Wall Street’s appetite for AI-related debt has taken a speculative turn. Terawolf Wolfwhich is best known for its cryptocurrency mining operations, is entering the junk bond market with a $3.2 billion offer to finance a major data center expansion at its Mariner Lake campus in Parker, New York. Morgan Stanley is leading the deal, which could be priced later this week. For TeraWulf, this marks its debut in a high-yield area and a bet that investors are willing to back smaller, riskier players in the race to build AI infrastructure. Credit agencies are still evaluating where to value the deal, but it is expected to reach somewhere in the BB to CCC range typical for speculative grade debt.
The timing couldn’t be more telling. After a deluge of investment-grade issuances by tech giants, highlighted by Oracle’s $18 billion bond sale last month, AI financing has now moved to riskier corners of credit markets. Investor demand for these deals has been strong, although questions remain about how quickly AI investments will begin to produce results. However, the willingness of institutional capital to support this wave suggests that the market could price in the long term on AI infrastructure as a new asset class.
TeraWulf’s move follows CoreWeave’s issuance of $1.75 billion in junk bonds in July, which were used to back its $9 billion acquisition of Core Scientific. Both transactions signal a broader shift as cryptocurrency miners, cloud service providers and hyperscalers converge on the same goal: rapidly expanding AI capability. As more speculative borrowers enter the space, the line between high-tech growth and high-yield risk could blur further, signaling a new phase in the AI debt cycle where the upside may be as great as the leverage behind it.
