Google Bets $3.2 Billion on TeraWulf’s AI Infrastructure Pivot

TeraWulf Inc. (WULF) has announced plans to raise approximately $3 billion in debt financing to expand its data center operations, with financial backing from Google Inc. The proposed funding, which could launch as early as October 2025, is structured as either high-yield bonds or leveraged loans and is being arranged by Morgan Stanley. Google’s involvement includes a $3.2 billion backstop commitment, which has increased its equity stake in TeraWulf from 8% to 14% Coindesk^[1]. The transaction is expected to be rated between BB and CCC by credit rating agencies, a typical range for junk-rated debt, though Google’s support may enhance its credit profile Invezz^[2].

The financing aligns with the growing demand for AI infrastructure, which has intensified competition for data center space, GPU chips, and reliable electricity. TeraWulf, traditionally a Bitcoin mining firm, is pivoting toward AI-driven infrastructure by repurposing its existing power-intensive facilities. This strategy mirrors broader industry trends, where crypto miners are increasingly partnering with AI firms to leverage their preexisting infrastructure. For instance, TeraWulf recently expanded its colocation agreement with Fluidstack, an AI cloud platform, under a $3.7 billion contract. Google’s backstop for this deal further solidifies TeraWulf’s position in the AI infrastructure market Cointelegraph^[3].

Google’s financial involvement extends beyond TeraWulf. Cipher Mining Inc., another crypto miner, has also partnered with Fluidstack and Google under a similar colocation agreement. Google has committed $1.4 billion to backstop Cipher’s obligations and secured a 5.4% equity stake in the company. These deals highlight Google’s strategic focus on securing long-term AI computing capacity, with both TeraWulf and Cipher Mining expected to raise additional debt to fund their expanded operations Yahoo Finance^[4]. Morgan Stanley has played a central role in facilitating these transactions, having arranged $1.65 billion in convertible bond sales for TeraWulf and Cipher in recent months Coincentral^[5].

The credit risk associated with TeraWulf’s debt raise remains a key consideration. With a debt-to-equity ratio of 2.96 and negative interest coverage, the company’s reliance on speculative-grade financing underscores its financial challenges. However, Google’s backstop and the high demand for AI infrastructure may mitigate some of these risks. Credit rating agencies are still evaluating the deal’s structure, with potential ratings likely to reflect the company’s elevated leverage profile Cryptonews^[6].

TeraWulf’s stock (WULF) has exhibited significant volatility in response to the news. Following the announcement of Google’s backstop in August, the stock surged 80% within days. On September 25, shares spiked 12% to an intraday high of $11.72 before retreating to close at $10.97 in after-hours trading, reflecting a 3.5% decline. The stock’s beta coefficient, a measure of volatility, ranges between 3.36 and 4.267, indicating heightened sensitivity to market sentiment Bloomberg^[7]. Despite short-term fluctuations, WULF has gained over 94% year-to-date, driven by optimism surrounding the AI pivot and Google’s support.

Analysts note that TeraWulf’s strategic shift from Bitcoin mining to AI infrastructure is a double-edged sword. While the company’s existing power infrastructure positions it to capitalize on AI demand, the transition requires careful execution to balance capital expenditures with operational efficiency. Delays, cost overruns, or technical challenges in scaling AI infrastructure could strain TeraWulf’s financial resources. However, the firm’s ability to secure multi-billion-dollar contracts with partners like Fluidstack and Google suggests confidence in its long-term viability.

The broader market for AI infrastructure is expected to remain competitive, with other crypto miners and tech firms vying for similar opportunities. For example, CoreWeave Inc. recently raised $1.75 billion in junk bonds to fund its AI expansion, while Meta and Oracle have pursued more traditional investment-grade financing. TeraWulf’s debt raise, however, highlights the unique role of crypto-native companies in addressing the urgent demand for scalable compute power. As AI applications continue to evolve, the integration of repurposed crypto infrastructure into this sector may redefine the landscape of data center development Datacenterdynamics^[8].