Summary IREN Limited is a strong value in the Bitcoin mining industry, with potential for growth from AI expansion in 2025. Unlike most competitors, IREN sells mined Bitcoin to fund its growth, avoiding excessive dilution and making it easier to analyze. IREN's AI Cloud Services, powered by NVIDIA GPUs, could significantly boost earnings, though Bitcoin price remains a critical risk. With Bitcoin prices strong, IREN shares could test $15 resistance and potentially break out higher, driven by increased hashrate and AI growth. This is an update to my prior forecast on IREN Limited ( IREN ), formerly known as Iris Energy, which continues to be one of the better values within the bitcoin mining industry. Further, it is likely that IREN's expansion into artificial intelligence has the potential to substantially increase the company's valuation within 2025. Moreover, IREN continues to execute on its development of increased hashrate for the mining of Bitcoin, and IREN shares should follow Bitcoin higher in the near term. A key differentiator between IREN and most other large Bitcoin miners is that it sells the Bitcoin it mines, and uses the proceeds to fund its growth. In contrast, many of the competing Bitcoin miners have adopted a 'HODL' or hold strategy of maintaining all or most of the Bitcoin they mine, and possibly even buying more on the market with debt. While the HODL strategy may bring with it a greater potential for appreciation, IREN's more traditional business model makes it easier to analyze and also less susceptible to substantial dilution, including potentially excessive executive compensation. Of course, that is not to say that IREN does not dilute shareholders, as it did do so in 2024. IREN issued a shelf secondary offering in May 2024 and subsequently issued $440 million in 3.25% convertible senior notes in December 2024. Those notes entitle holders to convert to shares at a value of 59.4919 ordinary shares per $1,000 principal amount of notes. That works out to a price of about $16.80 per share. IREN also entered into capped call transactions in connection with the notes that are expected to provide a hedge upon conversions up to an initial cap price of $25.86 per share. The recent increase in Bitcoin pricing means that IREN should realize significantly greater current revenue. Along with that greater revenue comes the greater capacity to both increase its hashrate and expand into AI Cloud Services. IREN's haste expansion is sizable and is yielding a greater level of Bitcoin, with the potential for continued growth in the first half of 2025. Moreover, the increase in the price of Bitcoin makes it easier for IREN to achieve its goals. For example, the Bitcoin mining calculations IREN assumed when it last updated its expansion endeavor presumed a $60,000 Bitcoin price, which is substantially below the current market range it is getting for the Bitcoins it effectively mines each day. Earlier this month, IREN reported that it mined 529 Bitcoins in December, compared to 379 in November. IREN also reported an average operating hashrate for December of 28.1 EH/s, compared to 19.7 EH/s in November. IREN also noted that while it had an average operating hashrate of 28.1 EH/s in December, it actually achieved an installed capacity of 31 EH/s by the end of the month/year. IREN exercised 19 EH/s of miner purchase options for a combination of S21 Pro and S21 XP miners that it expects to install for an expansion to 50 EH/s in the first half of 2025. IREN key metrics (IREN's January 7th, 2025 Press Release) IREN has now effectively established its AI Cloud Services business that is run on a fleet of 1,896 NVIDIA H100 & H200 GPUs. IREN indicated the AI Cloud Services business is already servicing multiple customers, though precise details have not yet been provided. Nonetheless, IREN is continuing to grow its AI Cloud Services capacity, including an ongoing contracting for H200s, as well as installing liquid cooling at its Childress and Prince George facilities in order to support NVIDIA Blackwell GPUs. IREN previously estimated that its 1,896 NVIDIA ( NVDA ) H100 & H200 GPUs could support $32 million in annualized profit, and contribute approximately 10% of its run-rate earnings from IREN's 510MW data center portfolio. This actual level of contribution is likely to be less than 10% in 2025 due to a probable run rate on cloud services at below full capacity, as well as due to higher Bitcoin pricing and increased haste and total data center capacity. IREN's total data center capacity is expected to increase to 810MW in the first half of 2025. I continue to expect IREN should soon attract a second investor base due to its capacity to increase its AI Cloud Services. Over time, most Bitcoin mining entities are likely to transition into AI Cloud Services. The key difference between Bitcoin mining and AI Cloud services is that Bitcoin mining requires Application-Specific Integrated Circuit ('ASIC') hardware, while AI requires Graphics Processing Unit ('GPU') hardware. Other than that, both are datacenters that require IT oversight and cheap energy from, ideally, renewable and/or environmentally friendly sources. It is reasonably likely that investors will seek out companies with an existing capacity of high-speed parallel processing of complex computations that are powered by contracts for cheap and renewable energy sources. Some larger AI and datacenter may even become interested in acquiring entities with developed infrastructure and power contracts. To this end, IREN could become an acquisition target in the coming quarters. Nonetheless, my investment thesis is not based on this potential. Rather, it is primarily based upon IREN's growing hashrate and realized selling prices for the Bitcoin it mines. Despite higher Bitcoin pricing, IREN shares are also trading close to the bottom of the trading range they have been in over the last six months. I believe shares have the potential to break out of this range upon another spiking of Bitcoin pricing. It appears reasonably likely that upon such a move higher, IREN shares have the potential to test apparent resistance at about $15 per share, and that they could move substantially higher than that upon a breakout from that level. IREN daily candlestick chart (Finviz.com) As the chart above shows, this $15 resistance level set a top for IREN shares in both the summer of 2024 and again in early December, when Bitcoin last peaked and roughly in line with IREN pricing its recent convertible debt offering. If shares were to soon return to that level, it would appear to complete a cup and handle formation, which would be a bullish technical indicator for a continued move higher upon a subsequent breakout. Risks The primary risk to IREN is the price of Bitcoin. If Bitcoin declines or breaks down, it would reduce mining profitability and potentially eliminate the profit margin. IREN's AI Cloud Services business is still rather small and does not warrant a valuation in line with the existing Bitcoin mining capacity. Another risk is that Iris Energy might not sufficiently contract out its growing AI Cloud Services business. It is also possible that such services could suffer from reduced pricing. Many of the competing AI Cloud Services providers are large and well-capitalized companies that could be willing to offer competitive pricing in an effort to gain market share. This could make it difficult to compete, or simply reduce the profit margins from this business. Other risks include potential spiking energy costs and shareholder dilution. Though IREN is less likely than most competing peers to substantially dilute shareholders due to selling its mined Bitcoin, the potential remains. Conclusion IREN achieved its plan of reaching 30 EH/s by the end of 2024, with an installed capacity of 31 EH/s by the end of the year, and appears likely to continue to reach its goal of 50 EH/s within the first half of 2025. Further, IREN's AI Cloud Services business should become increasingly valuable in 2025, and the company may soon become recognized for this potential. With Bitcoin pricing remaining strong and also potentially breaking out to new highs in the near term, IREN shares should appreciate from current levels. I believe shares are likely to soon move higher and test the $15s, from which they may break out and move considerably higher upon a sustained increase in the price of Bitcoin.