What a Google backstop buys
Two bitcoin miners raised nearly $5 billion of secured debt against leases to a young AI cloud. The buildings didn’t make that possible. The guarantor did.
At Thorofare Capital I underwrote commercial real estate loans. Every deal started with the same question: who pays the rent, and what happens if they stop? AI data centers have made that question worth billions of dollars.
Two deals, one structure
In August 2025, TeraWulf signed two 10-year leases with Fluidstack, an AI cloud provider, for more than 200 MW of critical IT load at its Lake Mariner campus in New York, worth about $3.7 billion over the initial terms. Google agreed to backstop $1.8 billion of Fluidstack’s lease obligations. Days later a 160 MW expansion added another $1.4 billion, bringing Google’s backstop to about $3.2 billion.
In September 2025, Cipher Mining signed a similar 10-year lease with Fluidstack for 168 MW at Barber Lake in Texas, worth about $3 billion. Google backstopped $1.4 billion of it.
| TeraWulf | Cipher | |
|---|---|---|
| Critical IT in the initial lease | 200+ MW | 168 MW |
| Contracted revenue, initial 10 years | ~$3.7B | ~$3.0B |
| Implied rent per MW per month | ~$154K | ~$149K |
| Google backstop on the initial lease | $1.8B | $1.4B |
| Share of initial revenue backstopped | ~49% | ~47% |
| Google’s equity stake (warrants) | ~8%, ~14% with expansion | ~5.4% |
| Senior secured notes | $3.2B at 7.750%, due 2030 | $1.73B at 7.125%, due 2030 |
Implied rent is contracted revenue divided by 10 years and by the critical IT load, so it is an average, before escalators. Cipher’s notes are a $1.4B issue plus a $333M add-on.
What the guarantee does
TeraWulf’s filing spells out the mechanics. If Fluidstack defaults or becomes insolvent, Google either pays a termination fee or pays the rent due and takes over the lease. The backstop starts when each lease starts. Until then, Google pledges its warrants to the lenders financing construction.
So a lender is not really underwriting a young AI cloud. It is underwriting a floor under that tenant, set by one of the strongest balance sheets in the world.
What it unlocked
Within about two months, both companies sold senior secured notes against the projects: $3.2 billion at 7.750% for TeraWulf’s subsidiary in October 2025, and $1.4 billion at 7.125% for Cipher’s in November, followed by a $333 million add-on. TeraWulf’s collateral includes a lockbox account tied to Fluidstack’s payments and, until the expansion is finished, the pledged Google warrants.
What it cost
Google put up no cash. It received warrants: about 14% of TeraWulf across both deals, at an exercise price of one cent a share, and about 5.4% of Cipher. That equity is the price of borrowing someone else’s credit.
Credit is the product
The land, the power and the cooling are what it takes to be in the game. What a lender pays for is the rent check, and the rent check is only as good as whoever stands behind it. In both deals the backstop covered about half of the initial contracted revenue. That is a floor under the rent, not the whole rent, and the difference is where the real underwriting happens.
What I’d check on any data center lease
- Who ultimately pays the rent, and what is their credit?
- If there is a backstop, how much of the rent does it cover, when does it start, and what triggers it?
- What happens if the building is late, before the guarantee is live?
- Does the lease outlast the debt? Here, 10-year leases sit under notes due in 2030.
- Who pays for power, taxes and repairs: the tenant, or the landlord out of rent?
- What does the guarantor get in return, and who carries the dilution?
Sources: TeraWulf’s August 14, 2025 announcement, expansion announcement and notes pricing; Cipher Mining’s September 25, 2025 announcement, notes pricing and add-on pricing. Implied rent and backstop shares are my arithmetic on those figures.
Disagree, or work on this? Email me at jlraney99@gmail.com.