SYDNEY - Iris Energy Limited (NASDAQ: IREN), a company specializing in renewable energy-powered data centers, has announced a substantial investment in its AI Cloud Services division with the acquisition of 1,080 NVIDIA (NASDAQ:NVDA) H200 GPUs. The purchase, valued at $43.9 million, is expected to be delivered and commissioned in the fourth quarter of 2024, enhancing the company's GPU fleet to a total of 1,896 units.
This strategic move is anticipated to boost Iris Energy's AI Cloud Services earnings to approximately 10% of its total by year-end, with expectations for continued growth through 2025. The expansion aligns with the company's broader business mix, which also includes a significant Bitcoin mining operation.
The current installed capacity for Bitcoin mining stands at 18.8 EH/s, with efficiency improvements slated to increase capacity to 20 EH/s within this month and further to 30 EH/s by the fourth quarter of 2024. These enhancements aim to reduce the electricity cost per Bitcoin mined to $20,000 and the all-in cash cost to $31,000.
Iris Energy's revenue projections for the end of 2024 indicate that AI Cloud Services could generate around $33 million, compared to $460 million from Bitcoin mining. The hardware profit from AI Cloud Services is estimated at $32 million annually, contributing to a business mix where AI Cloud Services account for roughly 10% and Bitcoin mining approximately 90%.
These forward-looking statements are subject to various risks and uncertainties, including fluctuations in Bitcoin prices and the company's ability to expand and maintain its data center operations effectively. The company's growth strategies hinge on the continued development of its existing data center sites and diversification into high-performance computing solutions, including AI Cloud Services.
The information presented is based on a press release statement from Iris Energy Limited. The company emphasizes its commitment to powering its operations with 100% renewable energy and is expanding its data center capacity to 510MW by the end of 2024. Iris Energy's overarching goal is to support the Bitcoin network and provide cloud computing services to AI customers, leveraging its technology stack for performance optimization across its operations.
In other recent news, Iris Energy Ltd (NASDAQ:IREN), a prominent player in Bitcoin mining and AI cloud services, has reported significant developments in its operations. B.Riley adjusted its stock price target for Iris Energy from $17.00 to $12.00, retaining its Buy rating, while Macquarie maintained its Outperform rating, raising the stock's price target to $13.50 from $12.00. On the other hand, Cantor Fitzgerald adjusted its price target to $20.00 from $23.00 due to increased operational expenditures linked to rapid expansion at the company's Childress facility.
The company reported production of 245 BTC in August, marking a 10% month-over-month increase, and achieved an operating hash rate of 16.0 EH/s, aiming to reach 30 EH/s by the fourth quarter of 2024. Iris Energy's AI Cloud services revenue also increased by 2% month-over-month to $15.5 million in August. These recent developments highlight Iris Energy's robust growth in mining and AI cloud services, and its strong financial position to support its ambitions.
Investors are currently anticipating further updates on the high-performance computing (HPC) monetization opportunities process, which Iris Energy initiated in July 2024. The company is also preparing to introduce the Childress GPU pilot for AI services later in the second half of the year. These are the recent developments in Iris Energy's progress.
InvestingPro Insights
Iris Energy Limited (NASDAQ: IREN) has recently made headlines with its significant investment in AI Cloud Services, and the financial metrics from InvestingPro provide a deeper insight into the company's performance and market position. Despite a challenging P/E ratio of -27.22, which indicates investor skepticism about future earnings, Iris Energy's gross profit margin stands impressively at 88.24% for the last twelve months as of Q4 2024. This high margin suggests that the company is efficient in its operations, particularly in its core business areas such as renewable energy-powered data centers.
InvestingPro Tips highlight that Iris Energy holds more cash than debt on its balance sheet, which is a reassuring sign for investors concerned about the company's financial health. Additionally, analysts expect net income and sales growth in the current year, which could be a harbinger of a positive shift in the company's profitability trajectory. With a market capitalization of $1.43 billion, Iris Energy is a considerable player in its sector, and these financial indicators could be pivotal for investors monitoring the company's growth prospects.
It's also worth noting that the stock has experienced significant price volatility, with a 6-month price total return of 64.35%, yet a 3-month price total return of -42.81%. This volatility reflects the market's reaction to both the company's strategic decisions and external economic factors. For more detailed analysis and additional InvestingPro Tips, investors can visit InvestingPro's dedicated page for Iris Energy at https://www.investing.com/pro/IREN, where 15 more tips are available, providing a comprehensive view of the company's financial status and investment potential.
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