Iris Energy (IREN) Analysis
Power is the ultimate bottleneck in modern AI. Iris Energy has secured 5.8 GW of grid connected power to establish themselves ahead of competition struggling to find power capacity.
We first covered Iris Energy in November 2024…it rose as much as 750% since, but 2026 has been brutal to it and other small players in the AI buildout. In late 2024, when $IREN first surfaced on our watchlists, the AI boom was just starting to take hold. Investors were quick to buy any company slightly involved in AI, but the market dynamics have changed since. As stocks rallied, valuations fell under question, and the breaking headlines of “$100 billion AI CapEx” have slowed. Moreover, uncertainty from geopolitics and inflation have also put more pressure on growth stocks. So there’s a lot of factors at play holding back investors from buying high Beta stocks like $IREN.
The Transition from A Bitcoin Mining Operation
Iris Energy is one of the few small players in the AI boom that’s actually posting revenue, but the pace of revenue growth has steeply fallen from its highs of 344% at one point, to just 10.7% YoY last quarter. That slowdown requires some context. IREN is intentionally moving resources away from Bitcoin mining and toward AI cloud services. The company decommissioned mining equipment ahead of new GPU installations, which reduced Bitcoin- elated revenue before its larger AI contracts began contributing meaningfully.
Reality Check after the High of the AI Rally
IREN still has to finance construction, obtain equipment, install thousands of GPUs, complete data centers on schedule, and satisfy customer acceptance requirements. Delays at any stage could push revenue further into the future while expenses and financing costs continue accumulating…this has already proven to be expensive for both Iren and other players trying to take a share of the industry. This increases dilution risk. AI data centers are extraordinarily expensive, and IREN may need to rely on customer prepayments, debt, equipment financing, partnerships, or additional share issuance to fund its expansion.
The company’s revenue goals are also extremely ambitious compared with its current AI cloud business. This creates a major execution gap between what IREN operates today and what management says it can operate over the next several years, but it can also mean a stock boom IF they can achieve those goals. Customer concentration is another issue. Large contracts can rapidly transform IREN’s revenue, but they also leave the company heavily dependent on a small number of customers…like Microsoft making up a majority of their backlog.
Finally, IREN has not completely escaped its roots as a Bitcoin miner. Until AI cloud revenue becomes the dominant contributor, its results can still be affected by Bitcoin prices, mining economics, network difficulty, and decisions to redirect power away from mining.
Iris Energy may have been a fun trade, but it is far from being a safe “buy and forget” type play. The AI boom can make a comeback, but it won’t necessarily favor the same companies. Over the long run, only those that stay relevant and competitive will survive. Iren Energy still faces execution risks and uncertainty around the future of AI.
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