Terawulf Inc. Q2 FY2025 Earnings Call

Greetings. Welcome to the TeraWulf 2025 Second Quarter Earnings Conference Call. Please note this conference is being recorded. I will now turn the conference over to John Larkin, SVP, Director of Investor Relations. Thank you. You may begin.

Good morning, and welcome to TeraWulf's 2025 second quarter earnings call. Joining me today are Chairman and CEO, Paul Prager; and CFO, Patrick Fleury. And for Q&A, we will be joined by Co-Founder and CTO, Nazar Khan; TSO, Kerri Langlais; and COO, Sean Farrell. Before we get started, please note that our remarks today may include forward-looking statements. These statements are subject to risks and uncertainties and actual results may differ materially. During this call, we may use words like anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions, which indicate forward-looking statements. For a more comprehensive discussion of these and other risks, please refer to our filings with the SEC available on sec.gov and in the Investors section of our website at terawulf.com. We will also reference certain non-GAAP financial measures today. Please refer to our 10-K and 10-Q filings and our website for a full reconciliation of these non-GAAP measures to the most comparable GAAP measures. We will start today's call with prepared remarks from Paul and Patrick, followed by Q&A with the full management team. I will now turn the call over to our CEO, Paul Prager.

Good morning, and thank you for joining us. We moved this call from Friday to this morning so we could share a complete update. Over the past few days, we finalized transformative agreements that meaningfully advance TeraWulf's strategy and reinforce our position as a leader in next-generation digital infrastructure. This morning, we announced 2 major transactions. First, we have a new tenant at Lake Mariner. We signed a 10-year 200-plus megawatt hyperscale AI hosting agreement with Fluidstack, a premier AI cloud platform that builds and operates GPU clusters for some of the world's most innovative companies. This agreement represents approximately $3.7 billion in contracted revenue, with the potential to exceed $8.7 billion if lease extensions are exercised. Fluidstack will utilize more than 200 megawatts of critical IT load, about 250 megawatts of gross site capacity. We also granted Fluidstack a 30-day exclusivity on CB-5, which would add another 160 megawatts of critical IT load on similar terms, including Google's participation. Deployment will be phased, with the first 40 megawatts expected online in the first half of 2026 and the full deployment by year-end. The lease is expected to bring in over $350 million a year in revenue, with site-level net operating margins of roughly 85%. Importantly, Google is providing a $1.8 billion backstop for Fluidstack's lease obligations in exchange for warrants representing about 8% of TeraWulf's equity, an extraordinary vote of confidence from one of the most influential players in AI. Second, we brought in Cayuga. We executed an 80-year ground lease with a purchase option, securing exclusive rights to develop up to 400 megawatts of digital infrastructure on a fully equipped site, with high-capacity transmission, industrial water intake, and redundant fiber. We expect to bring more than 130 megawatts online in 2027, with substantial expansion potential beyond that. Together, these transactions increase our total platform capacity to over 1-gigawatt, firmly positioning Lake Mariner and Cayuga as cornerstone assets for the future of AI infrastructure. Our first HPC tenant, Core42, continues to be an outstanding partner, and we anticipate growing that relationship. The WULF Den is fully operational and generating revenue. CB-1 begins generating revenue within the next week, and CB-2 is on track for Q4. We are hitting our milestones on time and on budget. For months, I've highlighted 3 key priorities: execute for Core42; secure our next tenant; and expand capacity. These announcements deliver on all 3. Looking ahead, our focus is on financing the HPC build-out efficiently and in a shareholder-friendly manner. With this new customer and the $1.8 billion Google backstop, our credit profile is significantly enhanced, enabling us to pursue low-cost, scalable capital solutions that align with our growth trajectory. Therefore, my immediate focus is execution, execution, execution. Finally, I want to thank my team, our partners at Fluidstack and Google, and our advisers, Morgan Stanley, Paul, Weiss, and Noah Hansford at Stutzman Bromberg, for their exceptional work in making these milestones possible. With that, I'll turn it over to Patrick for a quick look at our second quarter results.

Thank you, Paul. I'll briefly cover the financial highlights for the second quarter before diving into the transactions in partnership with Fluidstack and Google announced this morning, and our objectives for the second half of 2025. In the second quarter of 2025, we self-mined 485 bitcoin at Lake Mariner or approximately 5 bitcoin per day, a 30% increase over the 372-bitcoin mined in 1Q '25. Our GAAP revenues were up 38% quarter-over-quarter at $47.6 million in 2Q '25 from $34.4 million in 1Q '25. Meanwhile, our GAAP cost of revenue exclusive of depreciation decreased by 10% from $24.5 million in 1Q '25 to $22.1 million in 2Q '25. Power prices in Upstate New York normalized in 2Q, and we expect pricing to remain in line with historical levels for the rest of 2025, guiding at $0.05 per kilowatt hour for the second half of the year. SG&A expense for 2Q '25 was $14.3 million. After adjusting for stock-based compensation, SG&A decreased quarter-over-quarter from $11.5 million in 1Q '25 to $10.7 million in 2Q '25. I'm also pleased to report our non-GAAP adjusted EBITDA showed significant improvement in Q2, totaling $14.5 million, up from a negative $4.7 million in 1Q. As a reminder, these results are inclusive of significant increases in SG&A and operating expenses over the past 12 months as we've invested heavily in our HPC business. These incremental costs have been entirely borne by our mining business until now. As Paul mentioned, we're on track for the WULF Den and CB-1 leases with Core42 to start generating revenue in Q3. We remain on schedule and on budget for the delivery of this capacity. Looking ahead to the second half of 2025, we've updated our guidance in our investor presentation. At current bitcoin prices and network cash rate, we expect our mining operations to contribute positively to EBITDA in the second half of the year. We've also slightly adjusted our annual SG&A guidance to $50 million to $55 million from $40 million to $45 million, reflecting the accelerated growth in our HPC business. Now moving to the transactions announced today. These are truly a game changer for TeraWulf, and I want to highlight some of the financial implications. As Paul noted, the Fluidstack lease and Google support agreement are carefully structured to enhance our credit profile and position us to scale quickly. Google's partnership and support is multifaceted. First, Google is backing Fluidstack's lease obligations, which include early termination protections for the first 6 years. Second, Google is providing $1.8 billion of credit support over a 10-year period. Third, Google is pledging its equity stake in TeraWulf to support the construction phase of our data centers. Given the expected improvement in our credit profile, we've refined our financing strategy to focus on a series of capital markets initiatives in the second half of 2025, with the benefit of our new financial support from Google and our updated lease agreements. Additionally, the long-term ground lease at the Cayuga site adds significant future capacity and upside value for TeraWulf shareholders. We plan to develop up to 400 megawatts of HPC hosting at Cayuga, a site with many of the same advantages as Lake Mariner, including low cost, predominantly 0 carbon power and strong existing infrastructure. This acquisition and the structuring of these transactions were designed with careful consideration of shareholder alignment. As Paul mentioned, we have structured the terms with long-term shareholder value in mind. The acquisition of Beowulf Electricity and Data in 2Q further streamlines our structure and consolidates expertise in power generation. This acquisition not only simplifies our corporate structure but also strengthens our ability to execute on future projects. As part of the acquisition, 94 employees from Beowulf, including key personnel from Lake Mariner and corporate support functions have transitioned to TeraWulf. Finally, regarding our growth pipeline. We are constantly evaluating additional sites to add to the TeraWulf portfolio and maintain an extremely rigorous approach to this process. In 2025, we have evaluated over 75 potential expansion sites, and from that, we have a handful of progressing through negotiations. Given our HPC customer base and electrical infrastructure experience, we will maintain discipline as we evaluate future expansions. With that, I'll turn it back over to the operator, and we look forward to answering your questions.

Our first questions come from Mike Grondahl with Northland Securities.

Congratulations. A couple of questions. If you could maybe talk about why Fluidstack, kind of the pros and cons there, and the demand for that power? And then how are you thinking about the 30-day exclusivity?

Naz, you want to get that.

Mike, it's Nazar here. Why Fluidstack? Fluidstack, as Paul had mentioned, delivers compute clusters to some of the largest companies in the world, and they've been active with a number of different customers, both domestically in the United States as well as in Europe. And so they made a couple of announcements in Europe earlier in the year. So they are very active and are in deep and detailed discussions with a number of different counterparties in delivering optimized compute. And so as we thought about our trajectory and our ability to grow, adding somebody like Fluidstack to Core42, who also has grand ambitions in building a large platform around compute made a ton of sense. And I think as we've mentioned on prior calls, having more than 1 customer at the site has been a goal of ours. And this accomplishes that. On the exclusivity, today, we signed up a deal for CB-3, which is 42 megawatts of net critical IT capacity, and CB-4, which is 162 megawatts of net critical IT capacity. The discussions that we have ongoing are for a copy of CB-4, which would be CB-5. And given the discussions that we've had, given the intense amount of effort that's been put into customizing this design for Fluidstack, we have a relatively tight window here, so we are hopeful. But again, there's work to do there. But again, that tight window should give an indication of how much work is left.

Yes, that's really tight.

And then Mike, I'll just add to that. This is Kerri, Mike, the terms on the additional building, CB-5, are on the exact same basis as the terms that we just signed. So we have the same guarantee from Google and the same economics between TeraWulf and Fluidstack.

Great. And then maybe just one more. The $1.8 billion backstop from Google, how was that number sort of decided on? Is that basically a 6-year protection?

Yes, the backstop amount is roughly 50% of the payments over the lease term, which is approximately 6 years. This support is actually in place for up to the 10-year term of the lease and declines from the beginning over time.

Congratulations, guys. Great progress.

Our next questions come from the line of Brett Knoblauch with Cantor Fitzgerald.

Congrats on both of the announcements today. Really excited about those. Maybe first, on Lake Mariner, the 200-some-odd megawatts we have allocated towards bitcoin mining, does the Core42 plus the new deal M&A kind of impact the electrical capacity for bitcoin mining? Would you envision shutting bitcoin mining down for Fluidstack? Or is that something you don't really have to do quite yet?

Brett, it's Kerri. So as you know, right now, we've got about 200 megawatts of near-term power available at Lake Mariner. And if you look out over the next 18 months, we're optimistic that we can bring another 250 online there. So I think that your question here leads us to the other transaction that we announced today, which is the Cayuga deal. That's why moving on that so quickly was very important to us, to keep the momentum in our customer conversations and have that capacity available across multiple sites. So as you think about it, once we sign a deal, we're typically delivering the facilities within a year. So we're already thinking ahead to meet that timeline.

Okay. That's very helpful. And then on the Core42 build-out, can you maybe just remind us of how much CapEx is remaining for that first deal?

Yes, Brett, it's Patrick. I believe the precise amount might be off by around 1 million, but by the end of the second quarter, we had spent roughly $200 million. If you look at our previous presentations, the total spend was about $430 million. You might think that's inconsistent, but a significant portion of that spending is scheduled for the later part of the year. For instance, expenditures like those for UPS, which is a considerable amount, will primarily occur in the late third quarter and fourth quarter.

That's very helpful. And then maybe if I could just add one more. The new CapEx for Fluidstack, $8 million to $10 million range. It's a bit higher than Core42 range. Can you maybe just talk about the difference in the build-out and cost for that versus what you did with Core42?

Sure. This is Nazar. There are a couple of factors to consider. One is the scale and the time associated with that scale. For the Core42 project, we're delivering 60 megawatts of total critical IT capacity, and with this announcement, we're delivering over 200. The timelines for both projects are relatively similar. This requires significantly more labor, which means we have to source from increasingly distant locations, affecting our overall costs. That's one aspect of it. Additionally, as we discussed earlier, we spent considerable time with the Fluidstack team creating a design that was tailored to their deployment needs. This included adjustments based on what we implemented in CB-1 and CB-2. When you combine these factors, as you pointed out, our current CapEx is somewhat higher than what we initially budgeted for Core42.

I really appreciate it, guys. Congrats on the deals.

Our next questions come from the line of Darren Aftahi with ROTH Capital Partners.

It's Dillon Heslin on for Darren. The first one, it seems like the yield or the unlevered yield to cost on the build is roughly in the same range of Core42. When you start to look at other sites within Lake Mariner and then Cayuga, and people you're at the negotiating table with, like how much room do you think there is to either expand or maintain that yield to cost?

Yes, it's Patrick Fleury. I will address that question. We've been quite clear about our targets in the past, and we plan to keep that same discipline moving forward. Paul can provide insights on market demand, which is very strong. As Kerri and Nazar mentioned regarding the expansion capacity we are discussing, it remains consistent. We are confident that we will maintain our discipline and continue to deliver positive economic results for our shareholders.

Yes. And I would just add to that, that since early May, demand has felt almost urgent. We're not chasing yield on cost deals. We just think we can get better returns. Seeing very strong enterprise and hyperscale demand in several formats with more enterprise direct talks, especially in financial services. On pricing, we're very happy with the economics from Core42 and the Fluidstack Google deal, and think shareholders will be rewarded if we just keep replicating them. I think there's a good argument that the market might even be tighter in 2026 than in 2025 given ongoing power constraints and rising hyperscaler CapEx.

Got it. And as a follow-up, is there a way to earmark potentially how much capital you might need from the capital markets?

This is Patrick. So look, we're really excited about the structure of this deal and the partnership here. So I think given the expected improvement in our credit profile, we've really refined our financing strategy with our advisers at Morgan Stanley to focus on a series of capital markets initiatives in the second half of this year. And those initiatives are going to really benefit from the new financial support from our partner at Google and the updated lease agreements. So we think that strategy will really afford us a lower cost of funds going forward and increased flexibility going forward, and are just excited because we feel like we've cracked the code. As you know, one of the hardest things about these deals is financing them. And our strategic alignment with Google supporting us both on the debt and as one of the largest shareholders in our equity going forward, we think, is incredibly novel, and we're really excited about continuing to grow that partnership as we move forward.

Yes. And just to put a finer point on it or to underscore what Patrick said. I mean this is going to lower the cost of financing that we do, and it enables us to really approach things from a very shareholder-friendly perspective.

Our next questions come from the line of Nick Giles with B. Riley Securities.

Guys, congratulations here. It's really great to see. I think the $3.7 billion implies average revenue per megawatt of around 1.9. At what level does the contract start? And what's the annual escalator?

Nick, it's Patrick. Those details are confidential. I believe we've provided sufficient information for you to deduce the rest on your own. The data we've shared is the complete data. As we continue to grow as a company, we have been very transparent in the past, and this is a highly competitive environment for both us and our customers. You can expect continued transparency from us, but what we shared today is all the data we are going to provide.

Okay. Fair enough. I appreciate that. And then just back to the project financing. I mean, should we expect to see something announced for the Core42 and Fluidstack in kind of one single announcement? Or are those separate conversations? Just appreciate any color on kind of what we should be looking for.

Yes. Nick, like I said, I think it's going to be a series of transactions. Obviously, this transaction fundamentally changes the credit profile of our company in a very positive way. So I think you will see a series of transactions that we're working on with our advisers at Morgan Stanley here in the second half.

Got it. One more for me. Just on the 30-day exclusivity. Do you feel that Google would presumably backstop this capacity as well if executed?

Yes.

Yes.

Our last questions will come from the line of Brian Dobson with Clear Street.

Just on the Google partnership, do you think you could maybe opine a little bit on how you think that that's going to change discussions with future clients? Do you see this as a net long-term strategic positive? And if so, what kind of synergies do you think this agreement would yield, in terms of generating new business further down the road?

Naz, do you want to start, and I'll follow up?

I believe the hyperscalers, especially Google, have provided ambitious forecasts for both the remainder of this year and the upcoming year. The arrangement we've established is quite unique, as Patrick pointed out. We've observed a significant demand for capacity from hyperscalers, as Paul mentioned, and how they utilize that capacity can vary in several ways. This situation exemplifies that variance. When considering this, we must look at both who will use the capacity and how it will be financed. The framework we developed with our partners at Fluidstack and Google effectively addresses both aspects. In summary, there is clear demand out there, and the contracts associated with that demand will take various forms, including the announcement we made this morning.

Yes. And do you think that new potential clients will see this as an endorsement from a marquee player in the space?

I hope so. I would expect that Fluidstack and Google likely evaluated numerous sites and found our location appealing due to its attractive features such as our energy infrastructure, redundant grid connections, land availability, water access, fiber latency, an 89% zero carbon power source, and power availability. They also recognized the advancements we've achieved with the Core42 buildings and the partnerships we've built, as well as how we collaborate with our customers. High power density, liquid-cooled data centers are still emerging in the industry, and Fluidstack and Google appreciated the advantage of partnering with a team that already understands the complexities involved. Lastly, our team is exceptional, led by Sean Farrell, our Chief Operating Officer. Our management team, alongside Sean, has over 15 years of experience together, and we bring decades of expertise in executing complex energy infrastructure projects, which is not easily replicated. Overall, I believe it was all these elements that indicated to potential new customers our strong understanding of electricity and infrastructure, aligning well with their needs.

And just to underscore what Paul said, we had very detailed discussions with our customer around the design and configuration of what we're building for them. So we had a base design. And it's through that, that they got to see our chops and see what we do, how we work. And so I do think to your question, it should absolutely be an endorsement of our team and our ability to really work with some of the largest companies in the world in building the next generation of data centers.

Yes. Congratulations. It's a big win.

Our next questions come from the line of Chris Brendler with Rosenblatt Securities.

I want to extend my congratulations as well. This is outstanding. I'm interested in getting more details about your progress on project financing. It seems like you had made considerable advancements in that area before these transactions. Is there a way to quantify the benefits or improvements you might see in financing terms due to the changes in your credit profile? How quickly can you finalize those transactions? Additionally, regarding your expansion plans, I understand you were aiming for 150 megawatts per year, and now you’re projecting 150 to 200 megawatts. Is it correct that you might accelerate your expansion efforts now that you have these transactions finalized? What does the future hold for that expansion – could it potentially increase even further as you grow your portfolio?

Yes, Chris, it's Patrick. I'll address the first part of your question, and then Paul, Nazar, and Kerri can cover the rest. It's clear that Google is a key financial partner for us, as it has a multitrillion-dollar market cap and is one of the largest companies in the U.S. with around $30 billion in debt. This establishes them as a highly reputable AA+ company and now a significant shareholder in our venture. This partnership fundamentally changes our previous financing plans for Core42. We intend to finance the entire site under this new credit and support structure. This is a crucial takeaway. While I can't provide specific numbers during this call, we consider this a game changer, and our financing partners share that sentiment. As Paul mentioned, we are now well-positioned to secure a cost-effective and efficient capital structure. Previously, our discussions revolved around project financing, which can lead to isolated entities and isn't the optimal long-term financing solution. Fortunately, we now have the time and support to determine what is best for the company's long-term interests.

In response to your second question about growth and future capacity, we set a target of 150 to 200 megawatts intentionally. This target is based on both the capacity we currently have and what we believe we can finance and pay for efficiently. With this transaction, we should potentially be able to accelerate that process. As Patrick mentioned, we will be addressing this matter soon. Therefore, it's possible that we can consider increasing that target. However, I believe that our guidance of 150 to 200 megawatts is realistic, based on the capacity we have and our ability to finance and complete the construction in a timely manner.

Okay. Great. Just one more on the financing side. Are you still anticipating a 70% LTV? Or does that potentially have the ability to increase with these transactions?

Yes. Chris, I think all of that is out the door. It's no longer relevant. So I think you'll, again, see us attack the market, I think, in a very significant position of strength now with our partners. And I think all of those prior discussions and targets are off the table.

Our next questions come from the line of Martin Toner with ATB Capital.

Congrats, folks. The EBITDA per megawatt of this deal is a little bit higher than what you've given us for Core42. Can you just kind of talk us through like what's different?

Yes, Martin, as you'll see in our disclosures, this is a natural progression as we grow. Previously, when Core42 was our sole customer, we focused on EBITDA because it was our only metric. Moving forward, we'll approach both Core42 and this new deal by evaluating net operating income at the project level, which I believe is a more fitting perspective. You'll also notice this in our bitcoin mining guidance, where we consider segment operating income. Ultimately, our view is that there’s profitability at the project levels, alongside the SG&A expenses that we incur at the parent company, for which we provided updated guidance today. When you integrate the specific project entities and the bitcoin mining figures, that will roll up into a total, from which you can subtract SG&A to arrive at your EBITDA. Does that make sense?

Yes, I think so. Does Google have a significant contract with Fluidstack similar to the one Microsoft and OpenAI have with CoreWeave? I am also curious if Fluidstack has a backlog comparable to CoreWeave's.

I don't think we're in a position to disclose Fluidstack's customer base. I think as we mentioned earlier, Fluidstack works with some of the largest companies in the world in delivering customized compute solutions.

I appreciate that. And then last one for me. Can you kind of talk us through why like 95 million shares was the right price for Cayuga? Were there some competing bids? And any detail there you can give us there would be appreciated.

Sure, Martin, it's Kerri. We initially mentioned the Cayuga process during our first call in February, where Paul started a competitive bidding process for Cayuga. This attracted several third-party bids. Due to it being a related party transaction, the Board established an independent committee that enlisted its own financial and legal advisers to assess the opportunity for TeraWulf. After evaluation, the committee decided to move forward at a discount to those bids, opting for equity over cash to ensure alignment among all parties. We are excited to have Cayuga as our second site, which, like Lake Mariner, is a former coal plant with excellent infrastructure, including a redundant grid, water, fiber, and primarily zero-carbon power. This was a competitive process with third-party bids, and ultimately, we completed the transaction at a discount to those bids.

Our next questions come from the line of Stephen Glagola with JonesTrading.

Just wanted to clarify on that prior Q&A. When you include the extra nonproject level SG&A, is the margin then more comparable to that 75% level at Core42?

No, Stephen. I was trying to point out that we've adjusted our guidance. Previously, we had only one customer, which made it straightforward to provide an EBITDA margin. Now, I expect the net project operating income margin for each individual project to stand on its own, and I believe we are looking at around 85% for that. If you apply that to each project and factor in our SG&A guidance, it should lead you to the EBITDA. Does that help?

Yes. No, that's really helpful, Patrick. Appreciate it. And then just had one more. So it seems like the successful delivery of CB-1 and CB-2 are pivotal for showcasing your capabilities and establishing credibility for Tier 3 or 4 data center development. So I was hoping maybe you could share any key learnings your team has gained during the build-out process. Any processes that you maybe expect will be more efficient or streamlined with the Fluidstack build-out or future projects, et cetera?

Naz, do you want to start and let maybe Sean talk a little bit as well?

Sure. Stephen, I think there's a couple of things that are important. One is we've been in construction at our site for the last 4 years straight. So we've been building bitcoin mining buildings. And so we had several electrical mechanical contractors on site. And those folks and some of those folks that showed up 4 years ago are still at the site because they're rolling from 1 building and 1 project to the next. So momentum in being able to deliver on a schedule is important. And part of the diligence process that all of our customers have is really, hey, if there's this timeline of schedule out there, what's your ability to meet it? And so given that we've got quite a bit of activity at the site and there's a lot of momentum, it's easier to see how the existing folks there can roll into the next. And then as we scale up and are delivering greater sizes and capacity, it's really a question of can we augment and add to that kind of labor force. And so that's one thing that I think is important and we've been able to convey and articulate to customers, everyone that comes on and being able to show them these schedules is really grounded in being able to point to who's going to do the work. That's one. Second is the design of these things, as Paul mentioned earlier, we are in the very early stages here. And we are at our site deploying multiple different OEM GPU equipment. And each one of those comes with its own set of unique attributes and needs and desires. And so having the experience of going through that design process, understanding what those different configurations look like, what they need, and being able to deliver solutions to our customers kind of comes through as well. We've been through this process now both with Core42 as well as with Fluidstack and Google now. And so I think people see that, as they're thinking through and figuring out how to deploy various types of technology, we are a very good partner to work with, and especially on the electrical side, delivering that capacity. And Sean probably has a few other things to add.

Yes. I would just add to what Nazar said. A lot of the contractors we've had on site have been there for 4 years. So maintaining the workforce at Lake Mariner has been a huge benefit for our deployment at this site. So rolling them from CB-1, CB-2, CB-3 and so on has really been the momentum that we've kept at the site. We've also had huge lessons learned from CB-1 and CB-2. And also, as Nazar said, we've been in detailed technical discussions with Fluidstack for the past several months on CB-3. So instead of building a very wide envelope for Fluidstack deployments, we've really narrowed down on the design that meets their needs. So by doing that design and level-setting us upfront, it allows us to further accelerate our construction schedules.

And the only thing I'd want to add to that is the beauty of our bias regionally right now is that all those contractors and many of the same folks on the ground who are employees at Lake Mariner, they move right over to Cayuga when that's ready to roll so that we're taking advantage of all those lessons learned and working with the same people as we continue to refine our efforts here. So it made Cayuga far more compelling to us than just any other site.

Our next questions come from the line of Ed Engel with Compass Point.

Congrats on all the announcements. You just mentioned that you've been interacting with Fluid over the past couple of months. I was wondering what the involvement was with Google kind of during that whole process. Were they involved early in those negotiations, or were they a bit more later in the process? And then just kind of curious whether, I guess, GCP themselves has expressed any interest in any other sites in your pipeline.

Yes. We've been involved with Google as part of the Fluidstack effort since very early on. It takes a while to get these things over the finish line. The deal took 3 to 4 months from beginning to end. And we've established great working relationships amongst the parties at every level of their respective organizations. Having a signed deal is more than simply having land and access to power. You have to finance the transaction. It's critical to the magnitude of spend. And that's why it was so important to have Google involved pretty much from the start. I think Google taking 8% of our company is not simply about doing a deal, but they want to be a part of where we are going given their natural need for compute. And so again, it was complicated, and we've been talking about it for a long time. Anyone who's listened to Google's Q2 call is aware they have substantial data center needs given $106 billion backlog. They have acquired substantial quantities of third-party data center space. And their backstopping the transaction provides Google with a lower expected cost than a guaranteed value. And since in the unlikely event that Google steps in for Fluidstack due to the backstop, Google would likely add the facilities to their data center portfolio. They were instrumental in helping us get this deal done and very welcome partners.

That's great color. And then you also mentioned that there is early termination protections with Google. Can you talk about some of those conditions, just assuming that they're performance related? And then just one quick follow-up. The 30-day option that's still being considered, would that also include more warrants to Google as well? Or is that just a one-time thing?

Maybe I'll start, and then we'll go to you, Naz, on the walkaway concerns, which we don't really have. But I would expect that – a, I have high degree of hopes with respect to the option and the extension of additional capacity. And all parties have worked in good faith to come to the realization that, that's a good thing. And I would imagine that the terms will be very similar, as Kerri pointed out earlier, and that Google's backstop and equity participation would be part and parcel of that. So feel pretty good about that. Naz, do you want to address the notion of SLA penalties or walkaway considerations?

Sure. The specific terms are fairly confidential. However, the arrangement includes standard service level agreements around performance and delivery. We have collaborated closely with the Fluidstack and Google teams to ensure that both aspects are aligned. The operational ranges are quite narrow, and we have a solid delivery schedule in place to support this. Additionally, our experience with Core42 included similar provisions in that agreement. We are committed to delivering capacity within a designated timeline, and we have been meeting those deadlines on schedule and within budget.

Our last questions will come from the line of Bill Papanastasiou with KBW.

Congrats on this deal. I think most of the analysts went through a lot of the questions. But with respect to the Cayuga site, it appears capacity will be coming online in the second half of '26. Curious to hear your thoughts on how management is thinking about diversifying the tenant base, if that's a consideration. Or now that you have the 2 partners in your pocket, will you continue to scale hand in hand?

Yes. It's Paul. I've been telling everybody for the last 3 to 6 months, we need to land a new customer and expand our capacity. We've done that. But in doing so, we've seen a tremendous amount of demand from multiple parties. I think we ended up in a great transaction here with world-class partners. And we want to grow with them and meet their needs. But we have had significant real interest expressed by other quality customers. And we're going to continue to engage with all those parties as we look to grow. We think that's prudent. But at this point, we're really grateful for the confidence and trust Fluidstack and Google have demonstrated in us right now and really want to get going on that and then focus on CB-5. And then we could see who the right customer is for Cayuga. Demand is real. It's unbelievably powerful right now. So we're excited about the opportunity, but we're most grateful for the contracts that we've announced today and the future of this partnership.

Thank you. Ladies and gentlemen, that does conclude the question-and-answer session, and with that, does bring this call to a close. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.