Google has invested $1.8 billion in a mining company. Its stock soared

Google will finance the development of cloud service TeraWulf for $1.8 billion, and in return will receive the right to buy an eight percent stake in the company at a fixed price. TeraWulf was formerly a cryptocurrency miner, but repurposed its facilities into a data center to support AI projects along the lines of CoreWeave. TeraWulf shares jumped more than 50% on Thursday, August 14.

Google will invest in the development of cloud service company TeraWulf, allocating $1.8 billion in debt financing associated with the construction of its new data center. In return, the tech giant will receive warrants to purchase about 41 million common shares of TeraWulf, which corresponds to an 8% stake, Seeking Alpha reports.

Shares of TeraWulf soared 53% in Thursday trading, while securities of Google's parent company Alphabet strengthened 1.1%.

TeraWulf, originally a cryptocurrency mining company, has changed its strategy and will now also provide AI infrastructure to major tech players. This is similar to the transformation of CoreWeave, which also moved from cryptomining to a hyper-scale data center model, Seeking Alpha notes.

TeraWulf has signed two ten-year contracts with UK-based cloud computing platform Fluidstack to supply HPC clusters (High-Performance Computing clusters) to major cloud providers. Under the agreements, the company will provide more than 200 megawatts of critical IT load at its Lake Mariner campus in New York State. The total value of the contracts is $3.7 billion, and with two five-year renewal options, revenue could reach $8.7 billion.

TeraWulf plans to bring 40 megawatts of computing load online in the first half of 2026 and the remainder by the end of next year, Investor's Business Daily writes.

"We are proud to bring together the world's leading capital and computing partners to build next-generation infrastructure for AI powered by low-cost, predominantly carbon-free energy," Seeking Alpha quoted TeraWulf CEO Paul Prager as saying. - This deal confirms the Lake Mariner campus' status as a flagship hyper-scale-ready facility and accelerates our strategic expansion into high-performance computing."

The agreements were "transformational" for TeraWulf and "significantly strengthen the company's position as a leading infrastructure provider for hyperscale AI and HPC computing," Clear Street analysts wrote, as quoted by Investor's Business Daily. They cautioned that project execution and financing remain under scrutiny, but the contracts awarded "significantly enhance the predictability of growth and profitability."

Clear Street recommends buying shares of TeraWulf and has set a $9 target price on the stock, suggesting a potential upside of 64.8% from the last close, even before the Aug. 14 rally.

According to MarketWatch, of the 12 analysts tracking TeraWulf securities, the vast majority recommend buying them (Buy rating) and only one advises holding (Hold). The Wall Street consensus price target is $7.3, up 33.7% from Wednesday's close.

This article was AI-translated and verified by a human editor