TeraWulf Inc. stock traded lower on Tuesday after New York Governor Kathy Hochul signed an executive order launching the first statewide moratorium on new hyperscale data centers. The North American-based data center operator, originally founded as a Bitcoin miner, faced downward pressure as the state temporarily paused environmental permits for up to one year to establish a new regulatory framework. The move aims to protect ratepayers and the energy grid from the high demands of artificial intelligence and computing operations.

Moratorium Pauses State Environmental Permits

The executive action halts discretionary state environmental permits from the Department of Environmental Conservation (DEC) that are not already deemed complete. The one-year pause is designed to safeguard the environment and energy infrastructure while the state develops a Generic Environmental Impact Statement (GEIS). This assessment will evaluate the impacts of energy demand, water quality, and air quality associated with large-scale data centers.

Bitcoin Gains Countered by Policy Changes

The regulatory setback follows broader market volatility, where crypto-linked companies traded lower due to declining Bitcoin prices. On Tuesday, Bitcoin recovered, rising 3% to $64,783; however, the regulatory pause in New York specifically weighed on the data center sector. Additionally, Governor Hochul announced plans to pursue legislation to repeal sales tax exemptions for massive data centers across the state.

Earnings and Short Interest Data

The policy shift arrives ahead of TeraWulf’s scheduled second-quarter earnings report on Aug. 7. Financial analysts estimate a loss per share of nine cents and quarterly revenue of $47.99 million. Recent market data indicates short interest in TeraWulf decreased from 108.65 million to 104.66 million shares during the last reporting period. This leaves 24.87% of the company's publicly available shares short, with short sellers requiring 3.58 days to cover their positions based on an average daily trading volume of 29.27 million shares.

At the time of publication on Tuesday, TeraWulf shares were down 7.16% at $19.39.

TeraWulf Inc. shares rose 12.80% during the regular session to close at $22.83, adding to a 2.06% after-hours gain to $23.30, following Morgan Stanley's decision to maintain an Overweight rating and raise its price target to $72 from $66.5. The revised target reflects confidence in a landmark $19 billion lease agreement with Anthropic. The stock's surge was accompanied by elevated trading volume, reaching 42.87 million shares compared to an average daily volume of 31.21 million shares. At the time of publication on Thursday, shares were up 2.43% at $23.39.

The Anthropic Deal

On Monday, TeraWulf announced a 20-year lease agreement with Anthropic at its Justified Data campus in Hawesville, Kentucky. This transaction is expected to generate approximately $19 billion of contracted revenue over the initial lease term. The campus is designed to support about 401 megawatts of critical IT load, with initial capacity expected online in the second half of 2027 and full capacity by early 2028.

Strategic Transactions

Separately, TeraWulf entered into a definitive agreement to sell its 50.1% ownership interest in the Abernathy Joint Venture to an investor group led by its joint venture partner, Fluidstack. This transaction monetizes TeraWulf's approximately $450 million investment at a premium to invested capital, unlocking capital for redeployment into wholly owned AI infrastructure opportunities.

Market Performance and Analyst Reactions

Wall Street responded swiftly to the developments. Needham analyst John Todaro raised his price target to $33 from $28, and Rosenblatt Securities analyst Chris Brendler raised his target to $30 from $27, both reiterating Buy ratings. The stock's performance reflects broader strength in the technology sector, with the iShares US Technology ETF up 22.62% year to date and the State Street Technology Select Sector SPDR ETF gaining 25.71% over the same period.

Sector Pressures and Short Interest

The recent gains follow a period of bearish pressure earlier in the week, attributed to disappointing preliminary second quarter results from Samsung, reports of Chinese startup DeepSeek developing its own AI inference chip, and news of Meta Platforms Inc. planning a competing cloud infrastructure business. A minor decline in the cryptocurrency market also weighed on the company's legacy Bitcoin mining business. Data from the last reporting period shows that short interest in TeraWulf decreased slightly, falling from 108.78 million to 108.65 million. This drop left 25.82% of the company's publicly available shares sold short. Based on the recent average daily trading volume of 26.35 million shares, it would take short sellers approximately 4.12 days to cover their positions.

TeraWulf has a market capitalization of $11.31 billion and has traded between a 52-week high of $29.84 and a 52-week low of $4.64. The stock has gained 373.65% over the past 12 months.