with Foundry USA Pool is deemed to be less than 24 hours and to continuously renew throughout the day. Additionally, the Company concluded that the mining pool operator’s (i.e., the customer’s) renewal right is not a material right because the renewal rights do not include any discounts; that is, the terms, conditions, and compensation amounts are at the then-current market rates.

There is no significant financing component in these transactions.

The mining pool applies the Full Pay Per Share (“FPPS”) payout model. Under the FPPS model, in exchange for providing hash computation services to the pool, the Company is entitled to pay-per-share base amount and transaction fee reward compensation, calculated on a daily basis, at an amount that approximates the total bitcoin that could have been mined and transaction fees that could have been awarded using the Company’s hash computation services, based upon the then current blockchain difficulty. Under this model, the Company is entitled to compensation, payable in bitcoin, regardless of whether the pool operator successfully records a block to the bitcoin blockchain.

The transaction consideration the Company receives, if any, is noncash consideration and is all variable. Because digital currency is considered noncash consideration, fair value of the digital currency award received would generally be determined using the quoted price of the related digital currency in the Company’s principal market at the time of contract inception. The Company has adopted an accounting policy to aggregate individual contracts with individual terms less than 24 hours within each intraday period and apply a consistent valuation point, the start of day Coordinated Universal Time (00:00:00 UTC), to value the related noncash consideration. Revenue is recognized when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, which is the same day that control of the contracted service transfers to the mining pool and is the same day as the contract inception. After every 24-hour contract term, the mining pool transfers the digital currency consideration to the Company’s designated digital currency wallets.

Consideration payable to the customer in the form of a pool operator fee, which is incurred only to the extent that the Company has generated FPPS consideration, is deducted from the bitcoin the Company receives and is recorded as contra-revenue, as it does not represent a payment for a distinct good or service.

The Company recorded revenue from mining of $47.6 million and $82.0 million during the three and six months ended June 30, 2025, respectively, and $35.6 million and $77.2 million during the three and six months ended June 30, 2024, respectively.

Bitcoin Miner Hosting

The Company hadone bitcoin miner hosting contract which expired in February 2024. At the time of contract inception, the quoted price of bitcoin in the Company’s principal market was approximately $38,000. The Company recorded bitcoin miner hosting revenue of $0 and $0.8 million during the three and six months ended June 30, 2024, respectively.

HPC Hosting

In December 2024, the Company entered into long-term data center lease agreements (the “HPC Leases”) with a customer for specified data center infrastructure at the Lake Mariner Facility to support the customer’s HPC operations. In accordance with ASC 842, Leases, the Company determined at contract inception that these agreements contained a lease, comprising lease components related to the right to use data center space and non-lease components for power delivery, physical security, and maintenance services. The HPC Leases are expected to commence at various dates throughout 2025, each with an initial 10-year term. The agreements also provide the customer withtwo five-year renewal options and a provision for near-term expansion of HPC hosting capacity. While the expansion provision has since expired, the parties remain in active dialogue regarding potential expansion at the site (see Note 8).

Power Curtailment Credits

Proceeds from participation in demand response programs are recorded as a reduction in cost of revenue in the condensed consolidated statements of operations for the period in which the corresponding demand response program occurs. The Company recorded demand response program amounts of approximately $3.1 million and $5.9 million during the three and six months ended June 30, 2025, respectively, and $1.9 million and $3.2 million during the three and six months ended June 30, 2024, respectively.

Cash and Cash Equivalents

Highly liquid instruments with an original maturity of three months or less are classified as cash equivalents. As of June 30, 2025 and December 31, 2024, the Company had cash and cash equivalents of $90.0 million and $274.1 million, respectively.

The Company maintains cash and cash equivalent balances primarily at two financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”). The Company’s accounts at these institutions are insured, up to $250,000, by the FDIC. As of June 30, 2025, the Company’s bank balances exceeded the FDIC insurance limit by $6.9 million. To reduce its risk associated with the failure of such financial institutions, the Company evaluates at least annually the rating of the financial institutions in which it holds deposits.

Restricted Cash

The Company considers cash and marketable securities to be restricted when withdrawal or general use is legally restricted. The Company reports restricted cash in the condensed consolidated balance sheets and determines current or noncurrent classification based on the expected duration of the restriction. The Company had restricted cash of $1.4 million classified as noncurrent assets in the condensed consolidated balance sheet as of June 30, 2025. The Company hadno restricted cash as of December 31, 2024.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that total to the amounts shown in the condensed consolidated statements of cash flows (in thousands):

Supplemental Cash Flow Information

The following table shows supplemental cash flow information (in thousands):

Digital Currency

Digital currency consists of bitcoin earned as noncash consideration for providing hash computation services to a mining pool and for bitcoin miner hosting services, in accordance with the Company’s revenue recognition policy. From time to time, the Company also received bitcoin as distributions-in-kind from its joint venture. Digital currency is classified as a current asset in the condensed consolidated balance sheets as it is highly liquid and the Company expects to sell it within the next twelve months to support operations.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). The new standard requires certain crypto assets to be subsequently measured at fair value, with changes recognized in net income each reporting period.

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 digital currency balance and decrease the opening accumulated deficit in the condensed consolidated balance sheet as of January 1, 2024.

Following adoption of ASU 2023-08, the Company measures digital currency at fair value each reporting period in accordance with ASC 820, Fair Value Measurement (“ASC 820”). Fair value is determined using Level 1 inputs based on quoted prices from the active trading platform on which the Company regularly transacts, which is considered its principal market for bitcoin. Because bitcoin is continuously traded, the Company uses the midnight UTC price to align with its revenue recognition policy. Gains and losses from remeasurement are included within “(gain) loss on fair value of digital currency, net” in the condensed consolidated statements of operations.

For bitcoin sales, gains and losses are calculated as the difference between cash proceeds and the cost basis, using a first-in, first-out (FIFO) method. These gains and losses are also included within “(gain) loss on fair value of digital currency, net” in the condensed consolidated statements of operations. The Company recorded a net fair value (gain) loss of $(0.9) million and $(17,000) during the three and six months ended June 30, 2025, respectively, and $0.7 million and $(0.6) million during the three and six months ended June 30, 2024, respectively.

Bitcoin earned through mining activities is recorded as a noncash adjustment in reconciliation of net loss to net cash provided by operating activities in the condensed consolidated statements of cash flows. Bitcoin received as distributions-in-kind from equity investees is disclosed as a supplemental noncash investing activity.

Following the repayment of the Term Loans in July 2024 (see Note 10), the Company no longer immediately converts bitcoin into cash immediately. As a result, proceeds from bitcoin sales are reflected as cash flows from investing activities rather than operating activities for the six months ended June 30, 2025.

Concentrations

During 2025 and 2024, the Company primarily contracted withone supplier for the provision of bitcoin miners andone mining pool operator. The Company does not believe that these counterparties represent a significant performance risk. Revenue did not exceed 10% for any one bitcoin miner hosting customer during the three and six months ended June 30, 2025 and 2024. During the three and six months ended June 30, 2025 and 2024, the Company only operated bitcoin mining facilities. While capable of mining other digital currencies, the Company has no current plans to do so. If the market value of bitcoin declines significantly, the consolidated financial condition and results of operations of the Company may be adversely affected.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets (generally 5 years for computer equipment,4 years for miners and 10 years for furniture and fixtures and equipment). Leasehold improvements and electrical equipment are depreciated over the shorter of their estimated useful lives (25 years) or the lease term. Changes in depreciation and amortization, generally accelerated depreciation and variable amortization, are determined and recorded when estimates of the remaining useful lives or residual values of long-term assets change. Property, plant and equipment includes deposits, amounting to $0 and $53.9 million as of June 30, 2025 and December 31, 2024, respectively, on purchases of such assets, including miners, which would be included in property, plant and equipment upon receipt.

Interest related to construction of assets is capitalized when the financial statement effect of capitalization is material, construction of the asset has begun, and interest is being incurred. Interest capitalization ends at the earlier of the asset being substantially complete and ready for its intended use or when interest costs are no longer being incurred.

Variable Interest Entities

Variable interest entities (“VIE”) are legal entities in which equity investors do not have (i) sufficient equity at risk for the legal entity to finance its activities without additional subordinated financial support, or (ii) as a group, the power, through voting or similar rights, to direct the activities of the legal entity that most significantly impact the entity’s economic performance, or (iii) the obligation to absorb the expected losses of the legal entity or the right to receive expected residual returns of the legal entity. The Company would consolidate any VIE in which it has a controlling financial interest through being deemed to be the primary beneficiary of the VIE. The primary beneficiary of a VIE has both of the following characteristics: (1) the power to direct the activities of the VIE that most significantly impact its economic performance; and (2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could be significant to the VIE. If both characteristics are met, the Company considers itself to be the primary beneficiary and therefore will consolidate that VIE into its consolidated financial statements.

The Company determines whether it is the primary beneficiary of a VIE upon initial involvement with a VIE and reassesses whether it is the primary beneficiary of a VIE on an ongoing basis. The determination of whether an entity is a VIE and whether the Company is the primary beneficiary of a VIE is based upon facts and circumstances for the VIE and requires significant judgments such as whether the entity is a VIE, whether the Company’s interest in a VIE is a variable interest, the determination of the activities that most significantly impact the economic performance of the entity, whether the Company controls those activities, and whether the Company has the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.

Business Combinations

The Company includes the results of operations of the businesses it acquires as of the acquisition date. The Company allocates the purchase price of the acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase price over the fair values of identifiable assets and liabilities is recorded as goodwill. Contingent consideration is included within the purchase price and is recognized at its fair value on the acquisition date. A liability resulting from contingent consideration is remeasured to fair value as of each reporting date until the contingency is resolved, and subsequent changes in fair value are recognized in earnings. Contingent consideration is recorded in current liabilities in the Company’s condensed consolidated balance sheets.

While the Company uses its best estimates and assumptions to accurately apply preliminary values to assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, these estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of the assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the condensed consolidated statements of operations. Accounting for business combinations requires management to make significant estimates and assumptions, especially at the acquisition date, including estimates for assets acquired, liabilities assumed, and contingent consideration, where applicable. Although the Company believes the assumptions and estimates it has made have been reasonable and appropriate, they are based in part on historical experience and information obtained from management of the acquired companies and are inherently uncertain. Critical estimates include valuation of the contingent consideration transferred, and assets acquired and liabilities assumed. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates, or actual results. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.

Goodwill

The Company evaluates goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate the carrying value may not be recoverable. The Company may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying value and if so, it performs a quantitative test.

The Company estimates the fair value of the reporting unit using discounted cash flows. The Company’s analyses require significant assumptions and judgments, including assumptions about future economic conditions, revenue growth, and operating margins, among other factors. Events or changes in circumstances considered in the qualitative analysis, many of which are subjective in nature, include: a significant negative trend in the Company’s industry or overall economic trends, a significant change in how the Company uses the acquired assets, a significant change in business strategy, a significant decrease in the market value of the asset, and a significant change in regulations or in the industry that could affect the value of the asset. The Company compares the carrying value of each reporting unit to its estimated fair value and if the fair value is determined to be less than the carrying value, the Company would recognize an impairment loss for the difference.

Loss per Share

The Company computes earnings (loss) per share using the two-class method required for participating securities. The two-class method requires income available to common stockholders for the period to be allocated between Common Stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

Basic loss per share of Common Stock is calculated by dividing the Company’s net loss by the weighted average number of shares of Common Stock outstanding during the period. Convertible preferred stock is considered a participating security because it shares, in a pro rata basis, in any dividends declared on Common Stock. However, since it does not participate in the Company’s losses, it is excluded from the computation of basic net loss per share. Diluted loss per share reflects the potential dilution that could occur if other instruments were converted into Common Stock, using the treasury stock method or as-converted method, as applicable. However, for periods in which the Company reports a net loss, all potentially dilutive instruments are excluded from the calculation of diluted loss per share, as their inclusion would be anti-dilutive. Subsequent to June 30, 2024, the Company determined that dividends on its preferred stock would no longer be reflected as a reduction to net loss in the condensed consolidated statements of operations, and, therefore, would be excluded from the computation of basic loss per common share. Previously, the Company had included dividends in this calculation.

As of June 30, 2025 and 2024, the Company’s potentially dilutive instruments and participating securities included convertible preferred stock, Common Stock warrants, convertible notes, restricted stock, and restricted stock units (“RSUs”) issued for services. If the full liquidation preference of the Convertible Preferred Stock (as defined in Note 13) was converted at its conversion price as of June 30, 2025, approximately 1.3 million shares of Common Stock would be issued. As of June 30, 2025,17,266,733 Common Stock warrants were outstanding with a weighted average strike price of $1.38, and 4,432,093 RSUs were outstanding.

Segment Reporting

During the three and six months ended June 30, 2025 and 2024, the Company was engaged in digital currency mining by providing hash computation services to a mining pool operator and offering bitcoin miner hosting services to third parties. The Company’s operations are evaluated regularly by the chief operating decision maker, or decision–making group (“CODM”), which is composed of the Chief Executive Officer, Chief Technology Officer and Chief Strategy Officer, to assess performance and allocate resources.

The CODM is regularly provided only with consolidated expense data, as presented in the condensed consolidated statements of operations. Accordingly, the Company has determined that these consolidated expenses represent significant segment-level information. Because financial performance and resource allocation decisions are made on a consolidated basis, the Company operates as a single operating and reportable segment.

The CODM manages this segment using consolidated net loss as the primary measure of performance. Consolidated net loss for the three and six months ended June 30, 2025 was $18.4 million and $79.8 million, respectively, and $10.9 million and $20.5 million during the three and six months ended June 30, 2024, respectively. This metric is used by the CODM to evaluate operating results, assess the effectiveness of business strategies, and internally benchmark the Company’s performance against its industry peers.

As the Company reports a single segment, total revenue is disclosed in the condensed consolidated statements of operations, segment assets are presented in the condensed consolidated balance sheets, and capital expenditures are reported in the condensed consolidated statements of cash flows.

NOTE 3 –BUSINESS COMBINATION

On the Acquisition Date, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Beowulf E&D Holdings Inc., a related party due to control by a member of the Company’s management (the “Seller”), pursuant to which, among other things, the Company acquired 100% of the issued and outstanding membership interests of Beowulf E&D. The Purchase Agreement and the transaction were negotiated and approved by a special independent committee of the Company’s Board of Directors comprised entirely of independent directors. The transaction was accounted for as a business combination between entities not under common control, the purpose of which was to acquire a business comprised of 94 employees with deep experience in the development and operation of power generation assets and related electrical infrastructure. Integrating this capability directly into TeraWulf supports the Company’s long-term growth strategy, especially as power generation becomes increasingly integral to HPC operations.

Pursuant to the Purchase Agreement, in full consideration of the acquisition of Beowulf E&D, the Company agreed to pay the Seller:

•On the Acquisition Date (i) $3.0 million in cash and (ii)5.0 million shares of Common Stock.

•Upon the date on which the Company closes the breakers to the busway which energizes the data hall for the CB-1 Project (the “CB-1 Earnout Milestone”), (i) $6.0 million in cash and (ii) Common Stock valued at $6.5 million, calculated on the basis of a 60-day trailing volume weighted average price (“VWAP”) as of the date the CB-1 Earnout Milestone is achieved.

•Upon the execution by the Company of definitive documentation for a project financing of the CB-1 Project and the CB-2 Project (the “Project Financing Closing”), Common Stock valued at $6.5 million, calculated on the basis of a 60-day trailing VWAP as of the date the Project Financing Closing is achieved.

•Upon the execution by the Company of a data center lease for the CB-3 Project (the “CB-3 Earnout Milestone”). $13.0 million in cash.

Prior to the transaction, Beowulf E&D also performed certain administrative services to certain affiliates of the Seller. Concurrent with Purchase Agreement, the Company entered into a transition services agreement (the “TSA”) through which the Company, along with Beowulf E&D, agreed to provide to certain affiliates of the Seller, who are related parties of the Company due to control by a member of the Company’s management, certain transition services including, but not limited to, services related to tax and accounting, human resources and payroll, information technology, legal, and other general services) for a period oftwo years, unless terminated early in accordance with the provisions of the TSA. In consideration for the services, the Seller affiliates agreed to pay the Company a quarterly fee of $100 as well as reimbursement for third-party expenses incurred in the performance of the services. The Company determined that the TSA is not separate from the business combination and represented additional consideration transferred in the business combination. Accordingly, the Company recorded a liability at fair value at the Acquisition Date of $1.3 million to be amortized over thetwo-year term of the TSA. The Company had a $1.2 million liability related to the future services to be provided under the TSA included in other liabilities in the condensed consolidated balance sheet as of June 30, 2025.

The following table summarizes the Acquisition Date fair value of the aggregate consideration paid for Beowulf E&D pursuant to the Purchase Agreement (in thousands):

(1) The cash paid at close represents the gross contractual amount paid. Net cash paid, which accounts for the cash acquired of $0.3 million, was $2.7 million and is reflected as an investing activity in the condensed consolidated statement of cash flows for the six months ended June 30, 2025.

(2) The fair value of the Common Stock issued as part of the consideration paid for Beowulf E&D was determined on the basis of the closing market price of the Company’s Common Stock on the Acquisition Date.

(3) The fair value of the CB-1 Earnout Milestone was estimated using a Monte Carlo and Geometric Brownian Motion (GBM) simulation in a risk-neutral framework and measured based on significant inputs not observable in the market which ASC 820 refers to as Level 3 inputs. Key assumptions include the expected timing and probability of achieving the CB-1 Earnout Milestone and future stock price volatility.

(4) The fair value of the Project Financing Closing was estimated using a Monte Carlo and Geometric Brownian Motion (GBM) simulation in a risk-neutral framework and measured based on significant inputs not observable in the market which ASC 820 refers to as Level 3 inputs. Key assumptions include the expected timing and probability of achieving the Project Financing Closing and future stock price volatility.

(5) The fair value of the CB-3 Earnout Milestone was estimated using a discounted cash flow method and measured based on significant inputs not observable in the market which ASC 820 refers to as Level 3 inputs. Key assumptions include the expected timing and probability of achieving the CB-3 Earnout Milestone.

(6) The fair value of the TSA liability was estimated using the differential cash flow method, assessing the differential in compensation for the services provided based on contractual TSA rates relative to compensation at “market” rates.

(7) The Company determined the acquisition of Beowulf E&D in effect settled the preexisting relationships between the Company and Beowulf E&D and increased the consideration transferred by $2.3 million reflecting the effective termination of the Services Agreement and the related net receivables due to the Company from Beowulf E&D as of the Acquisition Date. The Services Agreement was determined to be comparable when compared with pricing for current market transactions for the same or similar items.

As of June 30, 2025, the contingent consideration liabilities were remeasured to a fair value of $30.0 million. The change in the fair value of $1.6 million is included in change in fair value of contingent consideration in the condensed consolidated statements of operations for the three and six months ended June 30, 2025.

In July 2025, the CB-1 Earnout Milestone was achieved and the Company paid $6.0 million in cash and issued 1.8 million shares of Common Stock to the Seller valued at $6.5 million, calculated on the basis of a 60-day trailing VWAP as of the date the CB-1 Earnout Milestone was achieved.

The Company recorded the assets acquired and liabilities assumed at their estimated acquisition-date fair values, with the difference between the fair value of the net assets acquired and the purchase consideration reflected in goodwill. The total purchase price of $54.6 million was allocated using information available to the Company at the time of acquisition. The purchase price allocation was based on preliminary valuations and subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available, including certain tax matters, during the measurement period (up to one year from the Acquisition Date).

In connection with the acquisition, the Company recorded goodwill of $55.5 million, which is primarily a result of the value of Beowulf E&D’s specialized assembled workforce acquired and expected synergies of combining operations. The Company determined that all of the goodwill is expected to be deductible for tax purposes.

The following table summarizes the preliminary allocation of the purchase price as of the Acquisition Date (in thousands):

The operating lease right-of-use asset includes a $(0.4) million adjustment to reflect unfavorable terms of a lease when compared to market terms.

During the three and six months ended June 30, 2025, there were no measurement period adjustments identified and recorded. As of the date these condensed consolidated financial statements were issued, the purchase accounting related to this acquisition was incomplete as the valuation of certain working capital balances, deferred taxes and contingent consideration were not yet finalized. The Company has reflected the provisional amounts in these condensed consolidated financial statements. As such, the above balances may be adjusted in a future period as the valuation is finalized and these adjustments may be material to the consolidated financial statements.

The Purchase Agreement also includes customary change of control provisions which provide for accelerated vesting of the earnout consideration in the event of a change of control as well as certain governance rights and additional cash payments. The Company further agreed to form an eligible employee trust administered by a third-party trustee for the benefit of certain individuals that were employed by or provided services to the acquired Beowulf E&D companies or its affiliates, and to fund the trust annually with an amount equal to 2% of the Company’s annual capital expenditures, calculated in accordance with U.S. GAAP, for the development and build out the Company’s HPC data centers, as determined in good faith by the Company’s Board of Directors.

The Company determined the eligible employee trust is a VIE and that the Company is the primary beneficiary of the trust as the Company has the power to direct the activities that most significantly impact the economic performance of the trust and the obligation to absorb losses or the right to receive benefits of the trust that could potentially be significant.

The Company incurred acquisition-related costs of $1.5 million which are included in selling, general and administrative expenses in the condensed consolidated statement of operations for the three and six months ended June 30, 2025.

Results of operations of the business acquired have been included in the Company’s condensed consolidated financial statements subsequent to the Acquisition Date, which includedno revenue, $1.1 million in selling, general and administrative expenses and $0.1 million in selling, general and administrative expenses – related party in the condensed consolidated statements of operations for the three and six months ended June 30, 2025.

During the three and six months ended June 30, 2025 and 2024 and prior to the Acquisition Date, substantially all of Beowulf E&D’s revenues were earned pursuant to the services it provided to the Company under the Services Agreement, which would be considered intercompany and eliminate on a pro forma basis. Additionally, the expenses incurred by Beowulf E&D in providing the services to the Company per the Services Agreement prior to the Acquisition Date are reflected in the fees previously paid by the Company, such that Beowulf E&D’s pro forma expenses, prior to the Acquisition Date, are included in selling, general and administrative expenses – related party and operating expenses – related party in the condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 (see Note 16).

Accordingly, the Company determined its consolidated financial statements for the three and six months ended June 30, 2025 and 2024, in all material respects, reflect on a pro forma basis what the Company’s revenues and earnings would have been if the business acquisition had occurred at the beginning of the prior year.

NOTE 4 –FAIR VALUE MEASUREMENTS

The following table presents the Company’s financial instruments measured at fair value on a recurring basis and their level within the fair value hierarchy as of June 30, 2025 and December 31, 2024 (in thousands):

The Company has determined the fair value of convertible notes is approximately $426.6 million as of June 30, 2025 (see Note 10) using Level 1 inputs. The carrying values of cash and cash equivalents, accounts receivable, prepaid expenses, other receivables, other current assets, accounts payable, accrued construction liabilities, accrued compensation, accrued interest, deferred revenue, other accrued liabilities and other amounts due to related parties are considered to be representative of their respective fair values principally due to their short-term maturities. There were no additional material non-recurring fair value measurements as of June 30, 2025 and December 31, 2024, except for (i) the calculation of fair value of Common Stock issued in connection with the New Ground Lease (see Note 8), (ii) the calculation of fair value of Common Stock warrants issued in connection with amendments to the Company’s long-term debt agreement (see Note 10), in connection with the issuance of Common Stock (see Note 14), in connection with a Common Stock exchange agreement and on a standalone basis, (iii) and the calculation of fair value of nonmonetary assets distributed from the Company’s joint venture (see Note 11), (v) the calculation of PSUs granted to employees as stock-based compensation (see Note 15) and (vi) the calculation of the fair value of components of total consideration transferred in the business acquisition of Beowulf E&D, including contingent consideration, and the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed.

The Company utilized a Monte Carlo simulation in a risk-neutral framework to estimate the fair value of the contingent consideration in the business acquisition, incorporating historical and expected annual volatility of approximately 110%, based on both the Company’s and peer public companies’ data. Key assumptions used in the valuation model also included the risk-free interest rate is derived from U.S. Treasury yields on the Acquisition Date with a maturity corresponding to the expected timing of achieving each contingent milestone. The Company applied a dividend yield ofzero, consistent with historical practice and expectations.

The Company utilized a Black-Scholes option pricing model, along with a discount for lack of marketability (“DLOM”), to value its Common Stock warrants issued in connection with the Term Loans (as defined in Note 10). The DLOM reflects contractual restrictions on the exercise of the warrants. The estimated fair value of the warrants is classified as Level 3 measurement due to the use of unobservable inputs.

Key assumptions used in the valuation model include expected share-price volatility, expected term, risk-free interest rate, dividend yield, and DLOM. Expected volatility is based on historic volatility of a peer group of publicly traded companies over the expected term of the warrants, which is assumed to be equal to the contractual term. The risk-free interest rate is derived from U.S. Treasury yields on the grant date with a maturity corresponding to the expected life of the warrants. The Company applies a dividend yield ofzero, consistent with historical practice and expectations.

The Company applied a DLOM of 20% to value the warrants issued in connection with the First Amendment to the LGSA and a DLOM of 30% for warrants issued in connection with the Fifth Amendment.

In addition, the Company used a Monte Carlo simulation model to estimate the fair value of PSUs, incorporating historical and expected annual volatility of approximately 120%, based on both the Company’s and peer public companies’ data. A DLOM of 10% was applied in determining the fair value of the Common Stock issued in connection with the New Ground Lease.

NOTE 5 –BITCOIN

The following table presents information about the Company’s bitcoin holdings as of June 30, 2025 and December 31, 2024 (in thousands, except for quantity of bitcoin):

The Company’s bitcoin holdings are not subject to contractual sale restrictions. As of June 30, 2025 and December 31, 2024, the Company held no other digital currency.

NOTE 6 –PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consisted of the following (in thousands):

Depreciation expense was $18.8 million and $34.4 million during the three and six months ended June 30, 2025, respectively, and $14.1 million and $29.2 million during the three and six months ended June 30, 2024, respectively. 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 2024. The Company recordedno impairment during the three and six months ended June 30, 2025 and June 30, 2024.

During the three and six months ended June 30, 2025, the Company sold or otherwise disposed of 2,918 miners and received proceeds of $1.9 million resulting in a loss on disposal of property, plant and equipment of $3.8 million in the condensed consolidated statement of operations.

NOTE 7 –GOODWILL

The following table summarizes the change in the carrying amount of goodwill during the six months ended June 30, 2025 (in thousands):

Goodwill attributed to the acquisition reflects the Company’s allocation of purchase consideration in excess of the estimated fair values of net assets acquired. The Company recordedno impairment during the three and six months ended June 30, 2025.

NOTE 8 –LEASES

Lessee Accounting

In May 2021, the Company entered into a ground lease (as amended from time to time, the “Ground Lease”), related to the Lake Mariner Facility in New York with a counterparty which is a related party due to control by a member of Company management (the “Ground Lease Lessor”). The Ground Lease had a term ofeight years and was classified as an operating lease remeasured as of the date of the second amendment in July 2022 utilizing a discount rate of 12.6%, which was an estimate of the Company’s incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at the remeasurement date.

In October 2024, the Company terminated its existing Ground Lease and entered into a new agreement with the same related party counterparty (the “New Ground Lease”) for the Lake Mariner Facility. The New Ground lease expanded the acreage of real property covered by the prior lease to support both cryptocurrency mining and HPC co-location data center operations.

The New Ground Lease includes both fixed and variable payments, including an annual escalation factor and the Company’s proportionate share of the landlord’s cost to own, operate and maintain the premises. It has an initial term of 35 years, commencing on October 9, 2024, and will automatically renew for up tonine additional five-year periods unless the Company provides written notice of termination at leastsix months prior to the end of the initial or the then-current renewal term. Upon expiration of the New Ground Lease, all buildings and improvements on the premises will revert to the landlord in good condition.

As consideration for terminating the prior lease and entering into the New Ground Lease, the Company issued 20.0 million shares of Common Stock with a fair value of $68.8 million and paid $12.0 million in cash (the “Cash Lease Prepayment”) to the parent company of the counterparty in October 2024. The Company determined that this transaction constituted a lease modification under ASC 842.

The New Ground Lease containedtwo lease components: Land and building. The land component was classified as an operating lease , while the building component was classified as a finance lease, as the 35-year initial term represents a major portion of the building’s remaining economic life. As of October 9, 2024, the Company remeasured the lease liabilities for both components using a discount rate of 6.9%, which reflects the estimated incremental borrowing rate for a collateralized loan with a term comparable to the lease payments.

In May 2025 in connection with acquisition of Beowulf E&D, the New Ground Lease was amended and restated (as amended and restated, the “A&R Lease”). While the A&R Lease did not change the parties, term or payments under the lease, A&R Lease grants the Ground Lease Lessor the right to participate in TeraWulf’s board of directors meetings as a non-voting observer for the remainder of the A&R Lease term, provided that the Ground Lease Lessor (together with its affiliates) continues to beneficially own at least 15 million shares of Common Stock. The A&R Lease also provides that (a) Beowulf E&D has been, and is currently providing certain services in its capacity as the exclusive operator of the Lake Mariner site, (b) so long as TeraWulf is an affiliate of the Ground Lease Lessor, the lessee may designate TeraWulf or one or more of its wholly owned subsidiaries as operator of the premises (together with Beowulf E&D, each and collectively “TeraWulf Operator”), and (c) as long as TeraWulf Operator is not in material default of its services, TeraWulf Operator may not be replaced or removed as operator without the prior written consent of the Ground Lease Lessor, with such consent not to be unreasonably withheld, conditioned or delayed.

In April 2025, the Company entered into an office lease in New York (the “NY Hudson Lease”). The NY Hudson Lease is expected to commence in the second half of 2025 with an initial term ending March 31, 2033. In connection with the execution of the NY Hudson Lease, the Company issued a letter of credit for $1.4 million as security for the lease which shall remain in effect through the term of the NY Hudson Lease. The Company is required to maintain a balance of $1.4 million in a deposit account as collateral to the letter of credit, which is included in restricted cash in the condensed consolidated balance sheet as of June 30, 2025.

In connection with the acquisition of Beowulf E&D, the Company acquired four office leases of Beowulf E&D, including (i)two leases with remaining lease terms of less than twelve months, for which the Company elected an accounting policy to not recognize these short-term leases on its balance sheet as allowed under ASC 842-20, (ii) an acquired lease for a property in New York with a related party counterparty due to control by members of the Company’s management (the “NY Lease”), which was classified as an operating lease with a remaining term of 11.3 years as of the Acquisition Date, and (iii) an acquired lease for office space in Maryland with a related party counterparty due to control by a member of the Company’s management (the “MD Lease”), which was classified as an operating lease with a remaining term of 6.1 years as of the Acquisition Date. The Company measured the right-of-use assets and lease liabilities of the NY Lease and the MD Lease as of May 21, 2025 in accordance with ASC 842 using a discount rate of 6.9% and 6.5%, respectively, which reflects the estimated incremental borrowing rates for a collateralized loan with terms comparable to the lease payments.

During the three and six months ended June 30, 2025, the Company recorded operating lease expense of $1.0 million and $1.8 million, respectively, including variable expense of $170,000 and $0.3 million, respectively, in operating expenses – related party in the condensed consolidated statements of operations and made cash lease payments of $0.4 million and $0.8 million, respectively. During the three and six months ended June 30, 2024, the Company recorded operating lease expense of $0.3 million and $0.7 million, respectively, including variable expense of $0.1 million in each period, in operating expenses – related party in the condensed consolidated statements of operations and made cash lease payments pursuant to the Ground Lease of $0.1 million and $0.2 million, respectively.

During the three and six months ended June 30, 2025, the Company recorded amortization of the right-of-use asset related to its finance lease of $0.1 million and $0.2 million, respectively, in operating expenses – related party in the condensed consolidated statement of operations and made cash payments of $6,000 and $11,000, respectively. The Company also recorded interest expense on finance lease liabilities of $5,000 and $10,000, respectively, included in interest expense in the condensed consolidated statements of operations for the three and six months ended June 30, 2025. The Company wasnot party to any finance leases during the three and six months ended June 30, 2024.

The remaining operating and finance lease terms were 20.6 years and 34.3 years, respectively, as of June 30, 2025. The following is a maturity analysis of the annual undiscounted cash flows of the estimated operating and finance lease liabilities as of June 30, 2025 (in thousands):

A reconciliation of the undiscounted cash flows to the operating lease liabilities recognized in the condensed consolidated balance sheet as of June 30, 2025 follows (in thousands):

Lessor Accounting

In December 2024, the Company entered into long-term HPC Leases with a customer for specified data center infrastructure at the Lake Mariner Facility to support the customer’s HPC operations. The Company determined at contract inception that these arrangements contain a lease, comprising lease components related to the right to use data center space—currently under construction—and non-lease components for power delivery, physical security, and maintenance services.

As of June 30, 2025, none of the HPC Leases had commenced. Each lease is expected to begin at various dates in 2025 and includes an initial 10-year term, two five-year renewal options, and a now-expired provision for near-term capacity expansion. Despite the expiration of this provision, the parties remain in active discussions regarding the customer’s potential expansion at the site.

The HPC Leases provide for certain prepaid rent amounts (“Prepaid Rent”) representing the first 12 months base rent under each lease for a total of $90.0 million and shall be applied towards 50% of each month’s base rent commencing on the respective commencement date of each lease until the Prepaid Rent is exhausted. During the six months ended June 30, 2025, the Company received the $90.0 million of Prepaid Rent from the customer and recorded $47.7 million and $42.3 million in current portion of deferred rent liability and deferred rent liability, net of current portion, respectively, in the condensed consolidated balance sheet as of June 30, 2025.

NOTE 9 –INCOME TAXES

The Company’s tax provision or benefit from income taxes for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. The Company has an effective tax rate of 0% for each of the three and six months ended June 30, 2025 and 2024. The Company’s effective rate differs from its statutory rate of 21% primarily due to the recording of a valuation allowance against its deferred tax assets.

ASC 740, Income Taxes (“ASC 740”), requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some or a portion or all the deferred tax assets will not be realized. As of June 30, 2025 and December 31, 2024, the Company estimated a portion of its deferred tax assets will be utilized to offset the Company’s deferred tax liabilities. Based upon the level of historical U.S. losses and future projections over the period in which the remaining 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 valuation allowance as of June 30, 2025 and December 31, 2024 for the amount of deferred tax assets that will not be realized.

The Company hadno unrecognized tax benefits as of June 30, 2025 and December 31, 2024. The Company’s policy is to recognize interest accrued and penalties related to unrecognized tax benefits in tax expense. No accrued interest or penalties were recorded during the three and six months ended June 30, 2025 and 2024.

NOTE 10 –DEBT

Loan, Guarantee and Security Agreement (the “LGSA”)

On December 1, 2021, the Company entered into the LGSA with Wilmington Trust, National Association as administrative agent, which consisted of total Term Loans of $146.0 million (the “Term Loans”) with an interest rate of 11.5% and a maturity date of December 1, 2024.

Subsequent to an amendment to the LGSA in March 2023 (the “Fifth Amendment”), the Company was required to pay amounts subject to an excess cash flow sweep, as defined, on a quarterly basis which automatically extended to the maturity of the Term Loans in the event the Company repaid at least $40.0 million of the principal balance of the Term Loans by April 1, 2024, which the Company did in February 2024. Interest payments were due quarterly in arrears prior to the Fifth Amendment and were due monthly in arrears subsequent to the Fifth Amendment. The Company had the option to prepay all or any portion of the Term Loans in increments of at least $5.0 million subject to certain prepayment fees equal to an amount of 2.0% of the prepaid principal, applicable to approximately 85% of the outstanding principal. Certain events, as described in the LGSA, required mandatory prepayment.

During the three and six months ended June 30, 2024, the Company repaid $30.2 million and $63.6 million of the principal balance of the Term Loans, respectively, including voluntary prepayments of $18.6 million in February 2024. In connection with the voluntary prepayment, the Company recorded a loss on extinguishment of debt of $2.0 million, which is included in the condensed consolidated statement of operations for the six months ended June 30, 2024, consisting of $0.3 million of prepayment fees and the immediate write-off of $1.7 million of unamortized debt discount associated with the principal repaid. The Company fully repaid the principal balance of the Term Loans ahead of maturity in July 2024.

In connection with the Term Loans under the LGSA, the Company issued certain shares of Common Stock and warrants to purchase Common Stock to the Term Loan holders, and incurred related issuance costs and up-front fees. These included $29.8 million in December 2021 in connection with the original issuance, $3.5 million in July 2022 related to the First Amendment, $2.9 million in October 2022 related to the Third Amendment, and $16.0 million in March 2023 related to the Fifth Amendment. These amounts were recorded as debt issuance costs and debt discount and were either amortized to interest expense over the term of the LGSA or recognized as part of the loss on extinguishment of debt, as applicable.

LGSA Warrants

In March 2023, in connection with the Fifth Amendment to the LGSA the Company entered into a warrant agreement (the “Warrant Agreement”) to issue the following warrants to the lenders: (i)27,759,265 warrants to purchase an aggregate number of shares of Common Stock equal to 10.0% of the fully diluted equity of the Company as of the Fifth Amendment effective date with an exercise price of $0.01 per share of Common Stock (the “Penny Warrants”) and (ii)13,879,630 warrants to purchase an aggregate number of shares of Common Stock equal to 5.0% of the fully diluted equity of the Company as of the Fifth Amendment effective date with an exercise price of $1.00 per share of Common Stock (the “Dollar Warrants”). The Penny Warrants are exercisable during the period beginning on April 1, 2024 and ending on December 31, 2025, and the Dollar Warrants are exercisable during the period beginning on April 1, 2024 and ending on December 31, 2026. In March 2023, in connection with the issuance of the warrants pursuant to the Warrant Agreement, the Company entered into a registration rights agreement pursuant to which the Company has agreed to provide customary shelf and piggyback registration rights to the LGSA lenders with respect to the Common Stock issuable upon exercise of the warrants described above.

During the three and six months ended June 30, 2025, no warrants issued in connection with the LGSA were exercised. During the three and six months ended June 30, 2024,29,242,661 warrants issued in connection with the LGSA were exercised for issuance of the same number of shares of Common Stock, comprised of 27,617,539 Penny Warrants and 1,625,122 Dollar Warrants, for aggregate proceeds to the Company of $1.9 million. All warrants granted by the Company as a component of debt transactions are classified as equity in the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024. As of June 30, 2025, there were 141,726 of the Penny Warrants and 9,962,308 of the Dollar Warrants outstanding.

Convertible Notes

Convertible notes consist of the following (in thousands):

In October 2024, the Company completed a private offering of 2.75% Convertible Senior Notes due 2030 (the “2030 Convertible Notes”). The unsecured notes were sold pursuant to a purchase agreement between the Company and Cantor Fitzgerald & Co. (“Cantor”), as representative of the initial purchasers (the “Initial Purchasers”), for resale to qualified institutional buyers under Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).

The total aggregate principal amount of the offering was $500.0 million, including $75.0 million issued pursuant to the Initial Purchasers’ full exercise of their option to purchase additional notes. The notes were issued at par, and net proceeds totaled approximately $487.1 million after deducting $12.9 million in purchasers’ commissions and estimated offering expenses. These issuance costs were recorded as debt issuance costs and are being amortized over the term of the notes using an effective interest rate of 0.5%. Interest of 2.75% is payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2025.

The 2030 Convertible Notes mature on February 1, 2030 (the “2030 Convertible Notes Maturity Date”), unless earlier converted redeemed or repurchased. The initial conversion rate is 117.9245 shares of Common Stock per $1,000 principal amount, equivalent to a conversion price of approximately $8.48 per share, subject to customary anti-dilution adjustments outlined in the indenture. The conversion rate will not be adjusted for accrued but unpaid interest

In the event of a make-whole fundamental change (as defined in the indenture), the Company may be required to increase the conversion rate for holders that elect to convert their notes during the designated make-whole fundamental change period. As of December 31, 2024, there were no changes to the initial conversion rate.

Prior to November 1, 2029, holders may convert their notes only upon the occurrence of specific conditions, including:

•If, during any calendar quarter commencing after March 31, 2025, the last reported sale price per share of Common Stock is at least 130% of the conversion price for at least 20 out of the last 30 consecutive trading days of the preceding quarter;

•During thefive business days following any 10 consecutive trading-day measurement period in which the trading price of the notes was less than 98% of the product of the Common Stock price and the conversion rate on each trading day;

•If the Company calls any or all of the notes for redemption prior to the scheduled redemption date; or

•Upon the occurrence of certain specified corporate events, as defined in the indenture

Upon conversion, the Company may settle the notes in cash, shares of Common Stock, or a combination of both, at its election. Beginning November 6, 2027, the Company may redeem the notes, in whole or in part, for cash, provided the Common Stock trades above 130% of the conversion price for a specified period, as outlined in the indenture. The redemption price will equal the principal amount plus accrued and unpaid interest, if any, up to but excluding the redemption date.

On or after November 1, 2029, holders may convert their notes at any time until the second scheduled trading day immediately preceding the Maturity Date.

If a “Fundamental Change” occurs, as defined in the indenture—including certain business combinations or delisting events—holders may require the Company to repurchase all or part of their notes at 100% of principal plus accrued and unpaid interest.

In connection with the offering, the Company entered into privately negotiated capped call transactions (the “Capped Calls”) with certain counterparties. The Capped Calls have a strike price of $8.48 per share and an initial cap price of $12.80 per share, each subject to adjustment. They cover the same number of shares initially underlying the notes and are intended to reduce potential dilution and/or offset any cash payments the Company may be required to make above the principal amount upon conversion.

The Capped Calls are scheduled to expire on February 1, 2030, and will automatically settle in daily ratable amounts between December 5, 2029, and the termination date. In the event of a repurchase, redemption, or conversion of the notes, the Company may—but is not obligated to—terminate a corresponding portion of the Capped Call options. Settlement may be made in cash or a combination of cash and Common Stock, at the Company’s discretion. The Capped Calls are accounted for as separate equity transactions and not as derivatives. The $60.0 million cost of the Capped Calls was recorded as a reduction to additional paid-in capital on the condensed consolidated balance sheet.

The indenture includes customary covenants and events of default. If an event of default occurs and is continuing, the trustee or holders of at least 25% of the outstanding principal amount may declare the notes immediately due and payable.

The Company amortized $0.6 million and $1.2 million of debt issuance costs related to the 2030 Convertible Notes during the three and six months ended June 30, 2025, respectively, included within interest expense in the condensed consolidated statements of operations. The Company amortized $3.1 million and $10.7 million of debt issuance costs and debt discount related to the Term Loans during the three and six months ended June 30, 2024, respectively, included within interest expense in the condensed consolidated statements of operations.

As of June 30, 2025, scheduled principal maturities of outstanding debt are as follows (in thousands):

NOTE 11 –JOINT VENTURE

In May 2021, the Company and a subsidiary of Talen Energy Corporation (“Talen”) (each a “Member” and collectively the “Members”) entered into a joint venture, Nautilus Cryptomine LLC (“Nautilus”), to develop, construct and operate up to 300 MW of zero-carbon bitcoin mining in Pennsylvania (the “Joint Venture”) which was subsequently amended in August 2022 (the “A&R Nautilus Agreement”) and March 2023 (the “Second A&R Nautilus Agreement”). In connection with the Joint Venture, Nautilus simultaneously entered into (i) a ground lease (the “Nautilus Ground Lease”), which included an electricity supply component, with a related party of Talen, (ii) a Facility Operations Agreement, subsequently transferred to a related party of Talen and (iii) a Corporate Services Agreement (the “CSA”) with a related party of Talen. The Company originally held a 50% interest in the Joint Venture which was subsequently reduced to 25% per the Second A&R Nautilus Agreement. The Nautilus Cryptomine Facility initially required 200 MW of electric capacity.

In March 2024, a subsidiary of Talen sold substantially all its assets to an unaffiliated third party, including the land that Nautilus utilizes pursuant to the Nautilus Ground Lease. In connection with the sale, the Nautilus Ground Lease was assigned from Talen to the purchaser of the assets.

On October 2, 2024, the Company sold its entire 25% equity interest in Nautilus to the Talen Member (the “Nautilus Sale”). The total consideration transferred was $102.1 million comprised of: (i) $86.1 million paid in cash, including a customary working capital adjustment, (ii) $0.3 million distributed in bitcoin on a pro rata basis for bitcoin mined and held by Nautilus, and (iii) $15.7 million of miners and equipment assigned to the Company by Nautilus, reflecting the fair value of all of Nautilus’ miners, including miners contributed by the Talen Member, as well as certain other related equipment owned by Nautilus. The Nautilus Sale included customary representations and warranties and customary covenants, including, among others, that the Talen Member will pay to the Company 25% of the net proceeds received in excess of $300.0 million in the aggregate in any future sale of all or substantially all of the assets, or a majority of the equity interests of Nautilus. In connection with the Nautilus Sale, the Company derecognized its investment in Nautilus of $79.5 million.

Prior to the Nautilus Sale, Nautilus was a variable interest entity accounted for using the equity method of accounting. In August 2022, due to the change in Member ownership percentage and governance rights under the A&R Nautilus Agreement, Talen determined it controlled the Joint Venture from an accounting perspective and thereby was required to fair value the identifiable assets and liabilities of the Joint Venture for its internal accounting purposes. Under the CSA, Talen was responsible for maintaining the books and records of the Joint Venture and elected to push down the fair value adjustments to Nautilus’ books and records. The Company accounted for the Joint Venture as an equity method investment and the change in ownership percentage did not impact the Company’s method of accounting or basis. Therefore, there was a basis difference between the books and records of Nautilus and the Company’s accounting basis in the Joint Venture.

Distributions were made periodically in accordance with each Member’s respective hashrate contributions after deducting primarily each Member’s share of power and operational costs. The Company received bitcoin distributions from Nautilus with a fair value of $19.1 million during the six months ended June 30, 2024.

The condensed results of operations for the three and six months ended June 30, 2024 and the condensed financial position as of October 2, 2024 (the date of the Nautilus Sale) are summarized below (in thousands):

(1) The condensed statements of operations information for the three and six months ended June 30, 2024 and the condensed balance sheet information as of October 2, 2024 reflect the impact of the Talen-estimated fair value measurements of Nautilus which, resulting from the application of ASC 805 have been pushed down to the books and records of Nautilus by Talen, as discussed above.

NOTE 12 –COMMITMENTS AND CONTINGENCIES

The Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims. From time to time, the Company may be subject to various legal proceedings, regulatory inquiries and claims that arise in the ordinary course of its business activities.

NOTE 13 –CONVERTIBLE PREFERRED STOCK

In March 2022, TeraWulf entered into Series A Convertible Preferred Stock Subscription Agreements (the “Subscription Agreements”) with certain accredited and institutional investors (collectively, the “Holders”). Pursuant to the Subscription Agreements, the Company sold 9,566 shares (of 10,000 shares authorized) of Series A Convertible Preferred Stock, par value $0.001 per share (the “Convertible Preferred Stock”) to the Purchasers for an aggregate purchase price of $9.6 million. The Subscription Agreements contain customary representations, warranties, covenants and agreements of the Company. The offer and sale of the Convertible Preferred Stock were made pursuant to the prospectus and prospectus supplement forming a part of the 2022 Registration Statement.

Holders of the Convertible Preferred Stock will accumulate dividends at an annual rate of 10.0% on the stated amount per share plus the amount of any accrued and unpaid dividends on such share, accumulating on a daily basis and payable, if declared by the Company’s Board of Directors, quarterly on March 31st, June 30th, September 30th and December 31st, respectively, in each year and commencing June 30, 2022. Commencing June 30, 2022, unpaid dividends will be accreted to the liquidation preference. The initial liquidation preference is $1,000 per share. Holders of the Convertible Preferred Stock will also be entitled to such dividends paid to holders of Common Stock, if applicable, as if such Holders of the Convertible Preferred Stock had converted their Preferred Shares into Common Stock (without regard to any limitations on conversions) and had held such shares of Common Stock on the record date for such dividends and distributions. If applicable, such payments will be made concurrently with the dividend or distribution to the holders of Common Stock. Upon liquidation, the Convertible Preferred Stock will rank senior to Common Stock, and will have the right to be paid, out of the assets of the Company legally available for distribution to its stockholders, an amount equal to the Liquidation Preference (as defined in the Company’s Series A Convertible Preferred Certificate of Designations) per share of the Convertible Preferred Stock. Holders of Convertible Preferred Stock will not generally have the right to vote at any meeting of stockholders, except for certain protective voting rights, as defined. The Convertible Preferred Stock does not have a maturity date.

The Holders of the Convertible Preferred Stock will have a right to effect an optional conversion of all or any whole number of shares of the Convertible Preferred Stock at any time and from time to time. The Company will have a right to effect a mandatory conversion of the Convertible Preferred Stock after the third anniversary of the issuance date if the Last Reported Sale Price (as defined in the Company’s Series A Convertible Preferred Certificate of Designations) per share of Common Stock exceeds 130% of the Conversion Price, as defined, on each of at least five (5) trading days (whether or not consecutive) during thefifteen consecutive trading days ending on, and including, the trading day immediately before the mandatory conversion notice date for such mandatory conversion. The number of shares of Common Stock issuable upon conversion will be equal to the liquidation preference, including accumulated and unpaid dividends, divided by the Conversion Price, as defined. The Conversion Price is determined by dividing $1,000 by the Conversion Rate, as defined, which is initially 100 shares of Common Stock per $1,000 liquidation preference of Convertible Preferred Stock. The Conversion Rate will be adjusted for certain customary events, including (but not limited to) stock dividends, stock splits or combinations, tender offers or exchange offers and, additionally, for Fundamental Changes, as defined, to include (but are not limited to) a change in control of the Company, disposition of substantially all assets of the Company, the Company’s common stockholders approve a plan of liquidation or dissolution or Common Stock cease to be listed on the Nasdaq Capital Market. A Fundamental Change will adjust the Conversion Rate based on the date of the Fundamental Change and the Stock Price, as defined, on such date. The Conversion rate will not exceed 125 shares of Common Stock per $1,000 liquidation preference of Convertible Preferred Stock. If any Convertible Preferred Stock is to be converted pursuant to a Holder’s optional conversion, the Company will have the option to settle such conversion in cash, as defined.

No dividends were paid during the six months ended June 30, 2025 and 2024. Cumulative dividends of $3.7 million were accumulated and accreted to liquidation preference as of June 30, 2025. As of June 30, 2025, the aggregate liquidation preference of the Convertible Preferred Stock was approximately $13.2 million. If the entire liquidation preference of the Convertible Preferred Stock was converted at the Conversion Price, the Company would issue approximately 1.3 million shares of Common Stock.

NOTE 14 –COMMON STOCK

On April 16, 2024, the Company held its 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”). As a result of the matters submitted to a stockholder vote at the 2024 Annual Meeting, the Company's stockholders adopted a charter amendment increasing the number of authorized shares of Common Stock from 400,000,000 to 600,000,000. Consequently, as of June 30, 2025, TeraWulf’s Certificate of Incorporation provides for authorized shares of 700,000,000, divided into (a)600,000,000 shares of Common Stock, with par value of $0.001 per share and (b)100,000,000 shares of Preferred Stock, with par value of $0.001 per share. Each holder of a share of Common Stock shall be entitled toone vote of each common share held. Each holder of a share of Preferred Stock shall not be entitled to any voting powers, except as provided in an applicable Certificate of Designations. The board of directors may authorize one or more series of Preferred Stock and may fix the number of shares in such series and the designation, powers, preferences, rights, qualifications, limitations and restrictions in respect of the shares of such series. One series of preferred stock, the Convertible Preferred Stock, was authorized as of June 30, 2025.

In April 2022, the Company entered into a sales agreement with Cantor Fitzgerald & Co. (“Cantor”), B. Riley Securities, Inc. (“B. Riley Securities”) and D.A. Davidson & Co. (“D.A. Davidson”), pursuant to which the Company may offer and sell, from time to time, through or to the agents thereunder, shares of Common Stock, par value $0.001 per share, having an aggregate offering price of up to $200.0 million. The April 2022 sales agreement was amended in August 2023 to terminate the agreement with respect to D.A. Davidson and add Northland Securities, Inc. (“Northland”) and Compass Point Research & Trading, LLC (“Compass Point”) as agents (as so amended, the “Original ATM Sales Agreement“). The Company incurred a commission up to 3.0% of the gross sales price from each sale of shares. In May 2024, the Company and B. Riley Securities mutually agreed to terminate the Original ATM Sales Agreement with respect to B. Riley Securities and the Company entered into Amendment No. 2 to the Original ATM Sales Agreement with Cantor, Northland, Compass Point ATB Capital Markets USA Inc. (“ATB Capital Markets”), Roth Capital Partners, LLC (“Roth Capital Partners”), Stifel Nicolaus Canada Inc. (“Stifel Canada”) and Virtu Americas LLC (each, individually, an “Agent” and, collectively, the “ATM Agents”) pursuant to which the Company may offer and sell, from time to time, through or to the ATM Agents, shares of Common Stock, par value $0.001 per share, having an aggregate offering price of up to $200.0 million (the “Amended ATM Sales Agreement,” together with the Original ATM Sales Agreement, the “ATM Program”). The Company incurs a commission up to 3.0% of the gross sales price from each sale of shares. The Company is not obligated to sell any shares under the ATM Program. The issuance and sale of the shares by the Company under the ATM Program have been made pursuant to the Company’s effective registration statement on Form S-3 (Registration statement No. 333-262226), including final prospectus supplements dated April 26, 2022 and May 23, 2024.

During the three and six months ended June 30, 2025, the Company sold pursuant to the ATM Programno shares of Common Stock. During the three and six months ended June 30, 2024, the Company sold pursuant to the ATM Program 40,553,489 and 63,822,089 shares of Common Stock, respectively, for net proceeds of $123.1 million and $173.9 million, respectively. In May 2025, the Board of Directors authorized an increase of $112.9 million shares of Common Stock under the ATM Program. As of June 30, 2025, the remaining capacity of the ATM Program to offer and sell shares of Common Stock is $200.0 million.

In October 2022, the Company entered into unit subscription agreements with certain accredited investors in privately negotiated transactions (collectively, the “October Purchasers”) as part of a private placement (the “October Private Placement”) exempt from registration under the Securities Act. Pursuant to the agreements, the Company sold 7,481,747 units, each consisting ofone share of Common Stock andone warrant (the “October Warrants”), exercisable at a price of $1.93 per Common Share, to the October Purchasers for an aggregate purchase price of approximately $9.4 million. Approximately $3.5 million of the aggregate purchase price related to investments by entities controlled by members of Company management. The Company allocated the proceeds between Common Stock and the October Warrants based on the relative fair values of the financial instruments, with $5.1 million allocated to the Common Stock and $4.3 million allocated to the October Warrants. As of June 30, 2025, there were 7,162,699 of the October Warrants outstanding. All warrants granted by the Company to date are classified as equity.

In October 2024, the Company’s board of directors approved a share repurchase program (the “Share Repurchase Program”) authorizing the Company to repurchase up to $200.0 million of the Company’s outstanding shares of Common Stock through December 31, 2025. In May 2025, the Board of Directors authorized an increase of $151.4 million shares of Common Stock under the Share Repurchase Program. During the three and six months ended June 30, 2025, the Company repurchased 0 and 5,900,000 shares of Common Stock, respectively, for $0 and $33.3 million, respectively. As of June 30, 2025, the Company has the capacity to repurchase $200.0 million of outstanding shares of Common Stock under the Share Repurchase Program.

No dividends were declared during the six months ended June 30, 2025 and 2024.

NOTE 15 –STOCK-BASED COMPENSATION

In May 2021, the Company made effective the 2021 Omnibus Incentive Plan (the “Plan”) for purpose of attracting and retaining employees, consultants and directors of the Company and its affiliates by providing each the opportunity to acquire an equity interest in the Company or other incentive compensation in order to align the interests of such individuals with those of the Company’s stockholders. The Plan provides for a maximum number of shares to be issued, limitations of shares to be delivered for incentive stock options and a maximum compensation amount for any non-employee member of the board of directors, among other provisions. The form of grants under the Plan includes stock options, stock appreciation rights, restricted stock and RSUs. As of June 30, 2025, the Company hadnot issued stock options.

The Company recorded stock-based compensation expense of $1.3 million and $40.0 million during the three and six months ended June 30, 2025, respectively, and $4.8 million and $11.8 million during the three and six months ended June 30, 2024, respectively.

Certain employees, in lieu of paying withholding taxes on the vesting of certain shares of restricted stock and RSU awards, authorized the withholding of an aggregate of 257,553 and 3,557,963 shares of Common Stock to satisfy statutory withholding requirements related to such vesting during the three and six months ended June 30, 2025, respectively, and withholdings of an aggregate 1,210,849 and 1,564,692 shares of Common Stock during the three and six months ended June 30, 2024, respectively. Shares withheld for the payment of withholding taxes are not deemed issued under the Plan and remain available for issuance. Additionally, the Company issued 0 and 21,869 shares of Common Stock to members of the board of directors for payment of quarterly fees in lieu of cash payments during the three and six months ended June 30, 2025, respectively, and 45,553 and 84,617 shares of Common Stock to members of the board of directors for payment of quarterly fees in lieu of cash payments during the three and six months ended June 30, 2024, respectively.

RSUs granted as set out in the table above include RSUs representing 1,800,000 shares with vesting based on market conditions tied to the Company’s stock price (the “PSUs”). The PSUs are subject to performance-based vesting conditions measured over athree-year performance period and vest based on the Company’s achievement of certain stock price hurdles by certain determination dates, subject to the respective employee’s continued service through the applicable determination date. The stock price hurdle represents the average closing price of the Common Stock on Nasdaq during the 45 trading days immediately preceding the applicable determination date. Any unvested PSUs will be forfeited if the performance targets are not achieved within three years of the grant date. Restricted stock are immediately vested on the grant date, but shall not be assigned, sold or transferred by the participant until one year from the grant date. The requisite service period for RSUs is betweenone andthree years. As of June 30, 2025, there was $6.4 million of unrecognized compensation cost related to unvested RSUs granted to employees and members of the board of directors. The amount is expected to be recognized over a weighted average period of 1.1 years.

The following table summarizes the activities for unvested RSUs granted to non-employees, excluding members of the board of directors, during the six months ended June 30, 2025:

The requisite service period for grants, including derived service periods for RSUs with market conditions, is generally betweenone andthree years. As of June 30, 2025, there was $0.4 million of unrecognized compensation cost related to unvested non-employee, excluding members of the board of directors, RSUs. The amount is expected to be recognized over a weighted average period of 1.2 years.

NOTE 16 –RELATED PARTY TRANSACTIONS

In April 2021, the Company entered into a Services Agreement with Beowulf Electricity & Data LLC, formerly Beowulf Electricity & Data Inc., (“Beowulf E&D”), a related party due to control by a member of Company management. Under the Services Agreement, Beowulf E&D will provide, or cause its affiliates to provide, to TeraWulf certain services necessary to construct and operate certain bitcoin mining facilities developed or anticipated to be developed by the Company and support the Company’s ongoing business, including, among others, services related to construction, technical and engineering, operations and maintenance, procurement, information technology, finance and accounting, human resources, legal, risk management and external affairs consultation. The Services Agreement had an initial term offive years and provides for certain fixed, passthrough and incentive payments to Beowulf E&D, including issuing to certain designated employees of Beowulf E&D awards with respect to shares of Common Stock upon the consummation of an initial public offering of TeraWulf or the consummation of a merger following which TeraWulf is listed on a nationally recognized securities exchange and, thereafter, upon achievement of certain milestones regarding bitcoin mining capacity deployed at the bitcoin mining facilities.

For the base fee, the Company originally agreed to pay Beowulf E&D in monthly installments an annual fee for the first year in the amount of $7.0 million and, thereafter, an annual fee equal to the greater of $10.0 million or $0.0037 per kilowatt hour of electric load utilized by the bitcoin mining facilities. In March 2023, TeraWulf and Beowulf E&D entered into an Amendment No. 1 to the Services Agreement, pursuant to which TeraWulf agreed to pay Beowulf E&D, effective as of January 1, 2023, a reduced annual base fee equal to $8.5 million payable in monthly installments, until all obligations under the Company’s LGSA, as amended and restated from time to time, are either indefeasibly repaid in full or refinanced, at which point the annual base fee will increase to $10.0 million, which occurred in July 2024. The Services Agreement also provides for reimbursement of cost and expenses incurred in connection with providing the services. For the six months ended June 30, 2025 and 2024, the Company paid Beowulf E&D $15.3 million and $7.2 million, respectively, under the Services Agreement, including payments related to construction services and agreements with contractors at the Lake Mariner Facility which were passed through at cost. For the three and six months ended June 30, 2025, selling, general and administrative expenses – related party in the condensed consolidated statements of operations included $4.3 million and $7.9 million, respectively, and operating expenses – related party in the condensed consolidated statements of operations included $0.6 million and $1.4 million, respectively, in each case related to the base fee and reimbursement of costs and expenses. For the three and six months ended June 30, 2024, selling, general and administrative expenses – related party in the condensed consolidated statement of operations included $2.8 million and $5.4 million and operating expenses – related party in the condensed consolidated statement of operations included $0.5 million and $1.1 million, in each case related to the base fee and reimbursement of costs and expenses.

On May 21, 2025, the Company acquired Beowulf E&D which terminated the Services Agreement between the Company and Beowulf E&D. Accordingly, no amounts are due between the Company and Beowulf E&D are included in the condensed consolidated balance sheet as of June 30, 2025. Of the costs incurred under the Services Agreement during the six months ended June 30, 2025, $5.7 million is included in property, plant and equipment, net in the condensed consolidated balance sheet. As of December 31, 2024, $0.8 million is included in prepaid expenses, $1.4 million is included in amounts due to related parties and, of the costs incurred under the Services Agreement during the six months ended June 30, 2024, $0.3 million is included in property, plant and equipment, net in the condensed consolidated balance sheet.

The Services Agreement also provided for performance-related milestones and related incentive compensation pursuant to which, once the mining facilities have utilized 100 MW of cryptocurrency mining load in the aggregate and for every incremental 100 MW of cryptocurrency mining load deployed thereafter, the Company agreed to issue awards of shares of Common Stock each in the amount of $2.5 million to certain designated employees of Beowulf E&D in accordance with TeraWulf’s then effective Plan. During the six months ended June 30, 2024, the Company issued 1,083,189 shares of Common Stock with a fair value of $2.5 million to settle the share-based liabilities due to related party. During the three and six months ended June 30, 2025, due to the change in the Company’s strategy to focus on development and deployment of infrastructure to support HPC workloads, the Company agreed to settle the final 100 MW performance-related milestone on a pro-rata basis for the 95 MW of cryptocurrency mining load deployed and recognized $2.4 million of performance milestone expense included in selling, general and administrative expenses – related party in the condensed consolidated statements of operations for the three and six months ended June 30, 2025. During the three and six months ended June 30, 2025, the Company issued 798,319 shares of Common Stock with a fair value of $2.4 million to settle the share-based liabilities due to related party. The Company recordedno performance milestone expense for the three and six months ended June 30, 2024.