IREN Shifts Focus from Bitcoin Mining to AI Data Centers

Iris Energy, now rebranded as IREN Ltd. (NASDAQ: IREN), is making a significant pivot from its roots in Bitcoin mining to a focus on artificial intelligence (AI) data centers. Founded in 2018 and based in Sydney, the company is shifting its strategy to capitalize on the growing demand for high-performance computing (HPC) services. This move comes as IREN looks to redefine its business model in a rapidly evolving tech landscape.

IREN’s new direction is underscored by its vertically integrated approach, which allows the company to own its sites, manage renewable power contracts, and construct its data centers. This strategy has already proven fruitful, as evidenced by the company’s financial performance. For the fiscal year ending June 30, 2025, IREN reported a revenue of $501 million, representing a substantial increase of 168 percent year-on-year, alongside a net income of $86.9 million.

In September, management announced a significant expansion of its AI cloud capabilities, boosting its fleet to 23,000 Nvidia chips. The company is targeting an annualized revenue run-rate of $500 million by the end of this year. A new facility in Sweetwater, Texas, featuring 75 megawatts of liquid-cooled infrastructure, is specifically designed to handle hyperscale AI workloads, highlighting its commitment to this strategic shift.

This transition positions IREN to tackle the challenges posed by Bitcoin’s “halving problem,” which reduces mining rewards approximately every four years. Analysts anticipate a surge in demand for data center capacity, with projections estimating an additional 1,000 gigawatts by 2030. Hosting AI workloads is expected to yield revenue margins that are two to three times higher per megawatt compared to traditional mining operations. Additionally, IREN’s focus on renewable energy aligns well with increasing pressure on companies to adhere to environmental, social, and governance (ESG) standards.

Despite the optimism surrounding IREN’s new direction, Wall Street responses are mixed. On the optimistic side, Bernstein analyst Gautam Chhugani raised his price target to $75, while Roth Capital/MKM analyst Darren Aftahi increased his forecast to $82, citing the potential for IREN’s GPU expansion to generate $2.7 billion in revenue and $1.2 billion in EBITDA by fiscal year 2028. Other firms, including Arete Research and Compass Point, have also adjusted their targets, reflecting confidence in IREN’s pivot to AI.

However, not all analysts share this enthusiasm. Reggie Smith from J.P. Morgan downgraded IREN to underweight, with a target of $24, cautioning that the stock’s current valuation may already account for a substantial colocation deal. Critics point out that IREN’s AI cloud revenue was a mere $2.7 million in the second quarter of fiscal year 2025, indicating that scaling to the projected $500 million will require precise execution and a strategic focus.

As part of its outreach efforts, IREN is participating in the North American Blockchain Summit (NABS) from October 9-10, 2025, in Dallas, Texas. The company, alongside others such as Riot, aims to engage with regulators regarding energy usage and AI privacy while showcasing its renewable energy credentials.

Despite the promising outlook, risks remain. Challenges such as GPU shortages, stricter energy regulations, and competition from larger firms like Equinix could hinder growth. The volatility witnessed during the 2022 cryptocurrency downturn serves as a reminder of the sector’s fragility. Nevertheless, IREN’s low-cost structure, renewable energy strategy, and focused pivot towards AI provide a buffer against these risks. The company aims for $500 million in annualized EBITDA by 2026, leveraging its mining revenues to facilitate higher-margin hosting opportunities.

In summary, Wall Street’s response to IREN’s strategic shift is predominantly positive. With the company’s stock price increasing significantly and ambitious analyst targets emerging, the future appears promising. Yet, the ability to execute this new strategy effectively will ultimately determine whether IREN can achieve its lofty goals. Currently, the stock is valued at approximately $50, a significant rise from just $17 in July. Investors will be closely monitoring IREN’s progress as it navigates this pivotal transition.