TeraWulf (NASDAQ: WULF) reported Q3 revenue of $76.2 million, a 51% year-over-year increase that beat the $62.5 million consensus by a wide margin. The headline number, however, is almost beside the point. The quarter's defining event isn't the financial print; it's the structural transformation of the company's backlog and the capital architecture supporting it.
HPC lease revenue reached $63.0 million, representing 83% of total revenue and up 97% sequentially from $31.9 million in Q2. That ramp reflects the Lake Mariner campus scaling toward its 438 MW contracted capacity. Digital asset revenue, the legacy bitcoin mining business, fell to $13.2 million from $43.4 million a year ago, a deliberate downshift as the company prioritizes HPC over mining. The mining revenue decline is not a miss; it's a repositioning.
Net income of $709.9 million is a GAAP artifact. It includes a $728.4 million non-cash gain from the change in fair value of warrant liabilities. Strip that out, along with the $95.0 million gain on the Abernathy JV sale, and the operating picture is clearer. Adjusted EBITDA was negative $12.8 million, reflecting pre-revenue operating costs at development sites and the cost of scaling the HPC business. The company is spending to build, and the spending shows up here.
The real story this quarter is the Justified Data Campus in Hawesville, Kentucky. TeraWulf executed a 20-year lease with Anthropic for 401 MW of critical IT capacity, representing approximately $19 billion of contracted revenue over the initial term. That's a 20-year lockup with a tenant that has its own demand profile. Two subsequent announcements give the contract teeth. On November 4, TeraWulf secured a Google credit backstop for project financing, effectively putting Alphabet's balance sheet behind the construction. It also signed a definitive EPC agreement with Fluor Enterprises covering three data center buildings. Phased ready-for-service completions are expected from late 2027 through Q2 2028.
The Google credit backstop is the most important detail in the release. TeraWulf is carrying $5.8 billion in total debt against $2.4 billion in cash and equivalents. The capital structure is layered: $2.5 billion in convertible notes at the parent, $3.2 billion in senior secured notes at WULF Compute, and a $75 million draw on the revolver. Net debt stood at $3.4 billion at quarter end. Building 401 MW of data center capacity requires billions more. The Google backstop signals that the financing pathway for Justified is credible, reducing the risk that TeraWulf would need to issue dilutive equity or expensive debt to fund construction. The Fluor EPC agreement locks in cost and schedule discipline.
The Abernathy JV monetization, completed during the quarter, is the other capital story. TeraWulf sold its 50.1% interest for approximately $530 million in total consideration, recognizing a $95 million gain. The company received $250 million in cash during Q3, with $150 million due by year-end and roughly $130 million by April 2027. This is capital recycling in action: develop, contract, sell, redeploy. The proceeds flow back into the development pipeline, including Justified and the expanded Muskie site.
Muskie itself got bigger. Contracted power capacity doubled from 500 MW to 1,000 MW through amended agreements with Kentucky Power Company, subject to Kentucky Public Service Commission approval. The initial 500 MW phase is targeted to ramp in Q4 2028, with the second 500 MW phase pushed to 2029. TeraWulf reaffirmed its target of contracting 250 to 500 MW of incremental critical IT capacity annually. The pipeline now includes Lake Hawkeye (320 MW) and the pending Chesapeake Data acquisition (800 MW), giving the company a multi-year development runway.
Lake Mariner remains the cash engine today. 102 MW is operational and generating lease revenue. CB-4 (168 MW) is on track for phased delivery in Q4 2026. CB-5 (168 MW) is targeted for Q1 2027. Construction is within the $8 to $10 million per critical IT MW cost guidance. The company ended the quarter with $2.4 billion in cash, equivalents, and restricted cash, and subsequently upsized its revolving credit facility from $250 million to $400 million with an accordion feature for an additional $150 million.
The GAAP diluted EPS of negative $0.03 beat the negative $0.18 consensus, but the adjusted EBITDA loss of $12.8 million is the number that matters for the near term. TeraWulf is in a construction phase, and the financials will reflect that until Justified and CB-5 begin contributing revenue. The question for investors is whether the contracted backlog and the credit support justify the current $5.0 billion market cap. The $19 billion in contracted revenue at Justified alone provides a multi-year revenue floor, but the execution risk is real: building 401 MW on a greenfield site with a 20-year tenant is a different challenge than scaling an existing campus.
What to watch next: the pace of CB-4 rent commencement in Q4, the timing of the remaining Abernathy cash receipts, and whether the Kentucky PSC approves the full 1 GW at Muskie. The Google backstop is a strong signal, but the actual project financing terms will determine how much equity value the Justified build consumes versus creates.