AI's Power Thirst Drives Crypto Miners to Repurpose $3B Data Centers with Google Backing

TeraWulf Inc., a U.S.-based cryptocurrency mining firm, announced plans to raise $3 billion in debt to expand its data center operations, with financial backing from Google. The deal, arranged by Morgan Stanley, is expected to launch as early as October 2025 through high-yield bonds or leveraged loans. Google’s involvement includes a $3.2 billion backstop commitment, which has increased its equity stake in TeraWulf to 14% from 8%title1^[1]. The funding aims to capitalize on the AI industry’s surging demand for data center capacity, GPU chips, and stable power sources, positioning TeraWulf to repurpose its energy-intensive infrastructure for AI workloadstitle2^[2].

The debt issuance, anticipated to receive a credit rating between BB and CCC, may benefit from Google’s financial support, potentially securing a higher rating than typical for junk-rated debttitle1^[1]. Credit rating agencies are currently evaluating the deal, with final terms still under negotiationtitle2^[2]. Google’s backing has already enabled TeraWulf to expand its collaboration with Fluidstack, an AI cloud platform, which in August signed a $3.7 billion colocation deal to utilize TeraWulf’s New York-based data centerstitle3^[3]. This partnership underscores the growing convergence of crypto mining infrastructure with AI development, as firms with existing power-hungry facilities become key players in the AI arms racetitle4^[4].

The strategic shift reflects broader industry trends. As AI demand outstrips supply, crypto miners like TeraWulf are repositioning themselves as infrastructure providers. TeraWulf’s recent $850 million convertible bond sale in August, also arranged by Morgan Stanley, highlights its aggressive capital-raising strategytitle1^[1]. Similarly, Cipher Mining Inc. announced a parallel agreement with Fluidstack and Google, with the tech giant committing $1.4 billion to backstop obligations and acquire a 5.4% equity staketitle5^[5]. These moves signal a sector-wide pivot toward AI-driven revenue streams, reducing reliance on cryptocurrency price volatilitytitle6^[6].

Morgan Stanley has emerged as a central facilitator in this transition. The investment bank has arranged over $1.65 billion in convertible bond sales for TeraWulf and Cipher Mining in recent months, including an $800 million deal for Cipher this weektitle7^[7]. The firm’s role underscores the growing intersection of traditional finance and crypto-native infrastructure, as institutional investors seek to monetize energy-intensive assets in the AI eratitle8^[8].

TeraWulf’s expansion plans also include a $400 million private offering of convertible senior notes due 2031, with proceeds allocated to capped call transactions and data center growthtitle9^[9]. Analysts note that the $3 billion debt raise could become one of the largest financing deals by a crypto miner transitioning to AI infrastructure, reflecting Google’s strategic investment in scalable computing powertitle10^[10]. The firm’s shares have surged 94% year-to-date, with recent volatility linked to market reactions to the debt announcementstitle11^[11].

The broader implications for the AI industry are significant. By leveraging existing data center infrastructure, crypto miners are addressing critical bottlenecks in AI development, including power availability and processing capacitytitle12^[12]. This trend is expected to accelerate as tech giants like Google continue to backstop large-scale infrastructure projects, creating a feedback loop where crypto firms gain access to capital and AI companies secure long-term computing resourcestitle13^[13].