IREN's $500M AI Gamble: Bitcoin Mining Fuels a High-Stakes Pivot

IREN Limited (NASDAQ: IREN) has surged over 530% in six months, driven by its strategic pivot from bitcoin mining to AI cloud infrastructure and a $674 million GPU procurement. The stock, now trading at $48.75, climbed 16.6% on the day as analysts and investors reacted to the company’s aggressive expansion. IREN has doubled its AI cloud capacity to 23,000 GPUs, including NVIDIA B300s, B200s, and AMD MI350Xs, targeting $500 million in annualized run-rate revenue by Q1 2026. This marks a dramatic shift from its early 2025 AI cloud revenue of $14 million, reflecting exponential scaling in the sectorBitcoin Magazine^[1].

The expansion has drawn strong analyst support. Bernstein raised its price target to $75, a 80% upside from the prior close, citing IREN’s “breakout” potential as a vertically integrated AI cloud operator. Arete Research echoed the optimism, initiating coverage with a $78 target and a “Buy” rating. Both firms highlighted IREN’s unique position, combining low-cost power (nearly 3 gigawatts of capacity), land, and data centers to capture full economics of GPU hosting, unlike competitors reliant on leasing modelsThe Block^[2]. The company’s Prince George campus in British Columbia, with 50MW of power, can eventually support over 20,000 Blackwell GPUs, further solidifying its infrastructure advantageGlobe Newswire^[3].

IREN’s dual strategy of balancing bitcoin mining and AI workloads has also attracted attention. The firm remains one of the largest self-operated U.S. bitcoin miners, with 50 EH/s of hashpower generating approximately $600 million in annualized EBITDA at current prices. This cash flow funds AI capital expenditures while allowing flexibility to toggle between mining and cloud hosting based on profitability. Management emphasized that redeploying ASICs to other sites will mitigate any impact on bitcoin operations during the AI expansionThe Miner Mag^[4].

Financial metrics underscore the stock’s valuation dynamics. Bernstein now attributes 87% of IREN’s enterprise value to its AI cloud and co-location potential, compared to 13% for bitcoin mining. At $75 per share, IREN would trade at $7.5 million per megawatt—a premium to AI-focused miners but still below established data center peers like CoreWeave, which averages $33 million per megawattCoindesk^[5]. GuruFocus noted mixed signals in the company’s financial health: while gross margins are strong at 68.27%, operating margins remain low at 4.37%, and insider selling of 2 million shares over three months raises cautionGuruFocus^[6].

The market’s bid reflects confidence in IREN’s execution risks. Bernstein acknowledged challenges in scaling AI cloud contracts and securing financing but emphasized the company’s track record in rapid GPU deployments. IREN’s recent $102 million financing for prior Blackwell GPU purchases and ongoing discussions for multi-thousand-GPU clusters indicate momentum. However, forward-looking statements—such as the $500 million ARR target—remain contingent on on-time delivery and customer utilizationIREN Press Release^[7].

IREN’s stock, up 365% year-to-date, now commands a $12.2 billion market cap, nearly double its closest competitor. Analysts argue the valuation still offers upside as the AI cloud segment matures. “IREN’s vertical integration and power control differentiate it in a sector where margins are compressed,” noted Bernstein’s Gautam Chhugani. Yet, risks persist, including regulatory shifts in cryptocurrency and AI hardware obsolescence, which could pressure the stock’s high P/E ratio of 62.94Economic Times^[8].