Iren Investment Thesis
Bitcoin Mining
For Mar/25 IREN 0.00%↑ had 30.3 EH/s for 533 BTC mined @ $85k with avg electricity cost of $20.5k per Bitcoin, leading to $45m revenues and $34m gross profit. Current minining capacity is already 37 EH/s and target is 50 EH/s for H1 2025.
At 50 EH/s IREN 0.00%↑ should mine roughly 780 BTC. Having a $20.5k variable electricity cost (most efficient in Bitcoin mining industry), Iren is very resilient to decreases in Bitcoin price. Currently Bitcoin is at $94k. Let’s assume avg electricity cost are 25% higher for $25k per Bitcoin mined and average price per Bitcoin of $70k (way lower vs. current). Variable profit per mined Bitcoin is $45k for monthly profits of $35m and annual profits of $420m. Assuming $80k Bitcoin price annual profits increase to $515m. Iren's overhead is $104m, so we got $316m of cash flow from core business.
IREN 0.00%↑ is pausing mining expansion at 52 EH/s for AI/HPC. We did numbers with 50 EH/s, so cash flow should be a but higher.
In order to accomplish the above, IREN 0.00%↑ raised roughly $500m. First, $111m raised at $11.07 share price from an existing $1bn ATM facility (not in Dec/24 balance sheet). Second, $440m from of convertible debt ($396m net of transaction costs) at 3.25% interest rate and convertible at $16.81 per share, though there are some conditions that need to be fulfiled before the conversion (in Dec/24 balance sheet). In January 2025 IREN 0.00%↑ destined $411m for 19.3 EH/s in new Bitcoin mining equipment and $35m in upgrading the existing fleet. With this investment, IREN 0.00%↑ is roughly covering the necessary Bitcoin mining equipment needs for the 50 EH/s expansion. Iren also generated $104m in profits (~$75m net of overhead and interests) during the first 3 months of 2025, so the company should not be dry on cash.
AI Cloud
Additionally, for Mar/25 IREN 0.00%↑ has $26m ARR from AI Cloud Services (97% margin, so $25m profits). IREN 0.00%↑ is looking into GPU financing to keep expanding capacity at Prince George (Canada) data center given growing customer demand.
This is a good moment to remind that Iren's zone of genius is building data center infrastructure for energy intensive activities (Bitcoin mining, High Performance Computing, HPC) that is cost efficient. In Prince George data center IREN 0.00%↑ literally has Bitcoin mining and AI compute, side-by-side. As AI and HPC become more attractive, IREN 0.00%↑ can start transforming its operations.
AI Data Centers
Finally, on AI Data Centers, IREN 0.00%↑ is developing Horizon 1 (75MW gross, 50MW IT Load) in TX, US with liquid cooling and power redundancy (Tier >3) for NVIDIA Blackwell next generation processors that should be ready by the second half of 2025. IREN 0.00%↑ will need roughly $300-350 million CAPEX for this. Based on my estimates, IREN 0.00%↑ should have roughly $100m of net cash in balance by March 2025, so they will need to find liquidity to finance this. In the last report, IREN 0.00%↑ said they are exploring a range of financing options under evaluation, including customer prepayments, corporate and project- level debt, convertible notes, and asset-backed financing and leasing. This is very helpful because is a signal that IREN 0.00%↑ is not tapping the ATM at the current $5-7 share prices.
My estimates of revenues for Horizon 1 data center are based on WULF 0.00%↑ deal. WULF 0.00%↑ colocated 72.5 MW Tier 3 with liquid cooling for $1bn revenues over 10 years. Iren Horizon 1 has 75MW gross and 50MW IT Load. Assuming IREN 0.00%↑ generates roughly same revenues per MW, Horizon 1 should bring roughly $60-100m yearly revenues.
Couple important notes here: IREN 0.00%↑ (a) needs to finance this development and (b) needs to find a customer too. There is a lot of noise around this, but given demand I am expecting this should happen at any time.
The above is what's already on track for 2025. Additionally, you have Sweetwater Data Center Hub with 2GW capacity that is expected to focus on AI Data Centers. This is 27x Horizon size. Assuming same yearly revenues per MW, Sweetwater could bring $2.0-$3.0bn yearly revenues. Sweetwater 1 (1.4GW has energization for April 2026) and Sweetwater 2 (600MW) has energization for late 2027.
An important caveat is that assuming linear CAPEX per MW, Sweetwater could cost $8.0-10bn CAPEX. This investment is at the reach of few companies. IREN 0.00%↑ will need a colocation agreement to finance this. Customers for this capacity are limited pretty much to Hyperscalers.
Conclusion
Bitcoin Mining: +$420-515m
AI Cloud: +$25m
AI Data Center: +$60-100m
Overhead and Interests: est. -$120m
Operating Cash Flow for Exit 2025: $385-520m
$IREN has a $1.4bn Market Cap and $1.8bn EV. That's 3-4x Cash Flow + Sweetwater 2GW optionality. A bargain!