Financial Analysis

BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS Beowulf E&D 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 Companys 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 Companys 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 Companys 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 …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

COMMITMENTS AND CONTINGENCIES Litigation 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.

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DEBT Long-Term Debt Long-term debt consists of the following (in thousands): December 31, 2025 December 31, 2024 Term debt $ 3,200,000 $ Debt issuance costs and debt discount (101,444) Property, plant and equipment finance agreement 3,098,556 Less current portion of long-term debt 46,316 Total long-term debt, net of current portion $ 3,052,240 $ Senior Secured Notes On October 22, 2025, the Company, through its wholly owned subsidiary Wulf Compute LLC (Wulf Compute), completed a private offering of $3,200.0 million aggregate principal amount of 7.75% Senior Secured Notes due 2030 (the 2030 Secured Notes). The 2030 Secured Notes have a maturity date of October 15, 2030. The net proceeds of the 2030 Secured Notes are being used to finance a portion of the cost of the HPC buildout at the Lake Mariner Data Campus. Principal payments on the 2030 Secured Notes are due on a semi-annual basis on April 15 and October 15 of each year following completion of the initial phase of the Lake Mariner Data Campus buildout. The Company is also required to make an offer to holders to repurchase the 2030 Secured Notes based on excess cash flows, as defined, on or before each semiannual payment date. Interest payments are due in arrears on April 15 and October 15 of each year, beginning on April 15, 2026. The 2030 Notes are fully and unconditionally guaranteed by Wulf Computes subsidiaries, La Lupa Data LLC, Akela Data Holdings LLC and Akela Data LLC (collectively, the Guarantors). The 2030 Secur …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

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 Companys 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. The Company recorded stock-based compensation expense of $50.9 million, $30.9 million and $5.9 million for the years ended December 31, 2025, 2024 and 2023,respectively. During the years ended December 31, 2025, 2024 and 2023, 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 4,566,796, 5,057,145 and 1,578,056 shares of Common Stock to satisfy statutory withholding requirements related to such vesting. Shares withheld for the payment of withholding taxes are not deemed issued under the Plan and remain available for issuance. Additionally, the Company issued 26,796, 138,876 and 415,910 shares of C …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

FAIR VALUE MEASUREMENTS Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-level fair value hierarchy prioritizing the inputs to valuation techniques is used to measure fair value. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The levels are as follows: (Level 1) observable inputs such as quoted prices in active markets for identical assets or liabilities; (Level 2) observable inputs for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable either directly or indirectly from market data; and (Level 3) unobservable inputs for which there is little or no market data, which require the Company to develop its own assumptions. The following tables present the Companys financial instruments that are measured and recorded at fair value on the Companys consolidated balance sheets on a recurring basis, segregated by hierarchy fair value levels as of December 31, 2025 and 2024 (in t …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

INCOME TAXES The components of net loss before income tax for continuing operations (comprised of the total of loss before income tax and equity in net (loss) income of investee and equity in net (loss) income of investee, net of tax) for the years ended December 31, 2025, 2024 and 2023 are as follows (in thousands): Year Ended December 31, 2025 2024 2023 Domestic $ (661,340) $ (72,417) $ (73,419) Foreign Total $ (661,340) $ (72,417) $ (73,419) The Companys income tax provision for continuing operations for the years ended December 31, 2025, 2024 and 2023 are as follows (in thousands): Year Ended December 31, 2025 2024 2023 Current: Federal $ $ $ State and local Foreign Total current income tax provision Deferred: Federal 73 State and local 3 Foreign Total deferred income tax provision 76 Income tax provision $ 76 $ $ The effective tax rate of the Company's provision for income taxes differs from the federal statutory rate for the year ended December 31, 2025 as follows: Year Ended December 31, 2025 Amount % Federal statutory rate $ (138,881) 21.0 % State and local income taxes, net of federal income tax effect 1 % Foreign tax effects % Effect of changes in tax laws or rates enacted in the current period % Effect of cross-border tax laws % Tax credits % Changes in valuation allowances 33,183 (5.0) % Nontaxable or nondeductible items Change in fair value of warrants and derivatives 90,256 (13.7) % Non-deductible compensation 18,423 (2.8) % Excess tax deduction on stock compens …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

LEASES Lessee Accounting The New Ground Lease In May 2021, the Company entered into a ground lease (as amended from time to time, the Ground Lease), related to the Lake Mariner Data Campus 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 of eight 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 Companys 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 Data Campus. The New Ground Lease expanded the acreage of real property covered by the prior lease to support both cryptocurrency mining and HPC leasing datacenter operations. The New Ground Lease includes both fixed and variable payments, including an annual escalation factor and the Companys proportionate share of the landlords 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 to nine additional five-year periods unless the Company provides written notice of termination at least six months prior to t …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Recent Accounting Standards Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 expands existing income tax disclosures for rate reconciliations by requiring disclosure of certain specific categories and additional reconciling items that meet the quantitative threshold and expands disclosures for income taxes paid by requiring disaggregation by certain jurisdictions, amount of income taxes separated by federal and individual jurisdiction, and the amount of income (loss) from continuing operations before income tax expense (benefit) disaggregated between federal, state, and foreign. The amendments in this update are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of this new standard did not have a material impact on our consolidated financial statements. In August 2023, the FASB issued an ASU 2023-05, Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement, that requires a joint venture, upon formation, to measure its assets and liabilities at fair value in its standalone financial statements. A joint venture must recognize the difference between the fair value of its equity and the fair value of its identifiable assets and liabilities as goodwill (or an equity adjustment, if negative) using the business combination accounting guidance regardless of whether the net assets me …

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RELATED PARTY TRANSACTIONS In April 2021, the Company entered into a Services Agreement (the Services Agreement) with 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 provided, or caused 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 Companys 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 of five years and provided 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 m …

RelatedPartyTransactionsDisclosureTextBlock · excerpt; the full note is in the filing

SEGMENTS The following table presents revenue and segment profit (loss) by reportable segment for the periods presented (in thousands): Year Ended December 31, 2025 2024 2023 Digital Asset Mining Segment Digital asset mining revenue $ 151,556 $ 140,051 $ 69,229 Cost of revenue (exclusive of depreciation) 80,199 62,608 27,315 Operating expenses (including related party) 12,394 7,583 4,889 Digital asset mining segment profit $ 58,963 $ 69,860 $ 37,025 HPC Leasing Segment HPC lease revenue $ 16,899 $ $ Cost of revenue (exclusive of depreciation) 2,464 Operating expenses (including related party) 7,353 66 HPC leasing segment profit (loss) $ 7,082 $ (66) $ The following table presents a reconciliation of the reportable segment profit (loss) to loss before income taxes and equity in net income of investee included in the Companys consolidated statements of operations for the year ended December 31, 2025, 2024 and 2023 (in thousands): Year Ended December 31, 2025 2024 2023 Reportable segment profit $ 66,045 $ 69,794 $ 37,025 Selling, general and administrative expenses 139,465 57,883 23,693 Selling, general and administrative expenses related party 8,292 12,695 13,325 Depreciation 88,597 59,808 28,350 Loss (gain) on fair value of digital assets, net 612 (2,200) Realized gain on sale of digital assets (3,174) Impairment of digital assets 3,043 Change in fair value of contingent consideration 10,397 Loss on disposals of property, plant, and equipment, net 4,895 17,824 1,209 Operating …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). All intercompany balances and transactions have been eliminated. Certain prior period amounts have been reclassified to conform with current period presentation. 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, fair value of contingent consideration issued in a business combination, the establishment of useful lives for property, plant and equipment and intangible assets, the fair value of equity securities or warrants to purchase the Companys 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 …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

COMMON STOCK On September 30, 2025, the Company held a Special Meeting of Stockholders (the Special Meeting). As a result of the matters submitted to a stockholder vote at the Special Meeting, the Company's stockholders adopted a charter amendment increasing the number of authorized shares of Common Stock from 600,000,000 to 950,000,000. Consequently, as of September 30, 2025, TeraWulfs Certificate of Incorporation provides for authorized shares of 1,050,000,000 divided into (a) 950,000,000 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 to one 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 December 31, 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 tim …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

SUBSEQUENT EVENTS On February 2, 2026, the Company entered into an Agreement of Purchase and Sale for a former industrial site in Hawesville, Kentucky (Hawesville). The Company exercised an exclusivity option to purchase Hawesville, which includes more than 250 buildable acres with immediate access to power infrastructure, including multiple high-voltage transmission lines, an on-site energized substation, and a direct connection to the regional transmission network. The Hawesville seller was granted a 6.8% minority equity interest in TeraWulfs Hawesville development entity, which is intended to develop and own a high-performance computing/artificial intelligence data center on the property. The Hawesville seller has the right to request the redemption of its minority interest starting on the first anniversary of the data centers commencement of operations (the Operations Anniversary Date). The Hawesville seller will not participate in the development, financing, construction, management or operation of the data center and will not have any obligations to contribute capital, unless its minority interest is not redeemed in full within 30 days after the Operations Anniversary Date. The Hawesville acquisition does not require any third-party consents or regulatory approvals and closed effective February 2, 2026. Additionally, on February 2, 2026, the Company issued a press release announcing the entry into an Equity and Asset Purchase Agreement (the Morgantown Purchase Agreement …

SubsequentEventsTextBlock · excerpt; the full note is in the filing