TeraWulf reported net income of $709.5 million for the third quarter, according to its 10-Q filed on Friday, 6 November, while its operations lost $88.2 million. Most of the gap is one line: a $728.4 million gain from the change in fair value of warrant and derivative liabilities, which on its own is about 103% of net income, by our arithmetic.
The company’s earnings release says the same in one clause: “Net income increased to approximately $709.9 million, benefiting from a non-cash change in fair value of warrants”. Diluted earnings per share were a loss of $0.03, against basic earnings of $1.42.
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The key insight: As we read TeraWulf’s 10-Q, the quarter’s $709.5 million of net income came from a $728.4 million non-cash warrant gain and a $95.0 million gain on a stake sale, while TeraWulf’s operations posted an $88.2 million operating loss.
Revenue was $76.2 million in the three months to 30 September, up from $50.6 million a year earlier. HPC lease revenue, the rent TeraWulf earns from AI data-centre tenants, was $63.0 million, which the release puts at about 83% of revenue. Digital asset revenue, from bitcoin mining, fell to $13.2 million from $43.4 million.
Total costs and expenses were $164.5 million, leaving an operating loss of $88.2 million, against $24.7 million a year earlier. Selling, general and administrative expenses were $56.8 million and depreciation $29.6 million. Interest expense was $53.6 million, partly offset by $28.6 million of interest income.
Items behind TeraWulf’s third-quarter 2026 net income of $709.5 million: a $728.4 million gain from the change in fair value of warrant and derivative liabilities, a $95.0 million gain on the Abernathy joint-venture sale, a $88.2 million operating loss, $53.6 million of interest expense and $28.6 million of interest income. Source: TeraWulf 10-Q.
Where the Profit Came From
The 10-Q says TeraWulf recognised a $728.4 million gain in the quarter “for the change in fair value of the Google Warrants”. It issued those warrants to Google, for 73,580,000 shares at an exercise price of $0.01 a share, in return for Google backstopping its Fluidstack HPC leases. Because they are carried as a liability, a lower estimated value for them is booked as a gain.
A second gain came from selling assets. TeraWulf sold its entire 50.1% interest in the Abernathy joint venture on 5 July and booked a $95.0 million gain, the filing says. Without the warrant gain and the sale gain, the quarter would have shown a loss of about $113.9 million, by our arithmetic.
The same line ran the other way earlier in the year. Over the nine months to 30 September, the change in fair value of warrant and derivative liabilities was a $243.6 million loss, and TeraWulf reported a net loss of $659.0 million.
As we read the income statement, revenue rose to $76.2 million from $50.6 million, but total costs and expenses rose to $164.5 million, so the operating loss grew from $24.7 million a year earlier to $88.2 million.
As we read the warrant note, the gain comes from the warrants TeraWulf issued to Google for backstopping its Fluidstack leases; the same line was a $243.6 million loss over the nine months.
As we read the per-share figures, basic earnings were $1.42 and diluted earnings a loss of $0.03.
TeraWulf Q3 2026 earnings release, 6 November 2026
“Net income increased to approximately $709.9 million, benefiting from a non-cash change in fair value of warrants.”
Three Implications
FOR TERAWULF Its 10-Q reports an $88.2 million operating loss and $53.6 million of interest expense for the quarter.
FOR GOOGLE The 10-Q says it holds warrants for 73,580,000 TeraWulf shares at $0.01, issued for its backstop of the Fluidstack leases.
FOR READERS Without the warrant gain and the stake-sale gain, the quarter would have shown a loss of about $113.9 million, by our arithmetic.
The framework says: “The $1T capex cycle is being underwritten by a $1T concentrated demand commitment from two counterparties whose combined free cash flow is deeply negative.”
As we read it, TeraWulf’s 10-Q shows one place where that underwriting appears in a data-centre landlord’s accounts: warrants issued to Google in return for backstopping leases. The framework predates the filing and does not discuss TeraWulf.
What Is Not Established
The warrants are valued with a Black-Scholes model using unobservable inputs, which the 10-Q classifies as a Level 3 measurement, so the gain is an estimate, not cash received. The filing does not set out the inputs behind the quarter’s change in the passages we read. We did not contact TeraWulf or Google.
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TeraWulf’s $709.5 million third-quarter net income rests on a $728.4 million non-cash warrant gain and a $95.0 million gain on a stake sale, according to its 10-Q. Its operations lost $88.2 million, and diluted earnings per share were a loss of $0.03.
A note on sourcing. Every figure is from TeraWulf’s 10-Q for the quarter ended 30 September 2026 and its earnings release, both filed on 6 November. The 103% share and the $113.9 million figure are our arithmetic. We did not contact TeraWulf or Google.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
