With $3.2 billion support from Google! Bitcoin miner TeraWulf's stock price surged nearly 90% in five days

Bitcoin mining and data center operator TeraWulf's stock price surged in the past week after the company announced that Google had increased its stake in the company to 14%.

During TeraWulf's expansion of its data center campus in western New York through debt financing, Google provided $3.2 billion in guaranteed support in exchange for warrants to purchase over 73 million shares of the company.

This collaboration significantly increased from previous levels, as TeraWulf stated last week during its earnings report that Google would provide $1.8 billion in guarantees for an 8% equity stake in the company. Following AI cloud service provider Fluidstack's decision to expand the leasing scale in its 10-year partnership with TeraWulf, Google raised its support amount to $3.2 billion on Monday.

Google's Increased Stake Boosts TeraWulf

Fueled by the news of Google's increased stake, TeraWulf's stock soared nearly 90% over the past five trading days.

TeraWulf CEO Paul Prager stated during last Thursday's earnings call that Google's support is "an extraordinary vote of confidence from one of the most influential players in the AI field." Once completed, TeraWulf's Lake Mariner data center in western New York will become one of the largest data centers in the United States. In connection with this project, TeraWulf announced a $400 million debt issuance plan on Monday.

TeraWulf is one of many Bitcoin miners transitioning to AI infrastructure. Analysts expect that as tech companies compete to launch AI software and utilize the vast computing power of AI servers in data centers, the data center market size will double starting in 2024, reaching approximately $585 billion by 2032.

TD Cowen analyst Mike Elias wrote in a report to clients in July that the pipeline for "hyperscale" data center leases in the U.S. (referring to projects that are planned or under construction but not yet operational) has reached an all-time high.

Analysts Optimistic About TeraWulf's Transformation Prospects

Needham analyst John Todaro raised TeraWulf's target price from $6 to $11 on Monday. In a report to clients, he stated that the company is "one of the best-positioned miners to convert Bitcoin mining data center capacity into AI computing."

Todaro also expressed concerns about "Google's substantial stake in TeraWulf and the anticipated dilution... Although there are caps in place, these measures and convertible bonds will lead to equity dilution."

TeraWulf went public in 2021, gaining support from celebrity investors including Gwyneth Paltrow and Mindy Kaling, and has garnered attention for its commitment to sustainable energy operations, although these efforts have also faced scrutiny