TERAWULF INC.WULF
TERAWULF INC. Leases Disclosure
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 Company’s 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 Company’s proportionate share of the landlord’s 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 the end of the initial or the then-current renewal term. Upon expiration of the New Ground Lease, all buildings and improvements on the premises will revert to the Ground Lease Lessor in good condition. As consideration for terminating the prior lease and entering into the New Ground Lease, the Company issued 20.0 million shares of Common Stock with a fair value of $68.8 million and paid $12.0 million in cash (the “Cash Lease Prepayment”) to the parent company of the Ground Lease Lessor in October 2024. The Company determined that this transaction constituted a lease modification under ASC 842.
The New Ground Lease contains two lease components: land and building. The land component was classified as an operating lease, while the building component was classified as a finance lease, as the 35 years initial term represents a major portion of the building’s remaining economic life. As of October 9, 2024, the Company remeasured the lease liabilities for both components using a discount rate of 6.9%, which reflects the estimated incremental borrowing rate for a collateralized loan with a term comparable to the lease payments.
In May 2025 in connection with acquisition of Beowulf E&D, the New Ground Lease was amended and restated (as amended and restated, the “A&R Lease”). While the A&R Lease did not change the parties, term or payments under the lease, the A&R Lease grants the Ground Lease Lessor the right to participate in TeraWulf’s board of directors meetings as a non-voting observer for the remainder of the A&R Lease term, provided that the Ground Lease Lessor (together with its affiliates) continues to beneficially own at least 15 million shares of Common Stock. The A&R Lease also provides that (a) Beowulf E&D has been, and is currently providing certain services in its capacity as the exclusive operator of the Lake Mariner Data Campus, (b) so long as TeraWulf is an affiliate of the Ground Lease Lessor, the lessee may designate TeraWulf or one or more of its wholly owned subsidiaries as operator of the premises (together with Beowulf E&D, each and collectively “TeraWulf Operator”), and (c) as long as TeraWulf Operator is not in material default of its services, TeraWulf Operator may not be replaced or removed as operator without the prior written consent of the Ground Lease Lessor, with such consent not to be unreasonably withheld, conditioned or delayed.
In August 2025, the A&R Lease was amended and restated (the “Second A&R Lease”). Pursuant to the terms of the Second A&R Lease, Lake Mariner Data LLC (“Lake Mariner”), an indirect wholly owned subsidiary of the Company, assigned its right, title and interest in the premises to its parent company, TeraWulf Brookings LLC (“Brookings”) and the parties adjusted the leased acreage to Lake Mariner’s current bitcoin mining operations. On the same date, the Ground Lease Lessor and Brookings entered into three new ground leases for the remaining acreage (collectively, the “Somerset-Brookings Leases”). The Somerset-Brookings Leases and the Second A&R Lease collectively cover 162.7 acres of real property and grant the respective tenants access to power and infrastructure equipment for up to 750 MW at the Lake Mariner Data Campus. This internal lease restructuring was not a substantive modification to the A&R Lease as it did not result in a change to the underlying right-of-use assets, lease term or total consideration transferred under the leasing arrangement. This restructuring enabled the Company to allocate power and infrastructure resources to its bitcoin mining and HPC subsidiaries via different subleases tailored to its datacenter customers.
The Cayuga Lease
On August 12, 2025 (the “Effective Date”), the Company entered into a lease agreement (the “Cayuga Lease”), related to the Company’s Lake Hawkeye site in New York with a counterparty which is a related party due to control by a member of Company management (the “Cayuga Lease Lessor”), The Cayuga Lease leases a portion of Cayuga Lease Lessor’s real property consisting of approximately 183 acres, including all structures, equipment, facilities and fixtures located thereon which the Company expects to use primarily for HPC datacenter operations. The Cayuga Lease has an initial term of 80 years with no renewal rights and the Company prepaid rent consisting of (i) $95.0 million in the form of Common Stock determined on the basis of a 15-day trailing VWAP by issuing 18.6 million shares of Common Stock and (ii) $3.0 million in cash during the year ended December 31, 2025. The Company is also responsible for its proportionate share of certain costs, expenses and disbursements incurred by Cayuga Lease Lessor to own, operate and maintain any other portions of the real property necessary or useful to reasonably support the Company’s use of the premises.
Any time after the 50th anniversary of the Effective Date (i) the Company may elect to purchase the premises for $100, either as an asset acquisition or though the purchase of all membership interests in the Cayuga Lease Lessor, and (ii) the Cayuga Lease Lessor and its parent may require the Company to purchase the premises on the same terms. In addition, following the Cayuga Lease Lessor’s reasonable determination that the premises will be subject to material environmental damage arising during the term resulting from the Company’s use of the premises, the Cayuga Lease Lessor may require the Company to purchase the premises for $100 either as an asset acquisition or through the purchase of all the membership interests in the Cayuga Lease Lessor. Any such sale will be on an “as is” “where is” basis. Upon expiration of the Cayuga Lease, all buildings and improvements on the premises will revert to the Cayuga Lease Lessor in good condition. The Cayuga Lease contained three lease components: land, buildings and equipment. All three components were classified as finance leases, due to the bargain purchase option. The Company measured the lease liabilities for the three components using a discount rate of 7.5%, which reflects the estimated incremental borrowing rate for a collateralized loan with a term comparable to the expected lease term.
Other Lessee Arrangements
In April 2025, the Company entered into an office lease in New York (the “NY Hudson Lease”). The NY Hudson Lease, which was classified as an operating lease, commenced in September 2025 with an initial term ending March 31, 2033 and includes two five-year renewal options. The Company measured the right-of use asset and lease liability of the NY Hudson Lease in accordance with ASC 842 using a discount rate of 6.2%, which reflects the estimated incremental borrowing rate for a collateralized loan with terms comparable to the lease payments. In connection with the execution of the NY Hudson Lease, the Company posted a letter of credit for $1.4 million as security for the lease which shall remain in effect through the term of the NY Hudson Lease. The Company is required to maintain a balance of $1.4 million in a deposit account as collateral to the letter of credit, which is included in restricted cash (noncurrent) in the consolidated balance sheet as of December 31, 2025.
In connection with the acquisition of Beowulf E&D, the Company acquired four office leases of Beowulf E&D, including (i) one lease with a remaining lease terms of less than twelve months, for which the Company elected an accounting policy to not recognize this short-term leases on its balance sheet as allowed under ASC 842 as well as one lease for office space in Washington D.C. with nominal rent payments over a 13-month term, (ii) an acquired lease for a property in New York with a related party counterparty due to control by members of the Company’s management (the “NY Lease”), which was classified as an operating lease with a remaining term of 11.3 years as of the Acquisition Date, and (iii) an acquired lease for office space in Maryland with a related party counterparty due to control by a member of the Company’s management (the “MD Lease”), which was classified as an operating lease with a remaining term of 6.1 years as of the Acquisition Date. The Company measured the right-of-use assets and lease liabilities of the NY Lease and the MD Lease as of May 21, 2025 in accordance with ASC 842 using a discount rate of 6.9% and 6.5%, respectively, which reflects the estimated incremental borrowing rates for a collateralized loan with terms comparable to the lease payments.
In September 2025, the Company entered an equipment lease for certain standby power generation equipment which is expected to commence in February 2026 (the “Equipment Lease”). The Equipment Lease includes fixed and variable payments over an initial term of one year with options to extend in six-month increments, up to four years. The Equipment Lease also includes a purchase option to purchase the equipment under lease with certain credits applied for fixed payments made during the term of the lease. The Company anticipates the lease will qualify as a finance lease upon commencement and prepaid $6.2 million of rent during the year ended December 31, 2025 which is included within other assets in the consolidated balance sheet as of December 31, 2025.
During the year ended December 31, 2025, the Company recorded operating lease expense of $5.4 million, including variable expense of $1.4 million and made cash lease payments of $2.7 million. Of the total operating lease expenses, $3.7 million is included in operating expenses – related party, $0.9 million is included in selling, general and administrative expenses, and $0.8 million is included in selling, general and administrative expenses – related party, respectively, in the consolidated statement of operations. During the years ended December 31, 2024 and 2023, the Company recorded operating lease expense of $1.7 million and $1.3 million, respectively, including variable expense of $0.2 million and $0.2 million, respectively, in operating expenses – related party in the consolidated statements of operations and made cash lease payments of $11.5 million and $0.9 million, respectively, in addition to the issuance of the aforementioned Common Stock for the New Ground Lease.
During the years ended December 31, 2025 and 2024, the Company recorded amortization of the right-of-use assets related to its finance leases of $2.5 million and $0.1 million, respectively, including variable expense of $1.2 million and $0, respectively, in operating expenses – related party in the consolidated statements of operations and made cash payments of $9.2 million and $0.9 million, respectively, in addition to the issuance of the aforementioned Common Stock for the New Ground Lease and the Cayuga Lease. The Company recorded interest expense on finance lease liabilities of $20,000 and $5,000 included in interest expense in the consolidated statements of operations for the year ended December 31, 2025 and 2024, respectively. The Company recorded no amortization of ROU and interest expense on finance lease liabilities or made payments for finance leases during the year ended December 31, 2023.
As of December 31, 2025, the remaining operating and finance lease terms were 11.8 years and 33.9 years, respectively, and the weighted-average discount rate of operating and finance leases were 6.5% and 6.9%, respectively.
The following is a maturity analysis of the annual undiscounted cash flows of the estimated operating and finance lease liabilities as of December 31, 2025 (in thousands):
| Year ending December 31: | Operating Lease Liability | Finance Lease Liability | |||||||||
| 2026 | $ | 3,527 | $ | 22 | |||||||
| 2027 | 3,543 | 22 | |||||||||
| 2028 | 3,559 | 22 | |||||||||
| 2029 | 3,612 | 22 | |||||||||
| 2030 | 3,703 | 22 | |||||||||
| Thereafter | 17,840 | 635 | |||||||||
| $ | 35,784 | $ | 745 | ||||||||
A reconciliation of the undiscounted cash flows to the operating lease and finance lease liabilities recognized in the consolidated balance sheet as of December 31, 2025 follows (in thousands):
| Operating Lease Liability | Finance Lease Liability | ||||||||||
| Undiscounted cash flows of the operating lease | $ | 35,784 | $ | 745 | |||||||
| Unamortized discount | 11,460 | 454 | |||||||||
| Total operating lease liability | 24,324 | 291 | |||||||||
| Current portion of operating lease liability | 2,015 | 2 | |||||||||
| Operating lease liability, net of current portion | $ | 22,309 | $ | 289 | |||||||
Lessor Accounting
In December 2024, the Company entered into long-term HPC leases with a customer (the “Core42 HPC Leases”) for specified datacenter infrastructure at the Lake Mariner Data Campus to support the customer’s HPC operations. The Company determined at contract inception that these arrangements contain a lease, comprising lease components related to the right to use datacenter space and nonlease components for power delivery, physical security, and maintenance services.
As of December 31, 2025, two of the Core42 HPC Leases had commenced in July and August 2025, respectively. The other two leases are expected to begin in early 2026. The Core42 HPC Leases included an initial 10-year term, two five-year renewal options, and a now-expired provision for near-term capacity expansion. In August 2025, the Company entered into change orders on the Core42 HPC Leases whereby the parties agreed to additional work and an adjustment of the base lease rent and modified the 10-year term to commence upon the achievement of certain specified additional work.
The Core42 HPC Leases provide for certain prepaid rent amounts (“Prepaid Rent”) representing the first 12 months base rent under each lease for a total of $90.0 million which shall be applied towards 50% of each month’s base rent commencing on the respective commencement date of each lease until the Prepaid Rent is exhausted. During the year ended December 31, 2025, the Company received the $90.0 million of Prepaid Rent from the customer and as of December 31, 2025, has recorded $58.2 million and $23.3 million in current portion of deferred rent liability and deferred rent liability, net of current portion, respectively, in the consolidated balance sheet.
In August 2025, the Company entered in long-term HPC leases with a customer (the “Fluidstack HPC Leases”) for specified datacenter infrastructure at the Lake Mariner Data Campus to support the customer’s HPC operations. The Company determined at contract inception that these arrangements contain a lease, comprising lease components related to the right to use datacenter space—currently under construction—and nonlease components for power delivery, physical security, and maintenance services. As of December 31, 2025, none of the Fluidstack HPC Leases had commenced. Each Fluidstack HPC Lease is expected to begin at various dates in 2026 and includes an initial 10-year term and two five-year renewal options.
In connection with the Fluidstack HPC Leases, the Company entered into recognition agreements with Fluidstack USA I Inc. (“Fluidstack”) and Google LLC (“Google”) (the “Google Recognition Agreements”), pursuant to which Google agreed to backstop (the “Google Backstop”) certain obligations of Fluidstack under the Fluidstack HPC Leases. The Google Backstop under each Google Recognition Agreement becomes effective as of the commencement date under the corresponding Fluidstack HPC Lease. In the event of a payment default under a Fluidstack HPC Lease, or if Fluidstack becomes subject to an insolvency event, following notice from the Company, Google will have the option to either (i) pay the termination fee under such Fluidstack HPC Lease (the “Termination Fee”) or (ii) pay all rent currently due under the Fluidstack HPC Lease and assume the Fluidstack HPC Lease as the tenant thereunder.
In consideration of Google providing the Google Backstop, the Company entered into Warrant Agreements with Google, pursuant to which the Company issued to Google warrants (the “Google Warrants”) to purchase a total of 73,580,000 shares of Common Stock for an exercise price of $0.01 per share of Common Stock. The Google Warrants have an exercise period beginning on the earlier of the commencement date of each respective Fluidstack HPC Lease or 180 days after the target commencement date, as defined, of each respective Fluidstack HPC Lease and expiring on August 13, 2030 for 41,011,803 of the Google Warrants and August 17, 2030 for 32,568,197 of the Google Warrants. If the Google Warrants are not exercised by these dates and the market value of Common Stock exceeds the exercise price, the Google Warrants are automatically exercised on a net basis. As a condition to receiving the Google Warrants prior to the effective date applicable to the Google Backstop, Google has agreed to pledge the Google Warrants for the benefit of the lenders under certain financing transactions in connection with construction of the HPC buildings pursuant to a customary warrant pledge agreement until such time as the Google Backstop becomes effective. Google entered into this pledge agreement with the Company and Wilmington Trust, National Association, as collateral agent, in connection with the Company’s $3200.0 million 2030 Senior Secured Notes financing in October 2025 (see Note 10).
The Company recorded an asset of $515.5 million based on the fair value of the Google Warrants at issuance, which is in deferred charges in the consolidated balance sheet as of December 31, 2025. The Company will amortize this asset over the life of the Fluidstack HPC Leases on a straight-line basis to recognize the benefit derived from the Google Backstop. The Company recorded the Google Warrants in warrant liabilities in the consolidated balance sheet as of December 31, 2025 and changes in the fair value are recorded in change in fair value of warrants and derivatives in the consolidated statement of operations during the year ended December 31, 2025.
The Company entered into commission agreements in connection with its HPC Leases. The commissions were earned upon execution of the HPC Leases and receipt of Prepaid Rent, as applicable, and the Company recorded assets for the commission charges as initial direct costs and will amortize these assets over the life of the respective HPC Leases on the same basis as lease income. Certain of the commission payments become payable upon future events, including commencement of the respective HPC Leases. As of December 31, 2025, the Company reported unamortized initial direct
costs of $57.4 million included in deferred charges and $27.6 million in accrued lessor costs, respectively, in the consolidated balance sheet.
The components of HPC lease revenue for the operating leases were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Lease income relating to lease payments | $ | 13,750 | $ | — | $ | — | |||||||||||
| Variable lease payments | $ | 3,149 | $ | — | $ | — | |||||||||||
The following table represents the maturity analysis of commenced minimum operating lease payments expected to be received as of December 31, 2025, and thereafter (in thousands):
| Operating Lease | ||||||||
| 2026 | $ | 14,144 | ||||||
| 2027 | 21,702 | |||||||
| 2028 | 30,111 | |||||||
| 2029 | 31,014 | |||||||
| 2030 | 31,944 | |||||||
| Thereafter | 178,844 | |||||||
| $ | 307,759 | |||||||
Leased property, plant and equipment, net consisted of the following (in thousands):
| December 31, 2025 | December 31, 2024 | ||||||||||
| Computer equipment | $ | 2,867 | $ | — | |||||||
| Electrical equipment | 43,200 | — | |||||||||
| Leasehold improvements | 126,927 | — | |||||||||
| Total | 172,994 | — | |||||||||
| Less: accumulated depreciation | (2,655) | — | |||||||||
Leased property, plant and equipment, net | $ | 170,339 | $ | — | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Mar 20, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Mar 31, 2022 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.