Inside TeraWulf's 482 MW approval in KY. Plus, GPU curtailment in TX

Last Friday, TeraWulf won approval for 482 MW of power for its Justified data center in Hancock County, Kentucky.

Another day, another deal. But behind the headline and win for TeraWulf, the energy plan for the approval gives us a clear look into the local fiscal, economic, and environmental impacts of one of these massive, new-fangled AI data centers. 

To start, Big Rivers – the local energy cooperative that will supply TeraWulf electricity in cooperation with Kenergy, a Big Rivers owner-member which oversees energy distribution – will receive an annual $15 million wholesale and distribution adder from TeraWulf, plus a $10 million annual transmission tariff. TeraWulf will also pay an annual $1 million adder to Kenergy. 

That totals $26 million in adders and tariffs that TeraWulf will pay to these utilities — revenue which otherwise wouldn’t exist. The Justified site sits on a former aluminum smelting factory that shut down in 2022, and Big Rivers and Kenergy have missed out on $40 million in transmission revenue since.

That vacuum filled, this fresh revenue from TeraWulf “will directly benefit all ratepayers through Big Rivers’ Member Rate Stability Mechanism…through bill credits (e.g., rate reductions),” TeraWulf’s energy plan claims. In other words, TeraWulf’s transmission tariffs could make it possible for the utilities to reduce bills for other ratepayers in the area. 

Moreover, Big Rivers will source power for Justified from the broader pool of assets in the MISO power market, not from its own power plants, to ensure it can serve the new load “without imposing additional costs on other ratepayers.”

When the aluminum smelter closed in 2022, 600 jobs went with it. TeraWulf estimates that Justified’s construction will generate 800-1,000 construction jobs, with another 95 full-time positions to operate the data center once complete, plus an undisclosed number of employees from its tenant Anthropic. 

Tax revenue, however, provides arguably the most salient benefit. The local school district will reap a 3% sales tax on TeraWulf’s electricity purchases, coming out to about $7 million annually. Hancock County will take an estimated $22 million in annual property taxes once Justified is fully operational, with Kentucky itself drawing a 6% sales tax for roughly $14 million annually once the data center is completed. (If we back these numbers out, we can estimate that TeraWulf is paying $55-61/MWh for Justified; the higher end of the figure is based on TeraWulf’s estimated 90% load factor for its sales tax modeling).  

TeraWulf estimates that it will pay $1 billion in tax receipts over the lifetime of the Anthropic lease, the bulk of which will go straight to the public coffers for the 9,000 person community of Hancock County. 

And one more detail: TeraWulf’s site will use closed-loop liquid cooling, without drawing from the Ohio River or the municipal water system, whereas the former aluminum smelter was using roughly 550,000 gallons of water per day.

The energy plan provides a rare glimpse into the actual local impacts of an AI data center across the very vectors of argument that have become central to the anti/pro data center debate. The tax revenue is substantial for such a small community, and the transmission tariffs are filling a revenue void that give utilities a real shot at lowering bills for other rate payers. 

Sure, Justified will not provide as many jobs as the smelter, but what is the alternative? Manufacturing companies apparently aren’t competing for this site given its prolonged vacancy, and without Justified, it would generate zero jobs. 

NIMBY’s now hold the burden of proof for why a site like Justified shouldn’t exist. Here is the reality – what is the alternative?

-CMH

Today’s show examines TeraWulf’s Kentucky power agreement, Morgan Stanley’s outlook for new powered-shell contracts, and Luxor’s GPU curtailment pilot. Luxor COO Ethan Vera joins the show before a review of GPU rental prices on DI Metrics.

Kentucky regulators approved a 15-year power agreement covering 482 MW at TeraWulf’s Justified campus. TeraWulf will bear the project’s energy, transmission, delivery plus infrastructure costs, with 401 MW of critical IT load leased to Anthropic.

Morgan Stanley expects operators to sign a wave of data-center contracts as AI customers compete for capacity that can energize before 2028. The bank expects Cipher to contract 700 to 1,000 gross MW by October, with Riot potentially leasing its full 1,000 MW Corsicana site by the end of September.

Luxor Energy plus Bentaus reduced a live inference GPU’s power consumption by about 75% within 500 milliseconds of an ERCOT signal, with no reported workload disruption. The test covered one unidentified GPU, leaving rack-scale performance plus commercial economics unproven.

Bitcoin hashprice recovered to about $39.06 per PH/s/day as bitcoin approached $80,000 plus network difficulty declined 1.31%. Luxor’s forward market remained above $35 through January 2027, suggesting traders do not expect an immediate return to June’s lows.

Maybe this is the solution to the data center aesthetics problem (one of many fronts in the war against AI…)

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