Iris Energy (IREN) is making waves in the Bitcoin (BTC/USD) mining arena, setting its sights on a major expansion of its computational power. According to JPMorgan analyst Reginald L. Smith, the company has a bold target of reaching 50 exahashes per second (EH/s) by 2025. This ambitious goal would put Iris Energy on par with leading U.S. mining giants like CleanSpark Inc (CLSK), Marathon Digital Holdings Inc (MARA), and Riot Platforms Inc (RIOT).
To achieve this growth, Iris Energy has made strategic adjustments. They are exiting prop power trading after experiencing a significant hedge loss in July, allowing them to focus solely on expanding their mining operations. This strategic shift aims to keep their all-in-power costs within a competitive range of three to four cents per kilowatt-hour. The company currently operates at 15 EH/s and is projected to double its capacity to 30 EH/s by the end of 2024.
Reaching the 50 EH/s target by 2025, an increase from their previous goal of 40 EH/s, would solidify Iris Energy’s position as a top contender in the U.S. mining landscape. Smith highlights that Iris Energy has already increased its hashrate by 4.5 EH/s since the end of July. Currently, with 15 EH/s, it ranks as the fifth-largest publicly listed miner by installed hashrate.
To support this growth, Iris Energy is actively improving its operational efficiency. They aim for a blended fleet efficiency of 15 joules per terahash (J/TH) once they reach 50 EH/s, a significant improvement from their current 19 J/TH. However, Smith acknowledges that while the 30 EH/s milestone is fully funded, achieving the 50 EH/s target hinges on the successful execution of ASIC purchase options.
Beyond mining, Iris Energy’s Cloud Services segment is thriving. Revenue surged to $2.5 million in the fourth quarter, more than doubling quarter-over-quarter. However, the company has faced a setback with Poolside, one of their original partners, not renewing their contract. While this development came as a surprise, Iris Energy is actively seeking new partnerships to mitigate this loss. Furthermore, they are launching a pilot GPU program at their Childress facility in the second half of 2024.
Financially, Iris Energy is well-positioned with $405 million in cash and no debt as of June. Nevertheless, their operating expenses are on the rise due to increased employee compensation and SG&A costs, resulting in a $10 million sequential decline in adjusted EBITDA to $12 million.
Despite the challenges, Smith remains optimistic about Iris Energy’s prospects. He believes their strong cash position and focused operational strategy are key to achieving their ambitious goals. The path to 50 EH/s is ambitious, but with their strategic moves and financial stability, Iris Energy seems poised to make a significant mark in the Bitcoin mining landscape.
