### **Summary** Iris Energy (IREN) is a high-performance computing (HPC) infrastructure provider, strategically positioned at the intersection of two of the most dominant investment themes of this cycle—Bitcoin mining and artificial intelligence (AI). The company leverages low-cost renewable energy sources to power its data centers, securing a competitive advantage in an energy-intensive industry. IREN’s portfolio includes over 2.3 GW of secured power capacity across North America, with a significant portion still undeveloped, allowing for rapid scalability. The company is currently one of the fastest-growing Bitcoin miners, targeting a record-breaking expansion in its hash rate while simultaneously exploring AI cloud computing services. ### **Strategic Rationale** #### **Bitcoin Mining Leadership** - IREN has grown its hash rate from **1.6 EH/s to 5.6 EH/s** in 2023 and is on track to expand from **5.64 EH/s to 31 EH/s** by December 2024, representing a 450% year-over-year increase. - This trajectory would make it the **fastest-growing public BTC miner** in history. - Fleet efficiency is industry-leading at **16 J/TH**, expected to improve further to **15 J/TH** by year-end, giving IREN a strong profitability edge. - Access to extremely cheap electricity, particularly in **Texas** (3.1–3.5 cents per kWh), offers a cost advantage over competitors. #### **AI Compute Expansion** - IREN owns and operates its infrastructure, enabling cost-effective AI cloud services. - Already running **816 NVIDIA H100 GPUs**, with an additional **1,080 H200 GPUs** incoming. - AI cluster achieved **145% revenue growth in 8 months**, proving strong early demand. - Positioned to capitalize on the AI compute arms race, with sub-10ms latency and strong network redundancy at its Texas sites. #### **Infrastructure Portfolio & Scalability** - **2.3 GW secured grid-connected power** across **U.S. and Canada**. - Major sites include **Childress, Texas (750 MW)** and **West Texas (1.4 GW, partially developed)**. - Further **1 GW+ in the pipeline** for future growth. - **Potential colocation deals** with hyperscalers such as AWS, Google, or Meta could drive significant additional revenue. ^[A colocation deal between a data center host like Iren and a hyperscaler typically involves the hyperscaler renting the host’s infrastructure, while bringing their own compute hardware like GPUs. These arrangements can vary significantly; the host might offer a standard, off-the-shelf setup or build a customized facility tailored specifically for the client’s needs. This flexibility allows hyperscalers to quickly scale their operations using the host’s established infrastructure without having to invest time & money in building their own data centers.] ### **Quantitative Metrics** #### **Financial Strength** - Market cap: **~$2.3 billion**. - Gross margins: **~73%**, expected to increase to **77%**. - Expected **$1.7 billion in BTC mining revenue (2025-26)** at $200K BTC price assumption. - AI Cloud services projected **$50M+ revenue** with expansion potential via GPU financing. - Potential **$750M–$3.5B+ in revenue** from a **500MW–1.4GW AI colocation deal**. #### **Competitive Edge** - **Full vertical integration**: IREN owns land, infrastructure, power, and compute assets. - **Operational flexibility**: Can toggle between BTC mining and AI compute based on market conditions. - **Industry-leading scale-up speed**: **50 MW/month expansion rate**, compared to the industry norm of **5-20 MW/month**. ### **Risks** - **Bitcoin price volatility**: A downturn in BTC prices could reduce mining revenues. - **Share dilution**: Potential for another ATM offering to fund expansion. - **AI competition**: Larger cloud service providers may undercut pricing. - **Legal risks**: Ongoing lawsuits (e.g., NYDIG) present financial uncertainties. - **Australian HQ headwind**: May deter some U.S. institutional investors. ### **Base, Bull, and Bear Case Scenarios** #### **Base Case** ($1,000 investment estimate by H1 2026): - **BTC at $200K, AI colocation deal at 500 MW**. - Market cap: **$20B**, Share price: **$150+**. - **$1,000 → $7,500+**. #### **Bull Case**: - **BTC >$250K, AI expansion accelerates**. - Market cap: **$35B**, Share price: **$250+**. - **$1,000 → $12,500+**. #### **Bear Case**: - **BTC <$80K, AI efforts underperform**. - Market cap: **$5B**, Share price: **$50**. - **$1,000 → $3,300**. ### **Core Differentiators (Linchpins)** 1. **Land & Power Portfolio**: Owning vast energy assets at pre-AI boom prices secures an irreplaceable advantage. 2. **Scalability & Speed**: Fastest-growing BTC miner, rapid AI compute ramp-up potential. 3. **Low-Cost Operations**: Cheap, renewable energy + newest hardware = highest profitability in BTC mining. 4. **Optionality & Flexibility**: Ability to pivot between BTC mining and AI compute based on demand. ### **Final Thoughts** Iris Energy represents a **rare asymmetric opportunity** where its existing BTC mining operations provide a strong revenue base while its AI expansion offers **massive upside potential**. With an **unparalleled infrastructure footprint**, **industry-leading operational efficiency**, and **multiple revenue streams**, IREN could emerge as **one of the most valuable digital infrastructure plays of this cycle**. For long-term investors looking for exposure to **both AI and Bitcoin**, IREN is an **exceptionally well-positioned bet**. ### Deeper Dives - [[How AI Will Impact Energy Demand]] - [[Bitcoin Mining]] - [[Inference]] - [Investor Presentation](https://iren.com/investor/events-and-presentations) - [[Themes shaping 2025#3. Modular Data Centers and Energy Infrastructure Battefield]]