IREN (Iris Energy): How the new Bitcoin mining giant expanded its empire with $413.4 million

Iris Energy Limited (NASDAQ:IREN), an Australia-based bitcoin mining company, recently raised $413.4 million in equity offerings to fund its ambitious expansion plans. This significant capital injection, completed between May 15 and June 28, 2024, will fuel the company’s growth trajectory, especially after the Bitcoin halving event.

Iris Energy raised funds through its at-the-market (ATM) offering program by selling 39.8 million shares. This move not only strengthened the company’s financial position, but also increased its total share count by 20%, from 146 million shares in mid-May to 186 million shares at the end of June.

Iris Energy’s Expansion Plans and Market Confidence

Thanks to this large capital raise, Iris Energy has fully funded its 2024 growth plans. The company aims to achieve a hash rate (a measure of mining computing power) of 30 exahashes per second (EH/s) and expand its data centers to 510 megawatts (MW). As of the end of June, Iris Energy reported cash holdings of $425.3 million, including cash, equivalents, and expected proceeds from an ATM offering in early July.

This financial increase demonstrates the market's confidence in Iris Energy's strategy and operations. By quickly securing such funding, the company demonstrates its strong market position and growing investor interest in Bitcoin mining.

Strategic Timing of Iris Energy After Bitcoin Halving

The timing of this financing is noteworthy. Bitcoin's halving event occurs approximately every four years and cuts the reward for mining a new block in half. This event typically stimulates market activity and interest in Bitcoin mining, potentially increasing Bitcoin prices. By securing funding shortly after the halving, Iris Energy strategically positions itself to benefit from the market opportunity and strengthen its mining operations.

Since late last year, public Bitcoin mining companies have been raising equity, capitalizing on the Bitcoin price rally to fund hardware and infrastructure expansion. Iris Energy’s recent funding round illustrates this trend, highlighting the growing investment in the Bitcoin mining industry.

Iris Energy’s expansion plans are designed to significantly increase its operational capacity and market presence. The company is focused on increasing hash rate and data center capacity, in line with the industry trend to expand operations and improve mining efficiency. With the newly acquired funds, Iris Energy is well-positioned to navigate the changing Bitcoin mining landscape and drive future growth.

IREN Company Overview and Forecast

IREN is debt-free and currently operates 260 megawatts (MW), supporting 10 EH/s, 25 J/TH of computing power. By Q3 2024, IREN expects to achieve 20 EH/s (17 J/TH), further expanding to 510 MW and 30 EH/s (16 J/TH) by Q4 2024, positioning it as one of the largest and most efficient public miners in the industry. By 2025, IREN's fleet is expected to reach 40 EH/s, 15 J/TH, utilizing approximately 760 MW for Bitcoin mining.

Its expansion to 20 EH/s will cost approximately $301 million, currently fully funded by $425.3 million in cash reserves, while the expansions to 30 EH/s and 40 EH/s will utilize a combination of cash reserves, future profits, ATM proceeds, or other funding sources. By the end of 2026-early 2027, IREN plans to have over 2,400 MW of available capacity for hosting transactions, joint ventures and custom data centers, as well as expanding its existing GPU fleet.

The company’s overall sustainable energy target is over 3,160 MW, primarily concentrated in Texas, where the average energy rate in the first quarter of 2024 was $0.033 per kWh, significantly lower than the $0.045 per kWh at its British Columbia facilities.

Recent contracts and business operations in the High Performance Computing (HPC) space value purpose-built energy-intensive infrastructure at approximately $1-1.45 million per MW per year. Enabling IREN to generate $2.4-3.48 billion in total revenue from the remaining 2,400 MW of generation. Combined with projected 2025 mining revenues of $761 million, IREN's diversified revenue streams could reach $316.1-$42.41 billion by 2027.

It's important to note that this is just one scenario; IREN has multiple verticals to tap into, as BTC mining is highly compatible with a variety of other demand opportunities.

This forecast also does not account for a significant increase in Bitcoin prices over the next 2.5 years, nor does it account for the potential for contract values ​​to rise as competition for AI and HPC infrastructure intensifies. Furthermore, the market's commitment to ESG principles significantly strengthens the value proposition of green computing infrastructure powered entirely by renewable energy.

2025 Mining Revenue Data Points

H1 2025, $319M: 850 EH/s network, w/30 EH/s @ 16 J/TH, 100k BTC

H2 2025, $442M: 900 EH/s network, w/40 EH/s @ 15 J/TH, 110k BTC

TradFi and Cloud Services

MorganStanley assumes power access prices of $5-12 per watt; based on this, IREN's future portfolio valuation will be between $15.8 billion and $37.92 billion.

Jpmorgan recently stated that "Iris Energy (IREN) is best positioned to capitalize on the growing HPC/AI opportunity."

Cloud Services: Currently, IREN's cloud services business will generate $14-17 million in revenue per year leveraging 816 NVIDIA H100 GPUs, 504 of which are currently contracted to Poolside AI (3 months + 3 month options) and serve the on-demand market, however, this number should grow rapidly as the division's revenue grew 118.63% from March-May 2024.

Poolsideai is a Paris-based generative AI company that raised $400 million at a $2 billion valuation with backing from Bain Capital Ventures and DST. Poolside's experienced team focuses on accelerating software development, enhancing IREN's cloud services potential, validating IREN's capabilities and connecting it with promising AI startups.

Energy Infrastructure and Mining Operations

1. British Columbia Sites Canal Flats

10 acres, 30 MW (0.9 EH/s), dual physical fiber paths, 20 full-time jobs, including in-house manufacturing facilities.

Mackenzie: 11 acres, 80 MW (2.7 EH/s), BC Hydro transmission network, 15 full-time jobs.

Prince George: 12 acres, 50 MW (1.6 EH/s), dual physical fiber paths, 20+ full-time jobs, 50-year lease with option to buy.

2. Texas Sites

Childress: 600 MW capacity (4.8 EH/s), 100 MW in operation, planned to expand to 350 MW in 2024, with 250 MW immediately available.

3. West Texas Sites

1,400 MW capacity, planned to be completed in 2026. Other pipeline: >1000 MW capacity, TBD.

It is important to note that the Childress site is located 250 miles northwest of Dallas and supports flexible energy consumption in the West Texas load region. The region has 37GW of renewable energy, but only 18.5GW of transmission capacity, often limited to 12GW due to technical limitations.

IREN's strategic advantages are its immediate access to low-cost power and its vast land portfolio (>1000 acres), both of which are high value. Their continued investment in site expansion is also intended to unlock more value from these assets.

IREN Operations and Expansion Summary

Current Operations

Childress Phase 1, Texas: 100 MW, 4.8 EH/s, operational Total: 260 MW, 10 EH/s @ 25 J/TH, operational

Recent Expansions

Q3 2024: Fleet Upgrades (+4 EH/s) and Childress Phase 2 (+100 MW, +6 EH/s; fully funded)

Q4 2024: Childress Phase 3 (+150 MW, +10 EH/s; fully funded). Total: 510 MW, 30 EH/s @ 16 J/TH

Future Development

H1 2025: Childress Phases 4-6 (+250 MW, +40 EH/s @ 15 J/TH)

Late 2026: Texas Development Sites (1,400 MW) Expected 2027: Additional Pipeline (>1,000 MW)

Future Total Portfolio

>3,160 MW @ $0.035/kWh, >40 EH/s @ <15 J/TH

Regulatory Approvals and Network Upgrades

ERCOT Approval: Both Texas sites have received ERCOT approval.

Childress Connection: Completed, substation infrastructure ready to support full 600 MW capacity.

1,400 MW Site: Load study completed per LFL interconnection requirements.

Network Upgrades: Required upgrades to sites in British Columbia (160 MW) and Childress, Texas (600 MW) have already been delivered. Upgrades to the 1,400 MW site in Texas will be completed by 2026.

Childress Expansion Timeline

Recent satellite imagery confirms that construction at IREN’s Childress site follows a phased timeline, with each construction phase starting approximately 20 days apart.

As of May 16, 2024, Phase II has laid the foundations for three buildings, while construction has yet to begin on the fourth building. As of June 18, 2024, excavation for the foundation of Building 4 was complete and concreting was more than halfway complete. Trenching and piping for Building 10 has been completed, and despite light rain, the remainder of Building 3 is being leveled, with the construction team efficiently moving heavy equipment. The foundation for Building 9 was originally scheduled to be completed on June 27, 2024, but has been delayed by rain and is now expected to be completed on June 28. Buildings 6, 7, and 8 are at various stages of metal structure, cladding, fans, electrical switchgear, and power distribution.

The substation is nearing completion and commissioning teams are about to start work, with the goal of energizing it in July. Historically, building completion from foundation to final structure (including electrical and fan installation) takes an average of about 90 days.

Overall, all four buildings in Phase 2 are expected to be completed by the end of September/October, allowing IREN to expand capacity to 30 EH/s 16 J/TH by the end of the year and an additional 250 MW for colocation transactions, joint ventures, building suitable data centers or expanding existing GPU clusters.

Bitcoin Mining Operations

• Mining KPI Overview (January 2024 - May 2024)

• Total BTC Generated: 1,592 BTC

• Total BTC Sold: 1,592 BTC (100% of Production)

• Average Daily Production: 10.49 BTC/day

• Average Operating Hashrate: 7.44 EH/s

• Current Average Operating Hashrate: 9.41 EH/s

• Average Monthly Mining Revenue: $18,430,600

• Average Monthly Electricity Cost: $6,991,600

• Average Monthly Mining Gross Profit: $11,439,000

• AI Cloud Service Revenue: $1,881,000

• AI Cloud Service Revenue Growth (March-May 2024): 118.63%

Bitmain Contract Summary

IREN has obtained multiple hardware agreements for Bitmain's latest generation of mining machines.

Existing agreements: These provide 5 EH/s of hashrate and 19 J/TH of efficiency.

Revised option agreement: IREN can purchase 48,000 T21 miners (providing 9 EH/s at 19 J/TH) or 48,000 S21 Pro miners (providing 11 EH/s at 15 J/TH). The T21 is priced at $14/TH and the S21 Pro is priced at $18.9/TH, with option expiration dates in September 2024 and March 2025, respectively.

New purchase agreement: Covers 51,480 S21 Pro miners, providing an additional 12 EH/s at 15 J/TH. The price is $15.1/TH, with an additional deferred payment of $3.8/TH payable 9 months after delivery.

New Option Agreement: IREN also has options for an additional 51,480 S21 Pro miners, providing 12 EH/s at 15 J/TH, at a price of $18.9/TH, with an option expiration date of May 2025.

Overall, IREN's contract with Bitmain will provide a combined hash rate of 40 EH/s, with a nameplate efficiency of 15 J/TH.

IREN utilizes an internal technology stack to optimize the performance of AI cloud services, Bitcoin mining, and energy trading operations. They liquidate their Bitcoin directly through Kraken, liquidating daily, and do not hold long-term, preferring to use cash rather than dilute capital.