IREN — a bitcoin miner walking away from bitcoin

Hey, Joey from joeytrades.com. Somebody asked about IREN on the Wall Street Bets forum, and I decided I wanted to help them out. Not personalized financial advice, just my own research, shared publicly.

They are primarily a bitcoin mining company, ~81% of FY26 revenue is from bitcoin mining which uses ASICs. These are not useful for AI so have to be torn out for GPUs if the company wants to move into that direction. The block subsidy halved to 3.125 BTC in April 2024 and doesn't halve again until 2028, so revenue per unit of hash only degrades from here, and the only offsets are BTC price and fees — neither of which they control. They sell every coin the day it's mined and held zero BTC at year end, so this is a power-to-dollars converter, not a bitcoin treasury. The ASICs are scrap — $638M had to be written down, primarily on mining hardware. That charge is non-cash and mostly spent; what's left of the fleet is carried at $72.5M.

What people miss is that mining revenue didn't dry up. It grew 19.3% in FY26, $484.6M to $578.2M. They are walking away from it on purpose, and that's the part that worries me. Last quarter AI Cloud went $33.6M to $70.5M, +110%. Bitcoin went $111.2M to $66.7M, −40%. Total revenue still fell, $144.8M to $137.2M — the first sequential decline. The exit is targeted substantially complete by Dec 31, so the remaining ~$67M a quarter of mining goes to about zero while AI has to more than double again just to hold flat. They have 40MW of AI capacity actually running against a ~5GW pipeline.

They hold $1.84B in customer money, 2.6x their own revenue, that they haven't provided service for yet — a liability, it's not their money yet. It is paid-for backlog, ~$0.9B of it scheduled over FY27, but it converts to revenue only as compute is delivered and accepted. It also flatters the cash: operating cash flow was $2,100.4M, but $1,841.7M of that is the deferred revenue increase. Take it out and it's $258.8M. As a business it doesn't fund itself; the build is paid for with outside capital — FY26 financing brought in $9.68B net. Operating margin is −148%, though $638M of that is the impairment; scrub it and you're still around −58%.

The bull case is they hold a rare asset in demand. They have a vertical on AI datacenter land, power, building, equipment and compute. That they are receiving pre-paid contracts from reputable Big Tech is an indication they have pricing power. I'd need to see them get further out of the bitcoin mining business, see them expanding the capacity of their asset (more data centers, more compute, etc.), and see them make good on their large contracts. They're targeting December to finish the mining exit, and the July–September quarter reports around Nov 5 — that's where I'd start checking. They'd have to prove more to me to get involved. I don't own it.

Article may have errors, always do your own research.