I put together a little writeup I've been sending to friends, I'd honestly love any questions or concerns as I'll be keeping a very close eye on Terawulf over the coming months. It's also lacking a lot of technical jargon when it comes to Bitcoin Mining and investing since not all my friends are not super versed in crypto and investing.
Company : Terawulf
NASDAQ stock Ticker : WULF
Based out of Maryland, USA
SYNOPSIS
The WULF stock price of $2 is very very undervalued.
This belief is heavily based on the fact that after expenses the company is currently pulling in $500,000 a day (including weekends), yet its market cap or total value of the company is only about 500 million.
Imagine buying a penthouse for $5 million dollars and then being able to rent it out at a fair market price for $1.8 million dollars a year. It would seem as if the penthouse was sold for way under value.
Below is an in depth explanation on why Terawulf is way under value.
WHAT DOES TERAWULF DO?
Terawulf has built two facilities in New York and Pennsylvania that are basically two huge state of the art computers. They’ve built these computer facilities to create an enormous amount of computing power. They then use this computing power to make money.
For Example: AI or artifice intelligence requires a lot of computing power. Terawulf is currently working with Talen and Amazon where they might sell their computing power to Amazon to power Amazon’s AI. Basically Amazon rents Terawulf’s facilities computing power, instead of building their own.
This potential Amazon deal is however a speculative future endeavor and not why I am writing this today. It just helped me explain what Terawulf has built without using the scary B word... Bitcoin.
However, that’s exactly what Terawulf is doing with their computing power.
They are “mining Bitcoin” or using their computing power, to help run the Bitcoin network. Similar to how Google could hire Terawulf’s computing power, to help run their email system GMAIL.
Terawulf, gets paid in Bitcoin daily, and immediately sells it for a hefty profit. The Terawulf CEO has invested millions of his own money into Terawulf and stated that the company is not in the business of speculating on the price of Bitcoin. They simply “Mine” Bitcoin everyday for a profit in American Dollars, not Bitcoin.
TERAWULF’S BACKSTORY
TERAWULF was formed in 2021, and their plan was to lock in long term cheap North American power (5-20 year plans). Not just any power, but Zero Carbon energy. Not only is it better for the environment, but in a world where regulations are moving in that direction, it’s better to be ready for it.
Once they locked in inexpensive green power, they bought land and started construction on buildings. Right now they have buildings in New York and Pennsylvania. Two states that have had discussions and laws even passed against companies mining bitcoin... but mining bitcoin with “bad” energy. Since Terawulf’s goal is 100% carbon free energy, they don’t have to worry.
Terawulf spent all of 2021 - 2022 getting their facilities ready. They started turning on the computers in 2023, but are still building and turning on new machines for 2024, and anticipate this continuing into 2025.
This all leads into why I believe they are so undervalued.
STOCK PRICE
Terawulf began this venture in 2021, during the last cryptocurrency bull run. Speculation was crazy in 2021 around anything crypto and Bitcoin related. Along with many other assets and mining companies, WULF’s price rocketed to a high of $44 per share in Nov 2021.
However soon after Bitcoin’s price went down and so did Terawulfs. WULF shares dropped as low as $0.53 in March 2023.
Rightfully so, I mean Terawulf up until that point had just taking on hundreds of millions in debt to build their facilities. According to their earnings reports this company just lost money month after month, year after year. They were an idea in 2021.
Most people don’t know what Bitcoin Mining is, so they see Terawulf, they see it’s a bitcoin mining company and don’t really know what the hell that means.
They’re investors not computer tech folks. So they look at what they do know, the earnings reports and well, the earnings reports are terrible. They don’t know why or care, however we now know it’s because Terawulf is still in the building stages.
It’s as if Ferrari spent over two years building a race car. But every month people asked how fast the race car was, and Ferrari said it went 0 mph. So everyone continued to write off this race car as a failure, without knowing that it was going to take 3 years to build.
They shouldn’t judge how fast it goes until it’s built, just like the market shouldn’t have judged Terawulf on how profitable it was before it was built.
I think the stock market thinks Terawulf is a fully built race car that goes 0mph, when in reality it is a half built race car that when fully built, will be the fastest car in the race.
Earnings reports are a major factor in how investors judge a company. Most articles and reports online are based off Terawulf’s released earnings reports. Those earnings reports don’t go past sept 2023, and those reports are very bad.
Currently, when you research Terawulf online, you’re likely to find a writeup that an algorithm wrote based off earnings reports before Oct 2023. The reports are filled with BAD numbers, and don’t explain that Terawulf was simply building their race car.
Now normally everyone has to wait until the company releases its earnings report to know how everything going. Not with Terawulf though.
Terawulf is not your average company, they are very transparent and have been releasing their numbers on their social media and their website. They are proud of what they accomplished and believe in a company that doesn’t hide behind walls, but instead informs investors of exactly what is going on.
They don’t pay for fancy marketing, they just make a damn good product and wait for word to catch on.
However, NOBODY is reading Terawulf’s reports... their twitter posts get maybe 100 likes, and a few spam comments.
So unless you’re one of the few like me listening, you are judging their company on the terrible earnings reports from 2021 thru September 2023.
However they just started turning on their machines in 2023, and have been expanding at a rapid rate throughout 2024.
On Fidelity and Charles Schwab if you click on reports for Terawulf and look at earnings... MISSED in big red letters pops up.
For investors it’s basically saying LOSER LOSER LOSER, over and over and over.
However, on March 28th 2024 the official earnings report comes out for Oct-Dec 2023.
Now if you’re following Terawulf on social media and understand Bitcoin Mining you’d know that Q4 was a bit of a winner this time. You’d also know that Q1 of 2024 is an even bigger winner. However, the vast majority of people simply wait for the official earnings reports.
Basically we are ahead of curve by 6 months.
I don’t know when exactly Wall Street is going to catch up on this, but right now WULF seems like a diamond in the rough. The confusion around what exactly is Bitcoin and Bitcoin mining, mixed with the delayed earnings reports has falsely labeled Terawulf a loser.
I anticipate that between now and summer of 2024 the market will catch on.
We discussed the price of the stock versus the earnings of the company. This is called a P/E ratio for short. Terawulf’s P/E ratio right now is about 4/1 since the entire value of the company is four times more than their gross earnings for the year.
In comparison to the software industry average of 56/1 which is what fidelity chose to compare it to Terawulf to.
A 56/1 P/E for Terawulf would value the stock $28 a share instead of $2 a share.
MARA Marathon Digital is a mining company that has a current P/E of 23/1. WULF at $11 a share would be a 23/1 P/E.
Now there are many other factors to consider and I think $10 a share is closer to a fair value.
I also think the stock could go to $100 a share considering how crazy the market can get, especially around something with the word Bitcoin in it.
However I am not an expert with how to value a company like this, should it be 3 billion or 10 billion, I’m not sure. What the stock market values is a best guess.
There’s so many things to consider, and nothing is guaranteed in this world. A comet could hit the Terawulf facility and blow it up tomorrow and drive the price to a few pennies.
I’m not a finial advisor, I have no idea your finances nor can I guarantee my beliefs or that I am missing something. I’m simply stating what I find interesting about this company and sharing that info and my beliefs.
Anyway, thanks for reading. Below is some more info to consider.
DEEPER DOWN THE RABBIT HOLE
SHORTS
Another reason why the price is so low, are the shorts have been opening up on this stock since 2022. This is just speculation, but I believe these shorts are coming from knowledgeable traders, who understood they would be out of profit for two years, or lenders who have hedged their investment.
For anyone who doesn’t understand Shorts, it’s basically a way to make money if the stock price goes down, and coincidently, investing in a short position on a stock helps drive the price down.
The shorts are slowly beginning to close and I have a feeling those shorts will close up completely by June 2024. Shorts closing brings stock price up.
TRENDING BUZZ WORDS CREATING HYPE
To add fuel to the fire, Terawulf prides itself in using green clean energy that’s carbon free, a very popular narrative. One thing I’ve learned in trading is that the best “story” often wins out. They also announced in Dec 2023 that they’re working with amazon and A.I. to capitalize the use of their mining machines. Two great buzz words for investors, “A.I.” & “Carbon Free Energy.” This mixed with the hype around Bitcoin and Cryptocurrencies makes me think Terawulf’s stock price could go from highly undervalued to high over valued.
STOCK DILUTION
One negative I noticed was how Terawulf has been diluting their stock. Kind of how when the FED prints more dollars and as a result the price of groceries goes up. It’s normal for a company to be issuing stock to pay bills and incentivize employees. 40% of the company is owned by insiders, which means the people working for the company seem to believe in its success. They don’t seem to plan on heavy stock dilution for 2024 from what I’ve heard them say, and while it’s something to consider, I don’t see it as a major red flag.
WULF HISTORY
Terawulf was started in 2021, they bought IKONICS CORPORATION in 2021. So if you look at the history of the stock ticker symbol WULF, you will notice it goes back to 1993.
However, this price data doesn’t imply to the current company Terawulf, since as planned Terawulf sold Ikonics in 2022.
This WULF stock history adds to the confusion and messes with any algorithms taking in numbers from the old company and projecting it onto the new company.
Another reason why this company is flying under the radar... for now.
DEBT
Terawulf took on Debt, they have been paying off their debt enormously the last few months. So while the old earnings reports have their debt listed over 100 million, it’s more like 50 million and dropping.
BITCOIN PRICE
Bitcoins price does effect WULF’s profit, but they have set themselves up to be profitable well into the foreseeable future, including after the April 2024 Bitcoin Halving. Explaining the Bitcoin halving would be a lot right now, but it’s basically an event happening in April 2024 that effects the profits of Bitcoin miners. There’s a lot of miners that aren’t in a good position to capitalize on this event. Terawulf is in my opinion set up to be one of the most profitable mining companies after the halving. Once again this is a very complex thing to understand, but I’ve seen articles scaring Bitcoin Mining investors about the halving, and rightfully so. Just because Terawulf is set up for success doesn’t mean the Bitcoin Mining Market as a whole might not panic and temporarily drive down mining company prices. Another thing of many I’ve considered and any investor should too.
THANK YOU
Once agin, I could be missing something here, Terawulf could be lying like Enron for all we know, I do not know everything nor can I predict the future.
So if you do your own research please let me know if you find something I missed, I’ll be very grateful.
Thanks for reading!
Bitcoin tips for internet strangers who may capitalize on this info, I expect no tips and will be overjoyed at even an anonymous dollar.
BTC address: 3Cu1hbvWc6mVzZdDjkNsy66VgncKQ8pjVx
A smile to a stranger goes further than we could ever know : )
