Core Scientific and TeraWulf reported combined third-quarter net income of about $1.89 billion for the period ended September 30, 2026. Most of that profit came from non-cash revaluations of financial instruments, while operating results diverged: Core Scientific posted $72 million in operating income, and TeraWulf recorded an $88 million operating loss. As data-center leasing replaces bitcoin mining as a primary source of revenue, cash flow and financing remain key to assessing whether expansion can be funded by the businesses themselves.
$1.76 billion in revaluation gains drove reported profit
Core Scientific reported third-quarter net income of $1.178 billion, while TeraWulf reported $710 million, for a combined total of about $1.89 billion. Together, the companies recorded roughly $1.76 billion in pre-tax, non-cash gains, mainly from changes in the value of financial instruments. Pre-tax revaluation gains and after-tax net income are different measures; taxes and other gains also affect net income.
Core Scientific recorded $1.034 billion in revaluation gains. Of that amount, $964 million came from its existing tranches of Series 1 and Series 2 warrants, $69 million from the liability component of AMD warrants, and $1 million from contingent value rights. The company said changes in the value of the warrants and contingent value rights were primarily related to movements in its share price.
Warrants give holders the right to buy shares under specified terms. The warrants associated with Core Scientific and AMD were issued alongside a customer lease agreement signed in July. Their issuance value was recorded as an incentive, reducing future lease revenue; the liability component is revalued and its changes are recognized in earnings. Existing warrants accounted for most of Core Scientific's revaluation gain. The instruments associated with the AMD lease were a separate arrangement.
TeraWulf recorded a $728 million gain from revaluing its Google warrants. The warrants are linked to Google's credit support for some of Fluidstack's lease obligations. That support can help with project financing, but the warrant revaluation is a non-cash accounting item and does not itself generate a corresponding cash inflow.
Taxes and asset sales also affected net income. Core Scientific recognized a $106.5 million tax benefit, mainly related to releasing part of a valuation allowance associated with the Polaris acquisition. TeraWulf recognized a $95 million gain from selling its interest in the Abernathy joint venture. The accounting gain is distinct from the cash proceeds from the sale.
Hosting revenue grows, but operating results differ
Both companies are shifting from bitcoin mining toward data-center hosting for artificial intelligence and cloud-computing customers. Their segment results should be distinguished from consolidated operating performance. Core Scientific generated $215 million in hosting revenue in the third quarter, the bulk of its $233 million in total revenue, up from $137 million in the previous quarter. Hosting gross profit was $128 million, with a reported gross margin of 60%. Core's $72 million in operating income also included $19 million in fair-value gains on digital assets.
TeraWulf generated $63 million in high-performance computing (HPC) lease revenue, about 83% of its $76 million in total revenue. Its HPC segment reported $11 million in profit. That figure excludes some expenses, including corporate overhead and depreciation, so it is not directly comparable with consolidated operating results or Core Scientific's hosting gross profit. TeraWulf reported an $88 million consolidated operating loss for the quarter.
Per-share results also reflected the effect of accounting items. Core Scientific reported basic earnings per share of $3.42 and diluted EPS of $0.47. TeraWulf reported basic EPS of $1.42 and a diluted loss of $0.03 per share. Diluted calculations include adjustments to the share count and a reversal of gains on warrants, contributing to the gap between basic and diluted results.
Expansion spending relies on financing and balance-sheet resources
In the first nine months through September 30, Core Scientific generated $296 million in cash from operating activities. It spent $1.495 billion on property, plant and equipment and a further $677 million on asset acquisitions. Net cash provided by financing activities was $3.2 billion. The gap between operating cash flow and construction and acquisition spending shows that financing was a significant source of funding.
Over the same period, TeraWulf used $179 million in cash for operating activities and spent a combined $2.231 billion on plant and equipment purchases and related deposits. Net cash provided by financing activities was $1.010 billion, including about $1.2 billion from common stock offerings. For both companies, operating cash flow alone did not cover expansion spending.
Core Scientific said most of the conversion work for hosting customer CoreWeave was funded by the customer. Development projects for AMD and other cloud customers still require additional external financing. The company plans to use project-level bond financing and said its current liquidity and expected funding sources can support planned development and operating needs.
TeraWulf's sale of its Abernathy interest brought in $250 million in cash during the third quarter, with further installment payments still expected. That cash should not be confused with the $95 million accounting gain. After the quarter, the company increased its revolving credit commitment to about $400 million, with a separate, conditional and uncommitted option to add another $150 million. On November 4, Google provided credit support for expected project financing tied to TeraWulf leases with customer Anthropic. The Fluidstack warrants behind TeraWulf's third-quarter gain are a separate arrangement.
The key question for both companies is whether additional hosting capacity can generate steady cash receipts, and whether disclosed and planned financing will cover construction costs. Core Scientific was profitable at the operating level in the third quarter; TeraWulf remained in operating loss. Their operating positions and funding arrangements differ.