The company IREN was formally known as Iris Energy, yet changed its name to reflect the stock ticker last year. There are a few key things that separates IREN from other Bitcoin miners. The first is that IREN is still a Bitcoin miner whereas others have retrofitted their Bitcoin operations for the data center entirely or plan to very soon as the operations were not profitable. In contrast, IREN is able to turn a profit from Bitcoin mining and plans to use that cash to help fund its AI data center expansions. IREN is able to turn the profit due to selling the Bitcoin it mines yet also due to operational efficiencies that result in lower power costs. The last part is interesting, to say the least, given the company not only has 3GW of power yet has demonstrated they can offer a PUE of 1.1 to 1.2 on air cooled sites, and around 1.4 PUE for the incoming liquid cooled sites like Sweetwater.
Secondly, IREN can offer a hybrid mix of both colocation and AI cloud services, which is essentially bare metal servers without a hypervisor or virtual layer. This is attractive to hyperscalers as virtualization can lead to performance loss. For the AI cloud, IREN functions similar to CoreWeave as the GPUs are leased “as a service.” For colocation, IREN provides the facility, power and cooling for customers to deploy and manage their own hardware. Although IREN is open to a mix of both colocation and cloud deals as it diversifies how they fund operations and raise capital, there’s no doubt that cloud deals are what could separate this stock from its Bitcoin mining peers.
IREN Doubles GPU Fleet to 23K with $674M Nvidia and AMD GPU Purchase
At the start of the week, IREN announced that it had purchased an additional ~12.4K GPUs for $674 million, more than doubling its GPU fleet to ~23K. This order included approximately 7.1K Nvidia B300s, 4.2K Nvidia B200s and 1.1K AMD MI350X GPUs, scheduled to be delivered over the coming months. Notably, this is the first time that IREN has purchased AMD’s GPUs, as it is currently focused primarily on buying Blackwell GPUs, which account for >85% of its fleet.
This builds upon rapid expansion of its GPU fleet in late August, where IREN purchased ~4.2K B200s for $193 million, followed by the $168 million purchase of 1.2K air-cooled B300s and 1.2K liquid-cooled GB300s just three days later.
Currently, IREN’s fleet includes:
• 1.9k Nvidia H100s & H200s
• 19.1k Nvidia B200s & B300s
• 1.2k Nvidia GB300s
• 1.1k AMD MI350Xs
In total, IREN’s fleet cost ~$1.24 billion, including ancillary equipment such as InfiniBand, servers, cabling, and licensing costs. This puts the company’s all-in cost per GPU at just above $53,000, though notably the Blackwell Ultra generation carries a significant premium to the B200s. IREN’s recent 2.4K purchase of B300 and GB300s cost ~$70,000 per GPU ($60,000 for the B300 and $80,000 for the GB300), while its 4.2K B200 purchase cost just under $46,000 per GPU.
Financing future GPU purchases will be paramount for IREN’s expansion plans, as the company has turned to high-single digit interest rate, 24 to 36 month lease financing for recent purchases. Depending on the how its latest $674 million purchase is financed, these leases already could add up to $100 million in quarterly expenses tied to these GPUs.
With the latest purchase, IREN has likely maxed out its capacity at Prince George, which it has previously said can host >20K GPUs. Across its British Columbia data centers, IREN can support >60K GPUs, which would likely require an additional $3B+ in funding depending on GPU mix. Comments from management hint at expanding its GB300 fleet, which is currently the most expensive GPU with an average all-in cost of ~$80,000:
“Construction is well underway on a new 10-megawatt liquid cooled data center at Prince George, designed to support more than 4,500 Blackwell GB300 GPUs. … Beyond Prince George, Mackenzie and Canal Flats. Our data center campuses in each of these locations create an even larger opportunity with powered shells, existing and designed to the same architecture as Prince George, these sites offer a straightforward and replicable pathway to more than 60,000 GB300s. Horizon 1 and our broader portfolio of data center sites in Texas opens up a further path to continued AI cloud growth.”
At Horizon 1, IREN says that it can host ~19K GB300 GPUs at 50 MW IT load, which, based on prices calculated above, would cost the company upwards of $1.5 billion. Funding this and fully outfitting its British Columbia sites for 100% AI cloud capacity would likely cost $5 billion or more, or ~10x IREN’s most-recently reported cash holdings. This also does not account for its 2GW Sweetwater campus, which IREN says can support >600K GB300s.
Analysts are expecting IREN to quickly scale its fleet through 2026, with Roth Capital projecting IREN to reach a ~112K GPU fleet by year-end 2026. This ~90K increase in GPU fleet could require IREN to take on more than $6 billion in debt, per Roth’s calculations. This would represent nearly 60% its current valuation and likely cost ~$600 million quarterly, which would not be covered by revenue nor cash flows.
New AI Cloud ARR Guidance of >$500M
In accordance with its doubled GPU fleet, IREN unveiled a new AI Cloud annualized revenue (ARR) guidance, now targeting >$500 million in ARR by Q1 2026, more than double its guidance from August for $200 million to $250 million by year-end 2025. The prior $200-$250 million guide was based on a fleet size of 10.9K GPUs, which management expects to be “progressively commissioned over the coming months.”
This is a rather ambitious target, as this would represent nearly 20x growth from June’s $26 million annualized run rate, or quarterly revenue of just $7 million. July and August have also shown minimal growth in AI cloud ARR, at ~$28 million and ~$29 million, respectively, compared to $26 million in both May and June.
Management says that they are observing demand for multi-thousand Blackwell GPU clusters, which should help revenue ramp quickly, yet the lack of a ramp suggests that clusters of that size have not yet been delivered. Additionally, the first B200 tranche “was immediately contracted on a multiyear basis” upon commissioning, highlighting that demand for the new generation remains high with customers ready to contract chips immediately once they are available.
On a quarterly view, IREN is essentially targeting a strong ramp in the December quarter extending into the March quarter, considering July and August revenue mean Q3 is approximately flat QoQ assuming similar run rate in September.
IREN also disclosed that the >$500 million ARR target is “an illustrative run-rate measure of potential revenue based on a ~23k GPU deployment and internal company assumptions regarding utilization and GPU pricing.” IREN warns that this figure “is not fully contracted, there can be no assurance that it will be achieved, and actual revenue may differ materially.” The ARR target also assumes on-time delivery and commissioning of GPUs, and any delays could quickly and easily derail this target, considering the pace of growth needed over the next six months.
IREN says it expects delivery of its most recent 12.4K order from Sept 22 to be also delivered over the coming months, and much of its target likely hinges on this tranche as it accounts for more than half of its total fleet. Any delays in delivery towards the start of 2026 could threaten this ARR guide. Management hinted that they are “pre-contracting ahead of delivery”, providing additional visibility into future growth, but that does not span across its entire order book, limiting a high degree of confidence in the near-term.
IREN Offers Cheaper Energy than Industry Average
If IREN can maintain lower power costs compared to other Miners, then that could potentially provide a leg up in terms of signed deals. For example, IREN sees a profit of about $50,000 per Bitcoin mined at current prices for a hardware gross margin of about 70%. The company has stated their Childress facility sees energy rates of $0.033 kWh. In the most recent earnings call, the company stated they saw $0.035 kWh in Q4.
According to an analysis by Nlyte.com the industry average PUE is 1.58 with companies like Google reaching 1.10. The analysis also points toward rates of $0.0616/kWh in regions like Iowa up to $0.2496/kWh in regions like Rhode Island. This helps to illustrate how IREN stands apart as the company is seeing energy rates 50% lower than cheap regions.
Regarding PUE, this fluctuates depending on air cooled versus liquid cooled, and may be impacted as power demands rise with new generations of GPUs. However, as of now, the company sees PUEs as low as 1.1 for air cooled and anticipates PUEs of 1.4 for its Sweetwater facility. All of the above is lower than the industry average.
“So as you mentioned, across the BC sites, we're operating at a PUE of 1.1. That's on an air cooled basis. Once we install the liquid-cooled facilities there, we expect that to be operating on an average slightly higher than that, but still well under 1.2 PUE across the year. At Childress, the Horizon 1 liquid cooled installation, the number that you mentioned is much closer to a peak PUE number, although we actually expect it to be less than 1.4 and the average PUE over the year to be around 1.2.”
IREN Mixes Colocation with Cloud for a Hybrid Approach
There are pros and cons to colocation versus cloud deals for IREN. Quite a bit of time was spent going through how the company plans to approach its hybrid strategy, given it’s rare to see a Bitcoin miner offer GPUs-as-a-service. It makes sense to try for Cloud deals as they come with a 97% margin, yet analysts were detailed in their questions how successful a Miner will be in pivoting to operate as a neocloud is an unknown and is the only attempt, thus far (the obvious question being, if there’s demand for this, why wouldn’t all Miners pursue this route).
As pointed out in the earnings call, the following are the major differences between the two from a funding standpoint:
- Colocation offers longer-dated contracts. For IREN, the contracts would be between 5-20 years yet takes around 7 years to see the capital absorbed. It leads to lower cash flows. The benefits to colocation is the infrastructure costs are provided for, which are 2-3X higher than the GPU costs.
- Cloud deals are shorter contracts with strong margins, yet not many companies are in a position to offer cloud deals. Most Bitcoin miners operate deep in the red whereas IREN has profitable mining operations and controls the infrastructure “end-to-end.” There was mention on the call of a 3-year payback on these deals: “As of today, we find a 3-year payback on data center and GPU infrastructure pretty compelling, particularly when Anthony is lining up 100% GPU financing at single-digit interest rates.”
The takeaway from the earnings call is that IREN would, of course, prefer to do AI cloud deals yet it remains to be seen if this will be attractive to key customers. As of now, most hyperscalers and neocloud customers would prefer the colocation option.
Should IREN be able to find a strong market for its AI cloud services, then the stock could do quite well. However, this is the first attempt (and perhaps only attempt) across the Miners to double up as a neocloud. Typically, pivots are difficult to pull off and colocation may be the more popular choice on the customer side (i.e., we can flip this and say … why would a hyperscaler or neocloud pay IREN a higher amount in three years on the cloud side if it can spread out a similar amount over seven years with a contract term of up to 20 years? What's the benefit to the customer to go cloud?)
It’s my contention that CoreWeave is in a league of its own, offering early access to hundreds of thousands of Nvidia’s GPUs. The higher utilization rates that CRWV offers is an advantage whereas Bitcoin miners have not factored in FLOPs for training models, which can have a much larger impact on output than a simple metric like lower energy rates. As we covered in the past, CoreWeave’s specialty is in optimizing memory bandwidth, improving communication between GPUs, clearing data input bottlenecks, and other ways in which to fix batch size, enable faster data loading, and/or better ways to balance the compute. In other words, what CoreWeave does is not easily replicated.
Therefore offering an AI cloud is one thing, yet it’s another matter entirely to offer enough software optimizations to justify recurring revenue that will result in 2X higher costs than colocation (if we assume cloud is a 3-year return on capital versus 7-years).
Fluidstack and Poolside are the primary customers for IREN which indicates they simply want to move quickly and are willing to overpay. Should cloud contracts continue to accumulate, it would be important to understand if there is an exit clause.
As a reminder, Fluidstack is the neocloud that Google put up a 50% guarantee for on the lease with Terawulf. This caused WULF’s stock to surge. Depending on how Fluidstack funds a specific lease, it can be viewed as an attractive customer. Here is what management stated on the call regarding their AI cloud offering:
“Because we own and operate the full end-to-end stack, we are able to deliver superior customer service, tighter control over efficiency, uptime and service quality translating directly into a better customer experience for our customers. We are leading our service with a bare metal service because it gives sophisticated developers, cloud providers and hyperscalers what they want most, direct access to compute and the flexibility to bring their own orchestration.”
Financials
Top-Line Performance: Growth on Two Fronts
IREN reported FY25 revenue of $501.0 million, up 168% year-over-year from $187.2 million, underscoring one of the fastest growth rates in the sector. This surge is driven by two different engines: the traditional Bitcoin mining business, which contributed $484.6M, and the emerging AI Cloud Segment, which posted $16.4 million, nearly five times its FY24 contribution. This represents IREN’s first full fiscal year with AI cloud as a meaningful contributor, validating management’s strategy of diversifying beyond the volatile crypto cycle into high-performance computing and AI hosting.
- FY25: $501.0M vs $187.2M in FY24 (+168% YoY).
- Q4’25: $187.3M vs $56.8M in Q4 FY24 (+229% YoY) and $113.6M in Q3 FY25 (+65% QoQ)
The fourth quarter alone delivered $187.3 million, up 229% from the $56.8 million earned in the year-ago period and up 65% sequentially from Q3’s $113.6 million. This kind of sequential growth is rarely seen outside of hypergrowth SaaS, let alone in a miner. The bulk of Q4 revenue came from Bitcoin at $180.3 million, with AI Cloud adding $7.0 million.
As seen in the charts above and below, analysts expect further continuation of this trend in significant top-line growth. Quarterly estimates remain strong through FY26 with all quarters exhibiting greater than 80% YoY growth. Annually, this equates to an FY26 growth rate of 109%, with an additional 49.3% growth in FY27 before pausing in FY28.
Segment Breakdown: Still Bitcoin-Heavy, but AI Cloud Gains Relevance
To be clear, Bitcoin mining still dominates the financials, accounting for 97% of FY25 revenue. Revenue rose 163% year-over-year as hash rate climbed to 50 EH/S, even as net electricity costs per coin mined rose to $25,642 post-halving (vs. $18,127 in the prior year). Favorable spot prices offset that inflation, keeping the economics attractive.
The eye-catcher is AI Cloud. The segment remains small, at just 3% of total revenue, yet it is growing rapidly. FY25’s $16.4 million compares with $3.1 million last year, and Management is already telegraphing a path to $200 – $250 million annualized run-rate assuming 10,900 GPU’s are deployed by December 2025. Q4’s $7.0 million contribution shows that ramping is starting to appear in the reported numbers. This segment’s strategic importance outweighs its current financial contribution, as it diversifies revenue away from Bitcoin and positions IREN as a credible infrastructure partner for AI workloads.
Top Line Growth Drives Margin Expansion
Gross profit (excl. depreciation) for FY25 was $342.0 million, translating to a 68.3% margin, up nearly 15 percentage points from FY24’s 53.5%. Combining 167% top line growth with this 15 pp of margin expansion leads to Gross Profit increase of 241.7% YoY. This is the textbook definition of operational leverage. In Q4, the margin reached 71.8%, further reflecting benefits from scaling mining operations and disciplined power cost management.
Operating Income turned positive in FY25 at $17.3 million or a 3.5% margin, a sharp swing from FY24’s ($25.2M) loss and (14.6%) margin. Q4 Operating Income was $20.6 million (11.0% margin), another milestone, as operating profit is now sustainable rather than a one-off.
Adjusted EBITDA tells the operational efficiency story most clearly. For FY25, IREN delivered $269.7 million, a 54% margin, up nearly 5x from FY24’s $54.4m. In Q4 alone, adjusted EBITDA reached $123.0 million, or 65.7% of revenue.
GAAP Net Income was strong but requires an asterisk. FY25 bottom line came in at $86.9 million, swinging from ($28.9) million loss last year with diluted EPS of $0.39. Q4’s $176.9 million profit, an absurd 94% margin) was artificially boosted by $775 million in unrealized gains on financial instruments and a $9.1 million gain on liability extinguishment. Strip those out and the true earnings power looks more like the $20M operating income figure.
FY25 Key Metrics:
- Gross Profit (ex-D&A): $342.0M, margin of 68.3%, up from 53.5% in FY25
- Operating Income: $17.3M, margin of 3.5% vs. ($27.2M) or -14.6% in FY24.
- Ad. EBITDA: $269.7M, margin of 54%, up 5x YoY from $54.4M, a 29% margin
- Net Income: $86.9M vs ($28.9M) in FY24
Q4’25 Key Metrics:
- Gross Profit (ex D&A): $134.4M, margin of 71.8%, up from 71.0% in Q3’25.
- Operating Income: $20.6M, margin of 11.0% vs. $29.1M or 20.1% in Q3’25.
- Adj. EBITDA: $123.0m, margin of 65.7% margin
- Net Income: $176.9M, a 94% margin
Overall, it’s important to remember that IREN’s profitability is extremely sensitive to BItcoin’s current trading price. The profitabilty discussed above is due to operational efficiencies on the mining operations combined with Bitcoin trading above $100K and not from scaling the AI data center infrastructure or cloud services (yet).
EPS remains volatile due to GAAP mark-to-market gains
EPS flipped positive in FY25, with diluted EPS of $0.39 versus a ($0.29) loss in FY24, marking the Company’s first full-year profit on a per-share basis. However, Management cautions that GAAP EPS is heavily influenced by fair-value accounting marks. Looking forward, analysts see GAAP profitability through FY26 as the Company expands its AI Cloud offerings efficiently at scale.
Operating Cash Flow Turns Positive amidst GPU-fleet buildout
Operating cash flow was a bright spot in FY25, at $245.9 million, up from just $52.2 million the prior year. That represents 48.9% of revenue flowing through to operating cash, a healthy conversion rate given the non-cash noise in reported earnings.
Despite healthy operating cash flow trends, free cash flow was negative in FY25 as capex spend was immense. IREN spent $1.38 billion on PP&E, consisting mainly of GPUs and data center expansion, more than doubling FY24’s spend of $692 million. The result was free cash flow of ($1.13B), a -226% FCF margin. In other words, every dollar of operating cash flow generated was more than outspent on buildout.
Financing flows more than filled this gap with $1.30 billion raised via converts, equity, and leases. Net-net, IREN ended FY25 with $160 million more cash than it started with, despite billion-dollar capex outlays. After year-end, the Company raised another $253.5 million via ATM equity sales and finalized a lease program that funds GPUs entirely, with fixed monthly payments of ~$2.8M and a buyout option at 18% of cost after 36 months. This strategy shifts capital intensity away from cash up front, preserving liquidity while enabling AI Cloud scaling.
Key Metrics:
- Cash and cash equivalents: $564.6M, up from $404.6M in FY24.
- PP&E: $1.38B, mainly GPU purchases and data center buildouts.
- Debt: $962.8M, convertible notes outstanding (non-current)
- Equity: $1.82B, reflects retained earnings and capital raises.
- Shares outstanding: 258.1M.
Liquidity / Solvency Comparison vs. Peers
At fiscal year-end, IREN held $564.6 million in cash against $962.8 million in convertible debt, equating to cash-to-debt ratio of .59x. Put differently, the Company had roughly 60 cents of cash for every dollar of debt outstanding.
For context, this is a stronger liquidity position than many mining peers, who often carry higher net leverage and rely more heavily on dilutive equity raises. The ratio underscores that IREN is not currently overextended. Its sizeable cash cushion provides flexibility to meet near-term obligations, fund working capital, and invest in ongoing GPU deployments.
However, the ratio also illustrates the reality of IREN’s capital intensity. With a $1.38 billion in FY25 Capex and another multi-billion-dollar investment cycle ahead, cash on hand can quickly become consumed unless offset by financing inflows. Management has already leaned on convertible notes, ATM equity, and hardware lease financing to balance the scales.
The sustainability of IREN’s expansion will depend on a handful of factors worth tracking. To fund operations, IREN must keep it’s cash-to-debt ratio stable through disciplined liquidity management. Further, IREN must avoid excessive reliance on equity dilution, which could weaken per-share economics even if absolute liquidity remains healthy. Beyond liquidity concerns, the Company needs to execute a successful ramp AI Cloud revenues to justify the spend. If IREN can scale AI Cloud revenues and maintain current unit economics (~93+% gross margin), these cash flows would provide a healthy recurring buffer against heavy capex.
In short, IREN’s 0.59x cash-to-debt ratio highlights both balance sheet strength and exposure. As discussed above, the Company has meaningful liquidity today, but the scale of its expansion means this ratio will be a key metric to monitor as it pursues GPU deployments and new data center builds through FY26.
Conclusion:
If IREN can prove they can pull off charging recurring revenue for its AI cloud services, then the stock is one to watch. We are at a critical juncture for cloud deals as analysts are expecting IREN’s revenue to decelerate in H2 2026. Therefore, any cloud deals that beef up current analyst expectations can help to strengthen this narrative.
Right now, we prefer to stay as close to the hyperscaler deals as possible when evaluating Bitcoin Miners. The reason for this is that it solves the pain point of having a company with deep pockets back-stop the leases, which in turn, improves creditworthiness and credit terms. As many of you are aware, our ethos is to participate in the upside while protecting to the downside. We want the best of both worlds, and in a highly speculative momentum play like Bitcoin Miners pivoting to AI data center infrastructure, the primary goal is to reduce risk.
We are watching IREN closely and would buy on a clear breakout only. If we were to buy, we’d closely adhere to all stops.
Damien Robbins, Equity Analyst at I/O Fund contributed to this analysis.
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