TeraWulf Plans $3B Debt Raise as Google Doubles Down on Crypto Miner's AI Pivot

Bitcoin mining company TeraWulf is preparing to raise approximately $3 billion in debt for data center expansion, with Google providing financial backing that could elevate the crypto miner's credit rating, according to company executives.

Morgan Stanley is arranging the potential transaction, which could launch as soon as October in either the high-yield bond or leveraged loan markets, TeraWulf CFO Patrick Fleury told Bloomberg News. Credit rating agencies are evaluating where to rank the deal within the BB to CCC spectrum typical for junk-rated debt, with Google's backstop expected to support a higher rating.

The debt raise follows TeraWulf's announcement in August that AI cloud platform Fluidstack expanded its use of the company's New York data center facility. As part of that arrangement, Google provided an incremental $1.4 billion backstop, bringing its total backstop commitment to $3.2 billion while increasing its equity stake in TeraWulf to 14% from 8%.

The financing structure mirrors a similar arrangement between Google, Fluidstack, and fellow crypto miner Cipher Mining announced this week . The parallel deals demonstrate how Google is strategically positioning itself in AI infrastructure by leveraging crypto mining companies' existing data center capacity and energy access.

TeraWulf's pivot from Bitcoin mining to AI hosting reflects broader industry dynamics as miners seek more profitable uses for their infrastructure. The artificial intelligence boom has created acute shortages of data center space, GPU chips, and electricity access, making crypto mining facilities attractive targets for AI companies already possessing these critical resources.

The company's Lake Mariner facility in New York is purpose-built for liquid-cooled AI workloads, with TeraWulf planning to deliver over 200 MW of computing capacity under its 10-year agreement with Fluidstack. The initial 40 MW is expected online by mid-2026, with full deployment by year-end.

TeraWulf expects 85% net operating income margins on its AI hosting business, translating to roughly $315 million in annual revenue. The company invests $8-10 million per MW in infrastructure buildout, making the $3 billion debt raise critical for scaling operations to meet contracted capacity commitments.

The crypto mining industry has faced challenging economics following Bitcoin's April halving event, which reduced block rewards and compressed margins. TeraWulf's Bitcoin production fell to 485 BTC in the second quarter from 699 BTC a year earlier, though the company returned to profitability in Q2 after reporting a $61.4 million net loss in Q1.

Morgan Stanley has played a central role in financing crypto miners' AI transitions. The investment bank arranged an $850 million convertible bond for TeraWulf in August and an $800 million convertible deal for Cipher this week, according to people familiar with the transactions.

The bank is also serving as financial adviser to Cipher and is expected to lead any debt capital markets transaction for that company. The dual mandates position Morgan Stanley as a key facilitator of crypto-to-AI infrastructure deals backed by major technology companies.

Google's expanding financial commitments to both TeraWulf and Cipher reflect the tech giant's urgency in securing AI computing capacity amid fierce competition for infrastructure resources. By backstopping debt obligations and taking equity positions, Google gains preferential access to data center capacity without directly building facilities.

The financing approach allows crypto mining companies to leverage their existing assets while accessing capital markets on more favorable terms than typical for the sector. Google's involvement provides credibility that could attract institutional investors otherwise hesitant about crypto mining credit risk.

Terms of the TeraWulf transaction remain under negotiation, and there is no guarantee a deal will launch as planned. Google declined to comment beyond existing releases, while Morgan Stanley also declined to comment on the arrangements.

The October timeline for a potential TeraWulf debt offering suggests rapid execution as the company races to capitalize on market conditions favorable to AI infrastructure investments. High-yield bond and leveraged loan markets have shown appetite for AI-adjacent credits, though crypto mining companies typically face higher borrowing costs due to perceived volatility.