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New words:
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Financial report summary
?Competition
Cleanspark • Riot Platforms • Marathon Digital • Bit Digital • Bitfarms • Cipher Mining • Core Scientific Inc - Ordinary Shares • Argo Blockchain • Stronghold Digital Mining Inc - Ordinary Shares • Bitdeer TechnologiesRisks
- If we fail to increase our hash rate, we may be unable to compete, and our results of operations could suffer.
- We expect the cost of acquiring new miners to continue to be affected by the ongoing global supply chain crisis.
- We may not be able to timely complete our future strategic growth initiatives or within our anticipated cost estimates, if at all.
- We may be unable to access sufficient additional capital for future strategic growth initiatives.
- Expansion of our Lake Mariner Facility and Nautilus Cryptomine Facility potentially exposes us to additional risks.
- Since the operation and expansion of the Nautilus Cryptomine Facility is subject to the terms of a joint venture agreement, TeraWulf may have less control over strategic decisions.
- Economic and geopolitical events may create increased uncertainty and price changes.
- We may be impacted by macroeconomic conditions due to global pandemics, epidemics or outbreaks of disease and the resulting global supply chain crisis.
- Failure to successfully integrate acquired businesses could negatively impact our balance sheet and results of operations.
- We may experience increased compliance costs as a result of our strategic acquisitions.
- If we are unable to comply with the covenants or restrictions contained in our Loan, Guaranty and Security Agreement, the lenders could declare all amounts outstanding thereunder to be due and payable and foreclose on their collateral, which could materially adversely affect our financial condition and operations.
- We have financed our strategic growth primarily by issuing new shares of our common stock in public offerings, which dilutes the ownership interests of our current stockholders, and which may adversely affect the market price of our securities.
- We have a history of operating losses, and we may report additional operating losses in the future.
- The lack of regulation of digital asset exchanges which bitcoin, and other cryptocurrencies, are traded on may expose us to the effects of negative publicity resulting from fraudulent actors in the cryptocurrency space and can adversely affect an investment in the Company.
- We depend on attracting and retaining officers, managers, and skilled professionals.
- Our ability to achieve profitability is largely dependent on the price of bitcoin, which has historically been volatile.
- Bitcoin market exposure to financially troubled cryptocurrency-related companies may impact our reputation, the price of bitcoin and the profitability of our bitcoin mining operations.
- Bitcoin is subject to halving, and our bitcoin mining operations may generate less revenue as a result.
- Transaction fees may decrease demand for bitcoin and prevent expansion.
- Bitcoin faces significant scaling obstacles that can lead to high fees or slow transaction settlement times.
- To remain competitive in our industry, we seek to grow our hash rate to match the growing network hash rate and increasing network difficulty of the bitcoin blockchain, and if we are unable to grow our hash rate at pace with the global network hash rate, our chance of earning bitcoin from our mining operations would decline.
- Because our miners are designed specifically to mine bitcoin and may not be readily adaptable to other uses, a sustained decline in bitcoin’s value could adversely affect our business and results of operations.
- Our reliance on third-party miners may subject our operations to increased risk of design flaws.
- Our use of a third-party mining pool exposes us to certain risks.
- We may not be able to realize the benefits of forks.
- Cyber-attacks, data breaches or malware may disrupt our operations and trigger significant liability for us, which could harm our operating results and financial condition, and damage our reputation or otherwise materially harm our business.
- Incorrect or fraudulent bitcoin transactions may be irreversible and we could lose access to our bitcoin.
- Our business could be harmed by prolonged power and internet outages, shortages, or capacity constraints.
- Digital assets held by the Company are not subject to FDIC or SIPC protections.
- Increased scrutiny and changing expectations from stakeholders with respect to our environmental, social, and governance (ESG) practices and the impacts of climate change may result in additional costs or risks.
- Changing environmental regulation and public energy policy may expose our business to new risks.
- We are subject to a highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our business, reputation, prospects or operations.
- The compliance costs of responding to new and changing regulations could adversely affect our operations.
- Regulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects, or operations.
- Our interactions with a blockchain may expose us to specially designated nationals (“SDN”) or blocked persons and new legislation or regulation could adversely impact our business or the market for cryptocurrencies.
- Bitcoin and bitcoin mining, as well as cryptocurrencies generally, may be made illegal in certain jurisdictions, including the ones we operate in, which could adversely affect our business prospects and operations.
- TeraWulf may be at a higher risk of litigation and other legal proceedings due to heightened regulatory scrutiny of the cryptocurrency industry, which could ultimately be resolved against TeraWulf, requiring material future cash payments or charges, which could impair TeraWulf’s financial condition and results of operations.
- The Company may be classified as an inadvertent investment company.
- If federal or state legislatures or agencies initiate or release tax determinations that change the classification of bitcoins as property for tax purposes (in the context of when such bitcoins are held as an investment), such determination could have a negative tax consequence on the Company or its shareholders.
- The trading price of shares of our common stock has been subject to volatility.
- We have, primarily, financed our strategic growth through our at-the-market (ATM) offerings and issuances of our common stock.
- Because we do not currently intend to pay any cash dividends on our common stock, our stockholders will not be able to receive a return on their shares unless they sell them.
- We previously identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, any of which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.
- Cybersecurity Risk Management and Strategy
Management Discussion
- The Company generates revenue in the form of bitcoin by providing hash computation services to a mining pool operator to mine bitcoin and validate transactions on the global Bitcoin Network using application-specific integrated circuit computers owned by the Company. The earned bitcoin are routinely sold for U.S. dollars. The Company also earns revenue by providing miner hosting services to third parties. In 2023, the Company established WULF Compute as its internal innovation center, with a specific focus on the research, development, and deployment of its expansive and scalable digital infrastructure. Subsequent to a successful pilot phase involving a compact graphics processing unit (“GPU”) system designed to bolster generative AI and large language model applications, the Company made an initial commitment by allocating a 2 MW power block at the Lake Mariner Facility located in upstate New York (the “Lake Mariner Facility”). This allocation is intended to support a broader high-performance computing (“HPC”) initiative, strategically aimed at diversifying the Company’s revenue streams. While the Company may choose to mine other digital currencies or pursue other data center services in the future, it has no plans to do so currently. The Company's plan of operation for the next twelve months is to continue to increase the mining capacity at its operating mining facilities and to complete the construction of the fourth building at its Lake Mariner Facility.