TERAWULF CFO Q&A | Q3 EARNINGS & SITE UPDATES | TOP AI STOCKS TO WATCH IN 2026 | WULF STOCK - TERAWULF INC

Hey guys, welcome or welcome back to the channel McNally Money, the official home of power analysis. In today's episode, Anthony Power and I are joined once again by Patrick Fleury, CFO at Terrawolf, following Q3 earnings and results. We've got a lot to discuss in today's episode. Before we get into it, take a second, smash the like button guys, big help to myself and the channel. If you're not already subscribed, McNally money, feel free to join and let us know in the comment section below what you thought about today's discussion and Wolf's results. with that being said let's get into today's video all right guys away we go big interview on deck for you today we've got patrick flurry cfo at tarawolf back in the hot seat here following q3 earnings gonna be a great discussion very timely in light of the midterms there's obviously been a lot of volatility in the sector and some big results with AI revenue starting to show. So Patrick, always a pleasure. Thanks so much for making it. Thanks for having me back. All right, let's get into it. Now we've separated it kind of by category and site. But before we get into the details, just at a high level, Q3 was obviously very busy for you guys. A lot of key developments, operational updates. Can you walk us through some of the highlights? Yeah, sure. I think first and foremost, you know, revenue, HPC revenue up pretty considerably, right? Quarter over quarter, I think on a gross basis, we were up about a hundred percent. And then as we kind of break out our financials, you'll see in our queue, you Know, we do break out for folks the actual rent versus the TFO versus the power pass through. So you'll see HPC rent up from about $27 million in Q2 up to $46 million in Q3. And that's really the result of CB3, which is the first fluid stack, anthropic TPU building coming online. That came online in early July. So it was online for most of the quarter. That building has you know two data halls and is 42 megawatts um then as you know and i'm excited about this because i think you know as you guys know these things take a long time to build right from the time you announce the deal to financing it to when the cash flow show up i think part of the indigestion in the market today right is because this is long-lived energy infrastructure it does not get built overnight in the snap of your fingers. And I think there's a lot of investors in the space that are formerly tech investors or crossover tech investors. And in tech, things happen really quickly. And there's lot of disruption very quickly. In our business, energy, power, infrastructure, it's very slow because power is just a meat and potatoes business. And so I think what you're going to see, again, you're starting to see in this quarter from us, you will see in the fourth quarter here as CB4 comes online. So CB4 has four data halls, that is 168 megawatt critical building. And those data halls data hall four and data hall three come online first. And that is happening imminently, we start earning rent. And then as data hall two and data hall one come online, when the entire building comes online, that's when the lease technically commences. So there is a period of time where we are earning rent ahead of the actual lease commencement. And when the least commences, that is when the amortization starts. That is when Google backstop for that portion of the project kicks in. So that is obviously a very important date, which will happen this quarter. then you know next first quarter next year you got cb5 again mirror image of cb4 uh so you know we got that coming so again exiting first quarter of next year i mean we're right here right this is less than you know five months away you know we are exiting at call it like around a 700 million dollar revenue run rate there so that is a big deal because i think again you know this is long lived energy infrastructure that takes a long time to build. And now we are like right on the precipice of having that starting to run through all the financial statements. So I think that's really important for just the sector, the space in general to see. So that's, you know, kind of exciting because that's right in front of us. I think in addition to that, like to me in the quarter, the most important takeaways to me that I wanted to get across to investors were lake mariner is you know on on budget it's exactly if you look at like our slide deck we have a page in our slide back and i'll tell you the actual page i got it right there in front of me it's page 21 but it's a capital structure page that shows how much cash we have at each level and if you do the math you know it's the basically exactly the same position that we were in last quarter. So that's important because I think in the space, right, there is concern about cost overruns, rightfully so. And we are in a good spot there. In addition, you know, three quarters of that CapEx has been spent already. So I've got about a billion left to spend to complete the project. But close to, I think, three-quarters of that remaining spend is committed. So really, it's you know a couple hundred million bucks right that is quote not committed that's more like time and materials contracts so again that is a big deal because you know bringing that home on that budget within our guidance range of eight to ten i think is you know proof of concept for us so very focused there and then the other thing uh out of the quarter i think that's really important for folks to take home is you knows we have musky which is a tremendous asset and as paul said on our earnings call, it's worth a lot more today than it was on Monday this week. And that is reflective in the phone calls we have received subsequent to the elections. And so that being said, we are not going to sign a lease there and be forced to go to the equity markets to dilute people. We will not do it. I mean, if you take a step back, right, we issued equity when the markets were open and $19 a share, because our view was with just Lake Mariner and Hossville, if whatever valuation metric you want to take, a cap rate, you want to take an NOI multiple, whatever it is, generally speaking, the view was the stock's worth 20 to 30 bucks. OK, so as simple as if the stock is reflecting everything that you expect to announce, which again, we hadn't even announced the possibilities. And I knew that I needed a billion of equity in the next 12 months. The view was, let's go to the market now where the markets are open and take it. Now, in hindsight, that looks very smart of us. That being said, I can tell you, I didn't feel very good about it when the stock went from 19 to 29. But does it feel amazing to have a billion plus dollars of cash on balance sheet today and have exited our Abernathy JV for cash? Hell yes. So, you know, when the tide goes out, you want to be armed and we are. And so to me, again, when I think of, we have a couple of key events coming up. One, we're going to go finance Hawesville, which we have Google credit backstop, which will get to in a few minutes. And then two, you Know, we've got to sign a lease on must be probably in the first half of next year right and then that means I got to finance that project probably by the middle of next year so again not like no gun to my head to get a financing done anytime soon and I got a multitude of options right I got customer prepayments I got some customers particularly big investment grade customers that have been willing to buy equity at well above market prices right we've seen that happen in a bunch of peers. I have the ability to sell equity in some of my businesses like Wolf Compute that are coming online at huge multiples to infrastructure funds that want that exposure. I Have a highly under levered structure at Wolf Compete, that that asset is five times levered, you know, coming out of the first quarter of next year, and it amortizes by about half a turn to three quarters of a turn a year, my peers, public peers and private are 10 to 15 times levered. Right. And so I don't want to be like, I'm not, I never go on there as you guys know, because we don't run our business that way, but there is a lot of capacity, right. At Wolf Compute to fund, to pull back and take equity to the parent, to fund other growth projects. So there are like, you know, four or five, six, seven different options before I go issue equity. And so, again, and given we last issued equity at $19, I can tell you, like, we have zero – and not only that, but I personally wrote the biggest check I've ever written, you know, at $17.60 a share, personally, instead of settling – net settling. So, again. That tells you where, like – I have zero interest in diluting anywhere close to these levels. And we are going to pursue, you Know, half a dozen other alternatives to fund Muskie before we do that. And again, I think the sell-off that happened yesterday in the wider markets, to me, was long overdue because you have all the people like me that are building the data centers, yet the guys that are providing the silicon were trading at all-time highs. And I'm like, well, how are they going to meet their forecast in 2027 if we can't build data centers because we can'T efficiently capitalize these projects? And so what happened yesterday kind of makes sense to me, just from a market kind of recalibration around the pace of data centers being built in the future. But I also think what it highlights is, you know, you have got to contract with investment grade counterparties, right? And you also can't compete with their cost of capital. So, you know, the Amazon, Microsoft, Google, Meta, NVIDIA, like these are the power play. The name of our game is get yourself as close to their balance sheet as possible because that is the most capital efficient way to grow. Don't compete with them again, which is why we are not in the GPU as a service or Neo cloud business. You know, we are effectively a toll road and we charge a toll. That's great. No, thanks for the transparency, Patrick. I mean, we've been covering TerraWall for years now, and one thing I'll say about when you and Paul come on the podcast and you highlight what you're going to do, you do what you've got to do and you do What You're Going to Say. And so, you know, in terms of using equity at the moment when the share price is probably just north of $10 and there's an expectation at that share price because of the announcements that you've made and because of this major pullback. We were chatting before the podcast, actually. I mean, you've got 26 years experience in this area here, understand the markets better than all the average retail shareholders out there listening to the podcast. We've seen that pullback since sort of June time, third week in June. We've been covering on the podcast there. It looks like, you know, effectively it's been oversold because the fundamentals from every earning call we've listened to this week, and there's been some big ones this week. They've all seemed to happen this week and, you know, yours as well there, Paul, gave a great update on the company. The fundamentals are strong. You've just talked through the expectation. We're seeing massive amounts of HPC revenue now coming through the income statement. And you've already alluded to one of my questions was, what's the what's the annual run rate once you've got CB4 and 5 online at the, you know at that additional you know 336 megawatts of compute and you've alluded to 700 million dollars of annualized revenue which you know when you consider what terrible was producing in the last few years of the bitcoin mining is a different step up and so great to be in that space but what what are you seeing yourself in the market nobody seems to be immune to this even the neo clowns the hyperscale, as you've mentioned, maybe with the exception of Apple, I've really seen prices come down. Yeah, look, it's a historic capex cycle, right? So you've got the biggest companies, the most profitable companies in the world issuing a lot of equity and a lot of debt. And so that drives credit spreads wider. And in addition, they're competing with the US government, right? And so you've got five, 10, 30 year treasuries, you know, a couple of weeks ago, I mentioned internally is the first time, sorry, second time in my career, and I'm getting old, unfortunately, but in 20, in 26 years where the five,10 and 30 year were above 5%. That's really significant because you have a whole generation of folks in investing seats that have never seen that before right and so i think that that's a lot to digest right in in a market capex cycle that folks have never seen before either so i come back to you know a lot of folks talk about bubble whatever you know we were john larkin and i who runs ir for us were laughing this morning you know because you know if if this was a bubble that popped yesterday to be the most boring bubble of all time um but because there you know with bubbles right there's there is either supply or demand you know typically it's supply that is out of whack right if you look back at like the telecom bubble or um oil and gas or power whatever it is over the last 30 you know years here again the issue is we're constrained on infrastructure right so i mean you're hearing from you know the frontier labs that they don't have enough compute you're hearing it from you know microsoft from amazon from from others so like that is the constraint and i think as adoption increases um it will continue to be the constraint uh and so look the u.s we rise to the occasion we will meet this over time by building more power plants you know uh on the grid and increasing and great capability and otherwise and doing it the right way, right? And that's what the election just showed you is people, I think, you know, the fear of AI coming for their jobs, you know kind of washes over into the fear or data center. So our job, right, is to go into these communities where our employees live, by the way, do the right thing, pay taxes for schools, you know train folks in the new economy from the old economy like and to not only that but educate folks as to, you know, the myths behind water, noise, you know, power price, other things that are, I think, are fear-mongering out there. That's our job. But clearly, like, yeah, I mean, it is a heck of a time to be alive. Just a quick follow-up, Patrick, and, you know, we've been covering this particular space, the AI space, for two and a half years two and a half year ago we were at a pier site when they announced their first big deal with Corweave and you think about the time you mentioned it early on the time taken to build these sites it takes 18 months two years and the revenues aren't coming through until the site's complete energisation and yes there might be a time frame between site complete energization where rent is paid you know at that particular point but it's still at the end of the cycle um do you think that um and this is going back to your previous role there in terms of when when companies are getting price targets based on future revenues is that um is that a an accurate way to look at it if there's a sort of like a two-year lag where you're building to that point in time and and incurring or the cost of buildings that time with limited revenues coming in? Yeah, I mean, the answer is yes, right? The market's a future price discounting mechanism, right, that's what the markets do. So, and look, this is not new. I said, like, it might be new for tech investors, but this is how large-scale energy infrastructure has been built for decades in this country, whether it's LNG facilities, nuclear power plants, refineries, pipelines, right. It takes humans and maybe robots in the future. But we have 2,500 people at our Lake Mariner site. I mean, it's basically a mini city, right? You have medical emergencies every day. You got to feed people. You need bathrooms. And so I think that's just the practicality of energy and power infrastructure. And so, yes, I do think you have to use a discount rate. And the discount rate you might use for one management team, you know, that is a tourist in the space versus maybe our management team that's been doing this stuff for 30 years, that discount rate might be different, right? Because that's what a discount rate is, like factoring execution risk, right, and time value of money. So, yeah, but I think, like, it's appropriate. That being said, in my career, the thing that no one can ever ignore is cash. Cash is king. And so when you are actually generating revenue and running that through an income statement, a balance sheet, a cash flow statement, like that's hard to ignore. And so my view is like that is what, in my opinion, will change how the sector is valued and look no farther than digital realty and equinix who trade on the screens at a 5% cap rate. Like our business is not dissimilar. And as you've heard me say before, I think superior in many ways, but I'd rather not have that debate today. But I'm happy to have it if any retail investor wants to hear my thoughts on it. But yeah, so I think like, again, this stuff is natural. It's never, you know, A straight to Z, like straight up, right? And particularly in one of the largest, if not the largest CapEx cycle that, you profitable companies in the world yeah yeah like you say what a time to be alive patrick now i wanted to follow up on one uh topic there the cost and the timeline you guys are still guiding in that eight to ten million range we've seen some of your peers revise that upwards we've also now started to see some powered land lease uh deals or terms that come in substantially lower in terms of capex albeit those are not tier three data center facilities so can you talk to us a little bit about how you've been able to maintain that financial discipline and if these newer lease models are sparking any interest at wolf yeah sure so look i i think there's a lot that goes into that um you know you know cost overruns or or budgets i think management teams have a big impact relationships with customers have a big impact um and then location and so i think some of what you're seeing right is uh and i think i might have mentioned this on our on our last podcast but uh i have been shocked at um the in particular the the price of labor but it really in particular electrical labor i mean it has literally gone parabolic i think in in in most regions throughout the company just because we don't have enough electricians and i bet today again we probably have around 2500 people on site i i would guess that you know more than half of those are electrical electricians right so it's a it's very significant demand so i i think what you're seeing from us at lake mariner is we're right square in the middle of that eight to ten million per megawatt range that we gave you previously and that's in the face of electrical labor you know going parabolic that being said like some of my my public peers who who have disclosed um you know other overages are in different regions and i think that matters right because you know if you're in texas for example and there's dozens of data center projects like you're competing and lng projects like you're competing with a finite pool for for electrical labor in in in lake mariner we're blessed to a certain degree right in that like we're the only game in town it was you know we were had some competition with buffalo bill stadium but that kind of ramped down right when we were ramping up so we were you know able to pull a lot of that workforce you know to lake mariner you know we still are pulling electricians from as far as detroit we've actually been flying some folks in from florida um so it is real but i guess what i'm saying is i think part of it is is is very regionally driven as well and we are fortunate in that you know sort of three four state radius area up there there just aren't that many other big projects so we've been able to secure that labor probably at a less acute rate than you know some of the folks uh in in texas or other regions where it's really intense. So, yeah, but I think, Bryce, I mean, we are really, really proud of that. Like I said, like that was like the number one takeaway that I wanted folks to come out of the call on, you know, we're right where we were last quarter and we've advanced the project significantly on a CapEx basis. So it is literally being de-risked every day. And in terms of the powered land leases, do you have any interest in those or continuing the tier three hyperscale model? Yeah, great question. Look, I thought at first blush, the deal that Riot announced in Texas looks really interesting. I will tell you this, having just done a Google backstop this week, a floor EPC agreement and my earnings, I have not had as much time to focus on it as I would like. So that being said, I think the numbers that I saw at first blush to me just look too good to be true, because I can tell you, like, the market for, you know, gross modified or triple net leases with frontier labs and with hyperscalers is very commoditized. I know exactly generally where those yields are going to be. Right. So, you know, so getting to a term, I can get to a termsheet candidly, you know, in 48 hours with anybody, the details, right, which are the lease, the SLAs, that takes a lot longer. And not only that, but the design, because different folks, you're using different silicon and have different design, like marrying all that together is what takes time uh so i but i think looking at that deal in particular it looks to me like those are are pre capital structure numbers so in other words if you then have if you don't have a wrap and you have to go finance the frontier ai customer direct um that's going to cost you a lot more like in my again i mean just look at core weave right where core weave paper trades today i can pull it up on my screen right here because i got 25 months but it probably where we was 16 16 okay so you know i'm not sure that i don't think that frontier lab is at that but i did see one of your other questions that you guys sent you're asking me about the spreads you know between kind of wrapped paper versus perhaps like frontier lab which kind of goes into this conversation and that is i mean i think if if you're financing a frontier lab today without a wrap and and again this moves like on a daily basis so don't hold my feet to the fire but you're probably you know 10 to 12 percent like the issue you run into in a big financing and like a financing that requires like three four five billion dollars if it's 10 to12 percent like you basically have to issue like the interest during construction the debt service reserve like all of a sudden you have a massive negative carry right because you got to basically pre-fund all of that interest and have a debt service reserve and fund all your other fees. So it does get tricky when you're talking about 10%, 11%, 12% capital. And so I think when I looked at that release from Riot, again, I haven't spent that much time on it, so please don't hold my feet to the fire on this. But to me, it looks like those returns are pre any capital structure cost. So then if you took your capital structure costs for financing that Frontier Lab without a wrap you know i think that likely brings those returns down significantly the two things on that they've announced it's anthropic uh through the 10q so it's it's now we know who the frontier lab is uh secondly it looks to me is uh very similar to what uh core we've did with core scientific steel the advanced coverage of that uh of building those modulars uh will will effectively be reducing the actual rental fee going forward so they'll basically be like a deferred deferred revenue um going forward. So so you know I mean Jason you know was very very clear on the podcast you know that the six billion six million dollars per megawatt was their capex spend four of it was around the pods being produced and we've highlighted the fact that NVIDIA were looking at doing something like this uh you know a month or so ago when Jensen sort of highlighted it but we just thought it was unique and actually because you guys are probably the power company out there um it sort of you know may have made sense in some future sites to maybe look at that as a way of reducing capital expenditure because that's that's the sort of that's becoming the key bottleneck in terms of power and capex together agree i 100 agree with you um again the way we look at things is what is your value creation per megawatt? And based on like, again, the early analysis I did on that deal, it looks like it's very similar on a value creation for megawat to deals that we're doing. The one advantage, as you point out, Anthony, is like, it's just less capital requirement and that in the market, like the one we have today. Speed to market was another key factor. I mean, but look, that's why, I mean as I've said to you on this podcast before, I think every open megawatt of power in 27 and 28 is going to get signed. So Riot has something that's really special, which is they have live power today in a market, by the way, that is going to be likely delayed certainly six or 12 months from when folks kind of thought they were getting live power. So that, again, I think definitive power on a very specific time cable is rare and throughout the country so you know like as i've said to you guys before i'm the space's biggest cheerleader the demand you know is incredibly robust so everybody's going to win uh so it's great i think it's fantastic to see uh riot come up with a new structure that's you know looks to be really attractive no thanks very much and you mentioned uh fleur before actually in terms of my previous work life i was in the oil industry and i can tell you now engineers moved from project to project when the rates go up because every company is after those engineers. I was the CFO of the company out there, so it wasn't as much opportunity for me with only one CFO in every company. But we worked alongside Floor. Can you tell us more about that APC deal with Floor and what that brings to Terrell? Yeah, look, we're really excited about this. I mean, having worked in the power space for a long time, all of us, we've all had a very good relationship with, you know, senior executives at Floor all the way down to, you know, to your point, the engineers on the ground executing projects. So in my opinion, this to me shows the maturation of us, the materation of the industry, right? I mean, we are now, you know, bringing in Floor's $7 billion market cap, $3 billion of cash on balance sheet, double B rated. I mean these guys are the cream of the crop. And so, you know, bringing them into the project provides all that EPC experience. allows us to outsource it to them, particularly on a workforce labor basis. And then, I mean, if you think about, again, just how we have matured, it's quite remarkable. And so let me just give you some thoughts around this. When we started building Lake Mariner, we had 30% designs, okay? Today, like 30%, the designs were 30% complete. So to me, that's like, you know, you're flying the airplane and building the airplane, like while you're flying in hopes that you get the wheels attached so you can land it. I mean, that was kind of, again, you know, where, where we started Lake Mariner starting at Hawesville CB one and CB two are 100% designed. Okay. CB three is about 80%. And I think we'll be, um, I think at the end of December, a hundred percent, a 100%, right? So what that does is that allows then our contractor floor to go out to the market to get their subcontractors completely bought out because they know exactly what the design and the schedule is. Then those subcontructors post a performance bond to floor, right? And then I have a floor guaranteed max price contract, and I have floor parent guarantee and otherwise. So, again, like the risk mitigation involved at every single level, right, for us versus like what we kind of started out doing, it's night and day. And in addition to that, right. We have like every single permit is taken care of on site. And again, these are big. I mean, we're talking like big, big dollars here. So anyway, we'll we're really excited about it. It's a tremendous partnership. I think you'll see us do more of these projects going forward. But again, the whole point here is risk mitigation and, you know, working with somebody that does this is all they do. And again, I think what you're seeing from us is you look at our partnership with Floor on the EPC side, right? Absolute pros in this. They just got awarded LNG Canada, which is like a seven and a half billion dollar award for that phase two. right we're partnering with aep right who's a investment grade utility 80 billion dollar utility that's all they do is provide infrastructure and power right and get paid for it and so i think you know we know what we're good at and we're trying to augment what we are good at with partners that we know they are good at it too and that's what they do and all of that just results in risk mitigation for the project and for our shareholders that is the goal yeah that's Phenomenal. I was going to ask if that partnership may expand to additional sites. It sounds like potentially it will. Speaking of additional sites, Muskie's next on the list here. This is a big one in terms of doubling the contracted power, a gigawatt site now. Can you talk to us a little bit about the approval timeline, how you're able to get that extra power and what this enables now Wolf to do with that site? Yeah, look, so I think as we were talking to all of our potential customers, you know, a thousand megawatt site is incredibly rare in the country on a definitive timeline, right? Not just you're waiting for some regulatory to tell you when you have power, but like we know when we have power. And so the, you Know, first 500 megawatts is secured under the existing tariffs with AEP. The second 500 megawatts is what we will be filing here shortly in the next three to four weeks with AEP, which will be a public process to get that next 500 megawats approved by the Kentucky Public Service Commission. For approval, they have to deem that it is in the best interest of ratepayers to approve it. Part of that, what AEP is proposing through Kentucky Power is, you know, building a new CCGT. And so, you Know, the way that we have tried to partner with them is to bear some of that cost, which again, we intend once we sign up a tenant for the first 500 megawatts, that tenant would have, you know, a very short fuse once it gets approved by the Kentucky Public Service Commission to take the next 500. And then, you know, as they're taking that capacity, you Know, they are paying for, you The rate payer benefits the cost of we agreed to fund the interest during construction for AP on that project. So that cost, again, will be passed on to our tenant in power costs. So So, again, this is, I mean, back to, like, what is our bread and butter? This is what we know how to do because we've been in the power business for, you know, about 30 years. So really, like. Strong, collaborative relationship with Kentucky Power, AEP, with the state. And I think this is what, you now, positive collaboration and design on a data center looks like. Right. I mean, making sure that, you know, locals are taking care of states, taking care of we're paying property taxes, you're doing all the right things. So and that leads to definitive timelines on when we can sell our customers power again, which just is risk mitigation on our behalf and and, you know, on the behalf of our customer as well. Now, before we come on to I've got a question. I'm funny, but before we go on site, just want to try and understand the dynamics in terms of um going back to the first deal with um with uh g42 um and where you are now and how you approach the next set of uh conversations with potential clients having signed a number of deals now and having sort of like you know gaining that experience are these becoming uh you know not saying like confident in terms of the conversations but how are those how are these conversations i I remember you saying the first deal took, you know, effectively six months working 16, 18 hours a day. And you just highlighted during this conversation that you can draw up the term sheets really quickly. And then it's just a case of going through the lease arrangements after that. I mean, what are you seeing difference in the way the style of conversations now with potential customers as it was maybe at the start? Yeah, I think primarily more credibility, right, from our side. I mean, we can take customers to Lake Mariner and they can see it, right? And it's a really impressive site. So I would say that's the biggest one and, you know, credibility, which is earned right through financing, through execution at the site, right. And then also partnership, you Know, I think Fluidstack, Anthropic, Google, Brock, I mean like, you Now, it's like a marriage, right, you got to work hard. It doesn't just come easy. And so that's just reps every single day with, with all those companies and I think earning their trust as well. So yeah, I, I think that's the big difference, Anthony, but I would also say too, you know, we could have probably, we, or I know we could have moved faster at Hawesville. We could have signed that lease faster, but we made space for some folks that we had not danced with before, because you want to get to know the different teams at the different companies. And look, I think respectfully, you don't want to waste their time, but we knew we had Muskie coming down the pike right after that. So the view was, let's get to Know Each Other here a little bit, and they're going to be disappointed when we sign this lease with Anthropic, but then we can put them right into another very, very you know timely good alternative here that that you know is equally as attractive so um yeah i think it's i think it'S a lot of reps and getting to know the folks because the reality is you know when you're talking about a 500 megawatt or 1000 megawatts site you know there's really like seven or eight companies in the entire world that can do that yeah absolutely and in terms of um what we're seeing at the moment gpu pricing seems to be going through the roof um how does that change the dynamic as well going forward because i would imagine you know the fact that uh the clients are going to do very well with their with their gpus does is the ability to um for that to cross over into some of the co-location deals from the landlord perspective does everyone benefit i mean i'm sure that jensen wang at nvidia is looking at these deals and thinking actually maybe i need to raise my prices and so the knock-on effect is everyone gets a little bit of the pie would that be your sort of like perspective going forward if these if these rates are able to stay at these levels and actually even go higher yeah look i you know one of my friends has a saying you know you know greedy piggies end up being big piggys and big puggies get slaughtered right so look i think the answer to that question though is i that's great for the ecosystem what it means for me and for terawolf i can i can be more assertive around protecting my shareholders right so when i go into a negotiation with a hyperscaler or frontier lab whatever i say look after our design team spent time here's what we think this is going to cost to build okay then i i can't even have a rent discussion with you until i know the design and what we think it's going to cost to build so once we have that then we say okay here's what we're thinking on the rent side and what i am the way we get to that is depending upon who it is we look at it and say okay we can probably finance this somewhere between 90 10 debt equity to 70 30 debt equity let's calculate what that weighted average cost of capital is for that specific project with that specific tenant, right? And then we got to get to that. And then we say, okay, that whack is, you know, typically somewhere between like 10 and 12%. Okay, roughly, I would argue it's moved up a little higher now, but like that kind of generally what so then our conversation with the tenant is look, like we want a yield on cost that locks in what we think is the right risk adjusted spread for that deal and so that's the simple discussion so when when we whether it it doesn't matter who we're talking to right we go have that discussion and the the the approach is look you guys are making a ton of profit on these deals so that'S the good news Anthony is that when you look at this ecosystem right because all the fears out there about about cost capital going my reaction is agree right when when you're seeing like hyperscaler spreads move out 5 10 20 30 basis points for new issue that's a big deal but the amount of profit in that system is incredible these are the most profitable companies in the world so there is the ability for me to go back to them and say hey guys look you you're making a 50 to 80 profit margin on this I need some help because my whack is now kind of like, so there's a couple of ways we can do it, you know, pay like above a certain coupon, add that back to me for rent. Okay. And then maybe when I refinance the original, I refinanced the original construction bond, you know then after that, you don't, I don't need your help because the asset is stabilized and online. So right. And so, again, as long as I think you're having that conversation and explaining to folks what your open book economics are, generally, I found they're sympathetic to that because they need us to get the structures up so that they can put the GPUs in so that they can make the money. I mean, and whether it's Amazon or Musk or whomever you want to look, I mean the payback periods on this stuff, right, to your point, Anthony, right now with we're pricing it. I mean, it's like nine to, you know, maybe nine to 12 to 18 months. I mean it's fast payback. And then we have a 20, you don't 20, 30 year lived asset, right. That again, I mean so it's a win, win, win. So I do think again, the fears around financing costs and cost of capital appropriate, but there are ways to address them because the ecosystem is so profitable. No, thank you for the transparency. Makes sense. Hey, we'll move on to some financing ones in a second here, Patrick. I just had one other question kind of rounding out the sites for you. Abernethy, you actually exited that. That was your only site in Texas for a profit. We've seen obviously some considerable change in Texas based on the midterms. In Kentucky and New York, can you just give us an update on the outcome there and if you expect any substantial change from maybe status quo on Monday? No, you know, good question. You know, I don't think so. I mean, as Paul talked about, I mean we welcome regulation, because it you know clears out a lot of the riffraff and the sort of, you know, fake it till you make it folks. You think about electricity, it's one of the few necessities in life, right? I mean people die without it. So it has got to be taken seriously. And, you know, rate pay payers can't be left holding the bag. So I do think all the politicians, whether it's blue state, red state, you know, they've got to protect. And again, that's what you're seeing from us. That's how we are approaching things in Kentucky. No, I think, as Paul said, I think on the call this morning, you Know, we welcome the regulation that the governor in New York is trying to institute. She's put it in the hands of people that know how to drive that forward um so we really welcome that and hopefully like it should frankly make our existing asset even more valuable there right because it it will make the bar higher for those you know to come in and and get connected in in new york so but as far as and then to answer i think your your other piece of that question bryce on you know selling assets you know a lot of folks have asked me this Recently, Abernathy was just great partners, but just not core to what we were doing from a size and opportunity cost and time there. So we took that capital back and are recycling it in sites that we wholly own. When I look forward, we want to run and operate this business for a long time. And so if prices stay as dislocated as they are today, particularly once we start actually driving cash flow through the business, hitting the income statement and cash flow, yeah, are there things we can do? Could I sell a minority interest rate in Wolf Compute at a similar multiple to where DLR and Equinix trade at 25 times EBITDA? Yeah, probably. um you know so yeah i mean like that that's the you know that's what i've been doing for 25 26 years that's easy part it's called financial engineering it's what I do all day and every day that's an easy part the hard part is actually like executing on-site and building these things and getting them up and running and online and meeting our customers needs so i'm not worried about that so if the market stays dislocated you know i'll fix it on our end at some point Yeah, and Ray's a good point with financing there. In terms of Horsville, obviously, it's a big site to fund. You've now got the Google backstop. You're going to have a strong balance sheet with plenty of cash you've already alluded to during this conversation, but what more do you need to really get everything in place? because one of the key things that we've highlighted from from terror wolf over this last 18 months two years is the fact that soon as contracts are signed you're coming in then with the funding to back that contract up and the transparency just uh you know is there for everyone to see there's nothing no hidden agenda here but in terms of that funding there and just as an indication um you know where do you see in the future uh terror wolf being able to sort of like start funding some of the projects going forward themselves with with that free cash flow yeah yeah good question so if you take hosville right i mean and you take the midpoint of our guidance you know 10 to 12 million per megawatt it's 401 critical megawatts so 11 million of megawatths like 4.4 billion you know add a little bit more you know for interest during construction debt service reserve fees things like that anyway so you know you then say okay if these guys finances thing between 10 and 20 percent equity contribution right i mean so it's 500 million to a billion that i mean those are like the broad numbers you know and i i told you i have 550 million invested as of september 30th on the equity side okay so you can see the path home to the equity right um and then on the debt right this is very similar to our wolf compute structure right which trades among the best of 25 project bonds that have been done right i think it's our bond and cypher's bond that literally trade the best so if it ain't broke don't fix it so again And very similar, we got a backstop from Google that backstops Anthropic's obligations under each lease. There's three leases, CB1, CB2, CB3. At the lease commencement, Google's credit support kicks in, protects against Anthropic default. And then during the first six years, if Anthropic were to default, there's a mandatory lease assumption. They have to assume it. And then after six years, if Anthropic defaults, they have the option to not assume and pay a termination payment. The termination pavement is the debt amount. So that's literally the way it works. I would add one other thing, which I hope you guys astutely saw, is unlike our structure at Wolf Compute and as evident in our disclosures, TerraWolf is not granting Google any incremental upfront equity here. The cost of Google's credit support is recoverable from the tenant under the lease. So, and then the only other change is, as we talked about, you know, Google's credit support here, the version 2.0, the wraps, which I think you'll see from Google, anybody that's doing wraps, NVIDIA, AMD, others, is, you Know, when the underlying tenant becomes investment grade, and that's up for negotiation, right um whether and right whether that means a or triple b minus like you got to negotiate that but um that google's backstop falls away once you know our tenant has achieved investment grade and if you went through our disclosures the other day you'd see that they have to achieve that rating for a minimum of at least three months so it can't be just like they have that rating for a heartbeat it's got to be like solidly weighted and and stable so that's you know the one i would there are two like differences um but i know a lot of people were concerned about the backstop and would we have to give up a lot equity and the answer is absolutely not that's great and we did pick up on that actually we chatted about it uh before the podcast last one for me then i'll let Anthony clean us up here talking about the 250 to 500 megawatt expansion pipeline moving forward annually can you just give us walk us through where this number came from sequencing and how far out into the future you expect that rate before maybe up up to the next level yeah look we have a page also in the deck you know as you guys know we take a lot of it is amazing how much time and effort goes into these decks just so you guys know um but my my team you know i've i've now expanded our team used to be just two of us doing these decks but now have an awesome team that i work with so you know jenny dylan jack you know john lark and the amount of time we all put into these things is is so i i i would say look at the deck um we have a page it's page 16 i think in the deck that kind of shows exactly what you just asked about Bryce, which is that 250 to 500 each year and how with our existing portfolio that kind OF fits in. So the short answer is we have that through 2030. That's literally in the company today. We do have, as you know, we look at a lot of sites every year. We have, I would say two or three that are like on the front burner but you know in in this current market you know cash is king and we want a fortress balance sheet so i'm not gonna uh i don't think you're gonna see us out there until you know some of the contingencies have been eliminated you know growing through new sites and when i say contingencies eliminated like lake mariner up online running you know hosville financed like done um and then you know a view to kind of how we're gonna uh how we we're going to finance musky right so i think once those three things are kind of you know contained you know then i think we can kind of look and and and some of the things that we have been advancing that are near-term power that that could increase that 250 to 500 you know those will come kind of and back onto the onto our plate one final one for me I mean it's been a it's been a great conversation one of the things you I think you alluded to in one of the questions and social responsibility I mean you work in a number of sites now and we're seeing you know all the sort of like the foot coming through certain elements of the press about about these data centers and just basically increasing pricing stealing all the water and talk us through some of the sort of interaction that you've had with um with with the communities in in the areas that you operate in and sort of what um what have you been able to do to make their lives a little bit easier as well in those areas yeah i mean great question so i think it's a lot of uh open public hearings right where we send attendees and just answer questions right and it's educating people on you know how much water we use versus say golf courses right i mean literally you know and even like my own kids who have asked me about this and and um you know we have a site up in in Ithaca just outside of Ithaka New York Cayuga right and my in-laws are from Ithica so and my father-in-law was the hockey coach at Cornell uh in the 70s and 80s so they are really ingrained in that community who by the way thinks you know most of them think I'm the devil so they've carried a lot of my water but I had to educate them right and you have to educate them on you know the average american swimming pool in the u.s has 20 to 30 000 gallons okay like our first injection up at la lupa was 10 000 gallons and we put about two in like over the year so so again i think it's getting through the myths of yes is there a significant injection of water day one yes but then it is a closed loop system and we use probably about one one hundredth of what a golf course would use you know in america right so again education two sound decibels right your your refrigerator or this conversation i bet is at 50 to 70 decibels but standing outside of our data center 10 feet away up at lake mariner it's the same 50 to 75 decibels okay it's not a bitcoin as you know bitcoin mining machines make a lot of noise does it not bitcoin mine because it's contained, humidity controlled, temperature controlled. So again, it's just an education process, Anthony, that is incumbent upon us to go into the communities where, by the way, our employees live and make sure that we're educating them, that then we're paying property taxes. A lot of states have exemptions on certain taxes. In Kentucky, we have chosen not to pursue those so full taxpayer across the board um again also an education process to tell folks this is how much we think we're going to spend this is what it means for your local tax schools county etc um at hosville we bought you know the fire department a new engine really cool like they they sent us a whole bunch of pictures with all of our team so again like that's it's it it's that And by the way, I think Anthropic as our, you know, customer and tenant, they have been absolutely front foot forward on this, you know, hand in arm with us, making sure that we have dedicated funds to do this and, you know, to do it across their portfolio. I think you just saw the same thing from OpenAI, right? So I think that's the right way to do And if done the right way, this should get community support. And not only that, but it is, I mean, the other side of it too is, right, I mean, this isn't just a frontier AI race or a hyperscaler race. This is a sovereign race too. And so we as the United States, like, you know, there's a lot of division on this topic, but we got to come together as a country too, because that is a big part. That's great to hear. And you raise a really good point. the tenants also part of this deal and great to see that the likes of anthropic open ai all supporting similar community benefits across the board there we we do our little bit on the channel we we try to obviously defend against this foot that we see out there and there's so much of it but we obviously you know we know what the company's doing we've been to many of the sites we've seen physically some of the investment companies are putting into into their localities and you know we haven't even picked on probably on the biggest thing jobs putting jobs into those locations you know technical jobs this isn't just any job these are technical jobs that are put into those locations where maybe the industry maybe left 15 20 years ago and there's been a real challenge to replace that industry data centers are one way of doing that you know yeah look and i think that that's you know i don't think it's as much you know people make a lot about blue state red state like regardless of your politics to your point it's much more like you look at the ohio river valley right here in the u.s right a lot of heavy industry you know smelters coal plants um you know aluminum plant that that you know left and this is a way to basically a clean up those sites right which is really important b bring that tax base back and then c to your point, retrain old economy jobs into new economy jobs to give those folks a future. So yeah, I think there's, there really, again, when, if you can sit down and have a conversation with folks, you know, which has been difficult for us as a, you know country here recently, but I think we find a lot of receptivity and you have to come armed with facts and, and that's what we're trying to do thanks perfect education and awareness that's what it comes down to hey great discussion i know we're at time i wanted to give you an opportunity to close out if there's anything we haven't uh touched on here patrick but congratulations on behalf of power analysis phenomenal quarter thanks guys appreciate it a lot more to come and you know just as always keep in mind you know we are i think the highest owned when you look at our board management team insiders Right. We own about 25 percent of the equity. So, you know, we are shoulder to shoulder with equity holders. And that is something, as you have heard me, Paul, talk about every day, like we are very focused on accretive growth and only accretiv growth. So, yeah, I think very exciting kind of three, four months here in front of us when this long awaited spend, you knows, kind of turns into cash flow. So I really appreciate you guys having me. thank you of course anytime thanks so much wolfpack if you have any additional questions leave them below hit the like button we'll see you back here tomorrow