Summary IREN is now focusing on building on top of its Bitcoin mining core revenues with AI infrastructure. They’re targeting over $500 million in AI Cloud ARR by Q1 2026. For now, Bitcoin mining remains their main cash engine. Management believes that their current economics support a sustainable $1.0 billion ARR. Their capacity roadmap includes British Columbia with 160 MW, Childress with 50 MW liquid-cooled, and Sweetwater with 2 GW. IREN is also vertically integrated as it owns the land, power, and data centers across the whole mining (and cloud AI) value chain. So, given its promising growth prospects and solid business fundamentals, I believe its slight premium relative to peers still seems somewhat cheap at these levels. IREN Limited ( IREN ) is evolving from one of the world’s largest Bitcoin ( BTC-USD ) miners to a next-generation AI infrastructure provider. Bitcoin mining remains the company’s financial backbone, generating over $1 billion of projected ARR in 2025. However, IREN has redirected capital toward scaling its AI bare-cloud business. It’s deploying massive GPU facilities across Canada and Texas, with a projected ARR of $500 million by Q1 2026. These initiatives combined are positioning IREN for a major growth phase in the next two years. And, in that context, its valuation multiples seem quite compelling at these levels, which is why I rate the stock a “Buy.” Bitcoin Mining And AI Ramp Up IREN Limited, formerly known as Iris Energy, is a company focused on Bitcoin mining and AI cloud services. It was incorporated in 2018 and started operating in 2019. IREN is currently headquartered in Sydney, Australia. I previously covered IREN last November, and since then, the stock has appreciated by approximately 289.8%, so I thought it was worthwhile revisiting this ticker. Source: FY25 Results Presentation. August 2025. First of all, IREN now operates a large-scale, grid-connected set of data centers across locations with abundant renewable energy in the US and Canada. This way, they can power their sprawling Bitcoin mining facilities at relatively reasonable costs and remain eco-friendly. Concretely, IREN has 50 exahashes per second (EH/s) of installed Bitcoin mining power . This essentially places IREN among the largest global Bitcoin miners. However, IREN has paused further Bitcoin mining expansion in the near term to allocate resources toward growing its other business verticals. In particular, their new ambitions lie in AI cloud, with a GPU-as-a-service approach. The logic behind this is to position themselves to capture the booming demand for AI computation, and AI cloud services could provide compelling ROI on their capital. Having said that, Bitcoin mining remains their core business vertical and contributes the largest revenue portion as of 2025. In fact, this year, IREN’s latest earnings call noted they’re projecting to generate over $1 billion in yearly mining revenues with their current capacity. They also benefit greatly from having a vertically integrated approach to mining because. IREN wholly owns its sites, infrastructure, and operations, while having a large contracted grid connection (2.9 GW overall) to support them. Source: FY25 Results Presentation. August 2025. In any event, IREN’s strategic bet to evolve into an AI cloud service company is mostly because they also want to de-risk themselves from Bitcoin’s inherent volatility and cyclicality. Bitcoin is known for its 4-year price cycles, which tend to correlate with its halvings that increase mining difficulty and decrease the minting rate of new Bitcoin. There’s also a constant need to deploy, maintain, and update its computing power (hashrate) to serve the Bitcoin network, which requires state-of-the-art ASIC machines to remain competitive. For context, ASICs are machines that are designed precisely for Bitcoin mining. But ASICs are also constantly improving, so they tend to become obsolete quicker as more powerful and newer ASIC models are released. That’s why IREN sees a potentially safer and more predictable business with AI cloud, which could quickly become a significant growth tailwind. Management noted that the AI cloud will actually become their main growth driver in the long run. They’re even raising IREN’s AI cloud annualized run-rate ( ARR ) to a target of $500 million by Q1 2026. This means an increase from $200 million to $250 million targeted in December 2025 to $500 million based on prospective demand. And IREN has British Columbia campuses capable of hosting more than 60k Blackwell GPUs. These GPUs are in addition to their facilities in Texas, which can host up to 19k Nvidia ( NVDA ) GB300 GPUs. AI-Optimized Campuses Looking forward, IREN also said they’re preparing for a new $670 million order that will double their AI cloud resources. IREN aims to eventually own 23,000 GPUs after ordering 12.4k GPUs worth $674 million. This order will give IREN a hardware mix composed of two types of GPUs from Nvidia and AMD. And it’s also worth mentioning that they included AMD GPUs in their purchases because IREN wants to reduce its dependency on Nvidia. This diversification should also broaden their customer base because AMD has certain benefits over some types of computation workloads. Source: FY25 Results Presentation. August 2025. Moreover, IREN’s AI data centers include the following facilities. First, IREN’s British Columbia facilities have 160 MW, which is partly transitioning from Bitcoin mining to AI hosting. This infrastructure is also adding liquid-cooled hosting environments in Prince George to house dense clusters with very high-capacity AI racks. Similarly, IREN’s infrastructure in Texas has expanded to include a 50 MW liquid-cooled facility for high-density GPU workloads. Lastly, there’s another project under construction in Sweetwater, Texas, which could soon become IREN’s largest installation. Management mentioned the first phase of this Sweetwater project is targeted to be energized in April 2026. And this site alone can support up to 2GW with hundreds of thousands of GPUs once it’s fully built out. But the most promising aspect of this strategy is that IREN should have a natural competitive edge in AI services because of its vertically integrated model. After all, they would effectively own and control all the critical pieces of the value chain. IREN can provide direct GPU access to bare metal , which means the customer can rent GPU servers without extra virtualization. This approach is key because it maximizes performance and lets clients install their own frameworks to run their personalized AI training models. Source: FY25 Results Presentation. August 2025. This would also make IREN ideal for enterprises and research labs alike that value speed and control at high scale. And while their core AI service would be bare-metal GPU access, IREN can also add tools for scheduling, managing, and distributing AI workloads across GPUs or clusters as needed. This would give clients a more seamless plug-and-play experience, further increasing its value proposition for AI applications. Valuation And Risk Analysis Now, from a valuation perspective, IREN currently trades at a $11.4 billion market cap, so it’s already a sizeable operation. Their latest 10-K shows their balance sheet holds $564.5 million in cash against $962.8 million in convertible notes (aside from other regular operating liabilities). These notes are due by 2030, so I wouldn’t worry much about them yet. Plus, they have a relatively low interest rate of just 3.25%, which also shows management secured favorable terms for this debt. And using those numbers, I estimate IREN’s EV at around $11.8 billion. Source: Seeking Alpha. Additionally, Seeking Alpha’s dashboard on IREN projects that it’ll generate $2.5 billion in revenues by 2027. This implies a forward P/S of 4.6, which is slightly higher than its sector’s median forward P/S of 3.6. Likewise, its forward EV/S would sit around 4.7, which is again somewhat more expensive than its peers’ forward EV/S of 3.5. But, in my view, this premium seems reasonable when you consider IREN’s impressive sales growth going forward. In fact, if its growth materializes in 2027, IREN would add almost $2.0 billion in incremental revenues compared to its 2025 sales (+391.0% relative to 2025). For comparison, IREN’s sector peers are only expected to grow their topline by about 7.5%. Thus, if anything, I think IREN remains a compelling investment opportunity at these levels. And fortunately, I calculated that their Q2 2025 was cash flow positive by around $49.2 million. Note that I got that figure by simply adding their quarterly cash flows from operations and CAPEX. But this would suggest IREN’s operations look self-sustainable at this point. Nevertheless, I do think their main risk is the cost of electricity itself. Since IREN’s main cost input is electricity to run its facilities, if this input increases substantially, it would contract its margins. And obviously, as long as Bitcoin mining remains their main revenue source, the price of Bitcoin itself will also be a key variable for their profitability. Currently, their all-in cash cost per Bitcoin mined sits around $35.8 thousand, so with Bitcoin trading at six figures, IREN appears like quite a lucrative operation. Bitcoin would have to decline massively to threaten IREN’s profitability, and that seems unlikely, but it’s nonetheless a risk worth considering. Source: Seeking Alpha Charts. Lastly, my bull case assumes that IREN’s scale will continue benefiting its profit margins . Remember, IREN had a -98.5% net margin back in 2020. Since then, its net margins have improved substantially to 17.4%, largely due to Bitcoin’s favorable price action and relatively low energy input costs. However, even if IREN were to successfully grow its topline as I anticipate, but its economics fundamentally change and become unprofitable, it could completely erase its growth appeal. This would likely remove its premium valuation and cap the stock’s upside potential, and could even result in considerable shareholder losses. Conclusion: Firing On All Cylinders Overall, IREN has really outperformed even my previous optimistic expectations from last year. In that sense, I have to congratulate management for seizing the favorable Bitcoin price action and rapidly growing their infrastructure to potentially diversify away from its cyclicality with AI. As it stands, it’s difficult to find a major risk or issue with IREN other than its inherent reliance on cheap, clean energy and Bitcoin’s notable volatility. But since IREN seems to trade at reasonable valuation multiples, I still think it’s worthwhile leaning bullish on the shares for the foreseeable future. After all, their growth seems to be just getting started.