Bitcoin Miner TeraWulf Borrows $50M to Build Mining Infrastructure
- Bitcoin mining company TeraWulf has upped its loan by $60 million, intending to use the new funds to develop its New York and Pennsylvania-based mining facilities.
Bitcoin (BTC) miner TeraWulf has taken a $50 million loan from capital market company Wilmington Trust to further develop its crypto mining facilities.
In a Tuesday press release, the firm’s CEO Paul Prager said the new funds would enable the completion of two of its facilities, Namely, these are the New York-based Lake Mariner, and the Pennsylvania-based Nautilus Cryptomine.
TeraWulf Borrows $50M for Building Mining Centers
According to a filing with the US Securities and Exchange Commission (SEC), the new loan matures on December 1, 2024. Until then, it will accrue an annual interest of 11.5%.
About three months ago, TeraWulf had borrowed $123.5 million from the same lender, and for the same purpose. The firm’s lead now says the latest capital injection will make it “resilient and securely positioned.” Prager says it will also allow it to utilize “certain value-creating opportunities” which may disappear once markets recuperate.
Already, TeraWulf has received its first batch of 3,000 Bitmain Antminer S19 XP mining rigs for its New York center. This adds to the existing 3,300 currently operating at the site. The newest collection of mining rigs is expected to start functioning in August this year.
Aside from that, TeraWulf has paid $60 million in deposits to receive monthly batches of Bitcoin mining rigs. The press release notes that the machines will be purchased at their then-to-be prices.
Once complete, TeraWulf expects to have a capacity of 50 megawatts at the Lake Mariner site. Meanwhile, the Pennsylvania station is on course to start operations in the third quarter.
Miners Between a Rock and a Hard Place
TeraWulf is one of the mining companies with large loans, with a debt to capital ratio of 0.56. At this metric, the company is only second to Core Scientific in terms of debt burden.
Other than its debt situation, the Maryland-based company has also felt the sting of the prevailing crypto market downturn. At its November peak price of $69,000, mining a single Bitcoin block brought in over $400,000. Now that the digital asset trades at about $20,000, miners’ revenue has been slashed to about $120,000.
The age of mining rigs has also been another factor recently putting a dent on miners’ profitability. Older mining rigs, for instance the 2017 S9 miners deliver just 14 terahashes/second (TH/s). In comparison, the latest miners from Bitmain can clock up to 255 TH/s/. Miners are now forced to dispose of their older mining rigs for newer ones to remain profitable.
A couple of miners, like Argo Blockchain and Riot Blockchain have sold off some of their output to cope with dwindling earnings. Others yet, are now seeking alternative income sources from the debt and equity markets.
On top of that, crypto miners have also experienced jurisdiction-specific challenges. Those in Washington now have higher power bills, while those in Kazakhstan have to pay taxes. More recently, a bill in New York enforced a two-year moratorium on carbon-utilizing Bitcoin miners.
Rebecca is a Senior Staff Writer at BitcoinWisdom, working hard to bring you the latest breaking news in the cryptocurrency market. In the words of Elon Musk “Buy stock in several companies that make products & services that *you* believe in. Only sell if you think their products & services are trending worse. Don’t panic when the market does. This will serve you well in the long-term.”
