Terawulf and IREN Bet Big on AI as Bitcoin Mining Revenue Shrinks

Operating Losses Widen Amid Rising Costs

For the third quarter of 2026, U.S. digital infrastructure provider Terawulf generated $76.2 million in total revenue, a significant year-over-year (YoY) increase driven primarily by its high-performance computing (HPC) data center leasing segment. HPC revenue surged to $63 million, accounting for roughly 83% of the top line.

Conversely, bitcoin mining and legacy digital asset revenue continued to shrink as a percentage of total sales, reinforcing Terawulf’s aggressive pivot toward hosting artificial intelligence (AI) infrastructure.

Despite the revenue growth, Terawulf faced mounting pressure on its operating profitability during the quarter. According to financial results released Nov. 6, the company’s operating loss widened to $88.2 million from $24.7 million in the corresponding quarter of 2025.

The widening loss was driven largely by a surge in selling, general, and administrative expenses as Terawulf expanded corporate operations, hired additional technical and electrical personnel, and advanced its multigigawatt development pipeline. Interest expenses also rose significantly year over year, reflecting a larger debt burden and convertible notes used to finance its capital-intensive expansion. Total costs and expenses more than doubled to $164.5 million from $75.3 million in the third quarter of 2025.

Terawulf Expands AI Infrastructure Footprint

Terawulf’s widening operating losses and rising costs reflect its extensive infrastructure expansion across several major data center campuses. Its Lake Mariner facility had 102 megawatts (MW) of operational IT capacity as of Sept. 30, with another 336 MW under construction at an estimated cost of $8 million to $10 million per MW.

At its Justified Campus, the company secured a 20-year lease agreement with Anthropic representing approximately $19 billion in contracted revenue, supported by a Google credit backstop for project financing. Meanwhile, Terawulf expanded its Muskie Campus in Kentucky to 1 gigawatt (GW) of contracted power capacity, strengthening its long-term development pipeline.

To support its capital-intensive expansion and manage rising costs, Terawulf ended the third quarter with approximately $2.4 billion in cash, cash equivalents and restricted cash. The company also completed the sale of its 50.1% stake in the Abernathy Joint Venture, receiving $250 million in upfront cash consideration, with additional payments expected. It also increased commitments under its revolving credit agreement to $400 million.

IREN’s AI Pivot Highlights Industrywide Shift

Terawulf’s transition mirrors a broader shift among publicly traded bitcoin miners seeking to capitalize on growing demand for AI computing infrastructure. Nasdaq-listed IREN, another bitcoin mining company pivoting toward AI cloud services, reported a sharp decline in mining revenue for the quarter ended Sept. 30.

According to its quarterly filing with the U.S. Securities and Exchange Commission, IREN generated $28 million in bitcoin mining revenue, down 58% from $67 million in the previous quarter and 88% from $233 million a year earlier. Bitcoin production plunged to 402 BTC from 2,039 BTC a year earlier, while its average operating hashrate fell to 8.8 exahash per second (EH/s) from 45.3 EH/s.

IREN held no bitcoin on its balance sheet at the end of September, reflecting its practice of selling mined bitcoin daily. The company expects to substantially complete its transition from bitcoin mining to AI cloud operations by Dec. 31, 2026, with only minimal mining activity continuing through 2027.

The shift has already transformed IREN’s revenue mix. Its quarterly revenue climbed 66% sequentially to $228 million, driven by approximately $200 million in AI cloud revenue, up 182% from the previous quarter. The company also narrowed its net loss to $263 million from $684 million, while adjusted earnings before interest, taxes, depreciation, and amortization rose to $66 million from $19 million.

IREN reported total assets of $20.6 billion, including $6 billion in data center assets, supported by customer agreements involving Nvidia, Microsoft and 13 other customers.

However, the transition has not insulated mining companies from broader market volatility. IREN shares fell 17% Nov. 5 to close at $18.03 amid a sell-off in AI and technology stocks. Despite the decline, analysts remain upbeat and maintain a price target of $55.