Executive Summary / Key Takeaways

• IREN Limited is strategically pivoting its vertically integrated data center business towards High-Performance Computing (HPC) and AI services, leveraging its established, highly profitable Bitcoin mining operations as a cash-generating engine.
• The company delivered record financial performance in FY 2025, achieving $501.0 million in revenue, $86.9 million in net income, and $278.2 million in EBITDA, driven by significant scaling in Bitcoin mining and the nascent growth of its AI Cloud services.
• IREN is rapidly expanding its AI infrastructure, targeting 10,900 NVIDIA (NVDA) GPUs by December 2025 and projecting $200 million to $250 million in annualized AI Cloud revenue by year-end. Key projects include the liquid-cooled Horizon 1 data center at Childress (Q4 2025 delivery) and the 2-gigawatt Sweetwater data center hub (Sweetwater 1 energization April 2026).
• The company's competitive advantages stem from its 2.9 gigawatts of secured, grid-connected renewable power capacity, proprietary power-dense data center designs (e.g., 200 kW/rack for Horizon 1), and in-house execution capabilities, enabling rapid and cost-efficient deployment in a power-constrained AI market.
• While IREN's valuation appears robust, its disciplined capital allocation, strong balance sheet with $564.5 million cash, and diversified funding strategies (including convertible notes and GPU financing) are crucial for executing its ambitious AI growth plans and maximizing shareholder value.

The Genesis of a Digital Infrastructure Powerhouse

IREN Limited, originally Iris Energy, embarked on its journey in 2018 with a clear vision: to build a vertically integrated data center platform powered by 100% renewable energy. This foundational strategy, established with its first Bitcoin mining operations in 2019 and solidified through its 2021 IPO, was never merely about Bitcoin. It was about securing large-scale, low-cost renewable energy and developing the expertise to deploy power-dense computing infrastructure. This deliberate approach has enabled IREN to organically grow its footprint across British Columbia, Canada, and West Texas, USA, culminating in a substantial 2.9 gigawatts of secured, grid-connected power capacity.

The digital landscape is undergoing a profound transformation, with Artificial Intelligence (AI) emerging as a dominant force. Industry reports project global AI data center demand to surge from 44 gigawatts today to an astounding 156 gigawatts by 2030, necessitating over 100 gigawatts of new infrastructure. This escalating demand is creating an unprecedented bottleneck in infrastructure and compute, particularly for high-density, liquid-cooled data center capacity. Traditional data center designs and development timelines, often spanning two to three years, are proving inadequate for the rapid deployment cycles (nine to twelve months) now demanded by AI customers. This macro backdrop underscores the strategic foresight of IREN's long-term infrastructure development.

Technological Edge and Operational Agility

IREN's core technological differentiation lies in its proprietary, purpose-built data center designs, optimized for power-dense computing applications. These facilities are engineered for versatility, allowing the company to pivot between Bitcoin mining ASICs and NVIDIA GPUs with remarkable speed and minimal capital expenditure. For instance, the transition from ASICs to GPUs at its Prince George data center was completed in a matter of weeks, demonstrating the inherent flexibility of its infrastructure.

The tangible benefits of this design are evident in IREN's operational metrics. Its British Columbia sites boast a Power Usage Effectiveness (PUE) of 1.1 on an air-cooled basis, with expectations to remain below 1.2 even with liquid-cooled deployments. The upcoming Horizon 1 data center at Childress is projected to achieve an average PUE of approximately 1.2. Crucially, Horizon 1 is designed for rack densities of up to 200 kilowatts per rack, significantly exceeding the 120-130 kilowatts required for NVIDIA's Blackwell GPUs, thus future-proofing its infrastructure for subsequent generations of AI hardware. This proactive approach, coupled with continuous research and development in power cost optimization and direct-to-chip liquid cooling systems, forms a robust competitive moat. It translates directly into lower operating costs, higher margins, and the ability to rapidly deploy cutting-edge compute, a critical advantage in the fast-evolving AI sector.

Competitive Positioning in a Dynamic Market

IREN operates in a highly competitive landscape spanning both Bitcoin mining and AI/HPC services. In Bitcoin mining, the industry is maturing, with increased competition from institutional-grade self-custody solutions and ETFs. IREN distinguishes itself as a low-cost commodity producer, focused on cash-on-cash returns rather than a "HODL" strategy. Its best-in-class fleet efficiency of 15 joules per terahash and low net power costs (averaging $0.035 per kilowatt-hour in Q4 FY2025) position it favorably against rivals like Marathon Digital Holdings (MARA) and Riot Platforms (RIOT), whose profitability can be more volatile due to energy costs and market cycles. While Marathon and Riot may lead in aggressive growth rates tied purely to crypto booms, IREN's disciplined cost structure and renewable energy focus provide greater resilience and stability.

In the burgeoning AI/HPC sector, IREN faces competition from established players like Core Scientific (CORZ) (hosting and colocation) and Digital Realty Trust (DLR) (global data centers), as well as cloud hyperscalers (e.g., AWS (AMZN), Microsoft Azure (MSFT)) and emerging edge computing solutions. IREN's vertical integration, controlling the entire stack from grid connection to compute, offers superior customer service, tighter control over efficiency and uptime, and eliminates third-party colocation fees. This contrasts with Core Scientific, which relies heavily on partnerships, and Digital Realty, which, while global, may have less specialized expertise in power-dense, renewable-focused AI infrastructure. IREN's ability to deliver liquid-cooled capacity at a competitive build cost of $6 million to $7 million per IT megawatt for Horizon 1, leveraging existing architecture, is a significant advantage. This cost efficiency and speed of deployment are critical differentiators, especially as grid connectivity becomes a major gating factor, often taking five to seven years for greenfield hyperscale sites. IREN's recent designation as an NVIDIA Preferred Partner further enhances its supply access and broadens its customer pipeline, strengthening its position against both neo-cloud companies and hyperscalers.

Financial Performance and Strategic Momentum

IREN's financial performance in FY 2025 underscores the effectiveness of its dual strategy. The company reported record total revenue of $501.0 million, a substantial increase from $187.2 million in FY 2024. Net income reached $86.9 million, a significant turnaround from a net loss of $28.9 million in the prior year. EBITDA surged to $278.2 million, demonstrating a more than tenfold increase year-over-year.

The Bitcoin mining segment was a primary driver, contributing $484.6 million in revenue for FY 2025, generated from mining 5,499 Bitcoin. The average operating hashrate grew to 25.7 EHs in FY 2025, up from 6.6 EHs in FY 2024. This scale, combined with low power costs and a best-in-class efficiency of 15 joules per terahash, resulted in an all-in cash cost of $36,000 per Bitcoin mined in Q4 FY2025, against an average realized price of $99,000. These strong unit economics are expected to improve further, with overheads per exahash projected to decrease by approximately 70% as the company scales to 50 EHs, leading to an estimated all-in cash cost of $28,000 per Bitcoin.

The AI Cloud Services segment, though smaller, is rapidly gaining traction. It generated $16.4 million in revenue for FY 2025, a significant increase from $3.1 million in FY 2024. As of June 30, 2025, IREN operated approximately 1,900 NVIDIA H100 and H200 GPUs, achieving hardware profit margins of 97%. The company is aggressively expanding its GPU fleet to approximately 10,900 NVIDIA GPUs (including B200, B300, and GB300 models) by the end of calendar year 2025, targeting $200 million to $250 million in annualized AI Cloud revenue by December 2025.

IREN maintains a robust liquidity position, ending FY 2025 with $564.5 million in cash and cash equivalents and total assets of $2.9 billion.

The company has diversified its funding sources, issuing $990 million in aggregate principal amount of convertible notes in December 2024 and June 2025, and establishing a $1 billion At-the-Market (ATM) facility, of which $635.1 million had been utilized by August 2025. Notably, IREN secured 100% financing for new GPU purchases at single-digit interest rates, with 2-3 year paydown periods, demonstrating its ability to fund growth in a capital-efficient manner.

Strategic Initiatives and Future Outlook

IREN's strategic roadmap is clearly defined: leverage its Bitcoin mining profitability to fuel rapid expansion in AI infrastructure. The company achieved its 50 EHs Bitcoin mining target by June 30, 2025, and has since paused further mining expansion to reallocate capital and resources to AI. This strategic pivot is driven by the compelling shareholder value creation opportunities in the AI sector.

Key AI infrastructure projects include:

• Horizon 1 (Childress): A 50-megawatt IT load, direct-to-chip liquid-cooled AI data center, on track for energization by the end of calendar year 2025. Designed for 200 kW rack density, it will support next-generation AI workloads and features full Tier 3 equivalent redundancy. Early works for Horizon 2, a second 50-megawatt liquid-cooled facility at Childress, have also commenced, creating a potential cluster of over 38,000 NVIDIA GB300s.
• Sweetwater Data Center Hub: This flagship 2-gigawatt hub in West Texas is a cornerstone of IREN's long-term AI strategy. Sweetwater 1 (1,400 MW) is on track for energization in April 2026, with substation construction and long-lead equipment procurement well underway. The announcement of Sweetwater 2, a new 600-megawatt site targeting energization around 2028, will create a 2-gigawatt data center hub with a direct fiber loop, positioning it for "whole of site single-tenant colocation opportunities" with hyperscalers.
• Prince George Campus: This site will anchor the next phase of AI Cloud growth, with a new 10-megawatt liquid-cooled data center under construction to support over 4,500 Blackwell GB300 GPUs. The campus has a clear runway to double capacity to over 20,000 GPUs.

IREN's management emphasizes its "picks and shovels for the digital age" philosophy, focusing on securing large-scale renewable energy and building infrastructure ahead of the curve. While the company has deferred consideration of potential investor distributions to accelerate investment in these strategic initiatives, the underlying profitability of its Bitcoin mining operations is expected to generate substantial operating cash flows to support this growth without relying solely on dilutive equity.

Risks and Considerations

Despite its compelling growth trajectory, IREN faces several risks. The regulatory environment for digital assets and energy-intensive computing remains in flux, with potential for new laws or restrictions that could impact operations or increase costs. Bitcoin's price volatility and the impact of halving events pose ongoing risks to mining revenue. The rapid pace of technological advancements in GPUs presents a risk of hardware obsolescence, requiring continuous capital outlays for upgrades. Competition in the AI sector is intense, and IREN's ability to secure and retain customers for its HPC and AI services on commercially reasonable terms is critical. Supply chain disruptions, including potential U.S. importation tariffs on mining hardware (a contested $100 million assessment), could impact expansion timelines and costs. Furthermore, the company is subject to a putative securities class action and cybersecurity risks inherent in its operations.

Conclusion

IREN Limited stands at a pivotal juncture, strategically transforming from a leading Bitcoin miner into a significant player in the burgeoning AI infrastructure market. Its vertically integrated model, underpinned by a substantial portfolio of secured renewable power and proprietary, power-dense data center designs, provides a distinct competitive advantage in an industry constrained by power availability and rapid deployment requirements. The company's record financial performance in FY 2025, driven by highly profitable Bitcoin mining, provides a robust financial foundation and internal cash flow to fund its ambitious AI growth initiatives.

By proactively building liquid-cooled data centers designed for future rack densities and expanding its GPU fleet, IREN is positioning itself ahead of the curve to capitalize on the escalating demand for AI compute. While challenges such as regulatory uncertainty and intense competition persist, IREN's demonstrated execution capabilities, disciplined capital allocation, and strategic flexibility to adapt to evolving market dynamics underscore its potential for long-term value creation. The successful monetization of its Sweetwater and Childress campuses for AI colocation and cloud services will be critical indicators of its continued success in this transformative digital era.