Iris Energy Shares Drop 14% Amidst Bitcoin Mining Claims and AI Possibilities: Bernstein

Shares of Iris Energy (IREN) plunged nearly 14% following a report from short-seller Culper Research, which questioned the Childress, Texas, site’s suitability for hosting artificial intelligence (AI) or high-performance computing (HPC). According to Bernstein’s research report, Iris Energy has largely dedicated the site’s expansion to bitcoin mining, highlighting the effective existing power and data center infrastructure for this purpose.

Bernstein emphasized that Iris Energy never claimed it intended to retrofit the Childress site for AI uses. Analyst Gautam Chhugani and his team clarified that 65% of Iris Energy’s value stems from bitcoin mining, with the remaining 35% potentially linked to AI/HPC. Bernstein strongly refuted claims that mining activities at the site are worthless.

The report suggests that any potential upside from AI for Iris Energy would primarily come from a 1.4-gigawatt West Texas site equipped with a power interconnect. The real opportunity lies in leveraging the land and power supply. Bernstein also pointed out that the company’s $1 million per megawatt capital expenditure reflects bitcoin mining costs, making comparisons with AI/HPC expenditures irrelevant.

Bernstein’s analysis indicated that the company’s valuation is on par with other bitcoin miners like CleanSpark (CLSK) and Marathon Digital (MARA), which are also primarily valued based on their mining activities. Earlier this week, Bernstein initiated coverage of Iris Energy with an outperform rating and a price target of $26. Iris Energy’s shares closed at $11.20 on Thursday.