Iris Energy, a bitcoin mining company, saw its shares drop by 14% after a short seller report claimed that its Childress site in Texas was not suitable for hosting artificial intelligence or high-performance computing. However, Bernstein, a broker, clarified that the company never stated its intention to retrofit the site for AI. Most of Iris Energy’s planned expansion at the site is focused on bitcoin mining, and the current power and data center infrastructure there is well-suited for that purpose.
According to analysts at Bernstein, the majority of Iris Energy’s value comes from bitcoin mining, with AI and high-performance computing accounting for the rest. The broker believes that the mining activity is not valueless, despite the concerns raised in the short seller report. The potential for AI upside for the company lies in its West Texas site, which has a power interconnect that could be monetized for AI purposes.
Bernstein’s analysis also highlighted that Iris Energy’s current capital expenditure metric of $1 million per megawatt is reflective of its bitcoin mining activities, making it difficult to compare to AI/HPC capex. The company’s valuation is in line with other bitcoin miners like CleanSpark and Marathon Digital, whose valuations are primarily driven by mining operations. Despite the recent drop in share price, Bernstein initiated coverage of Iris Energy with an outperform rating and a $26 price target.
Overall, while the short seller report caused a temporary slump in Iris Energy’s shares, Bernstein’s research suggests that the company’s focus on bitcoin mining and its existing infrastructure make it well-positioned for success. The potential for AI development at the West Texas site could provide additional value in the future. As the company continues to expand and grow, investors may see significant returns on their investment in Iris Energy.
