SYDNEY - Iris Energy Limited (NASDAQ: IREN), a company specializing in renewable energy-powered data centers, has reported significant developments in its operations and infrastructure projects. The company's AI Cloud Services division is on track to generate an estimated $32 million in annualized hardware profit by year-end, accounting for roughly 10% of total earnings.
The firm's existing fleet of 816 NVIDIA (NASDAQ:NVDA) H100 GPUs is nearing full capacity, with new contracts anticipated to maximize utilization. Iris Energy plans to further expand its AI capabilities by commissioning an additional 1,080 NVIDIA H200 GPUs in the fourth quarter of 2024. This expansion represents a doubling of the company's current AI capacity. The AI Cloud Services currently use less than 0.5% of the total data center capacity, indicating substantial potential for growth.
In a significant infrastructure update, Iris Energy has moved up the energization date of its 1.4GW substation at the West Texas data center project to April 2026, six months earlier than the initial October 2026 target. The company has contracted an EPC contractor to develop high and medium-voltage substation infrastructure. The procurement process for critical electrical components, such as transformers and circuit breakers, is in progress.
Additionally, Iris Energy has expanded its land holdings by acquiring 800 acres, supplementing the existing 500 acres and totaling over 1,300 acres. This expanded land will support both Bitcoin mining operations and high-performance computing (HPC) and AI services, with interest from various parties.
The press release also outlines the company's commitment to utilizing 100% renewable energy sources for its operations and its contribution to the Bitcoin network's security. Iris Energy's ongoing projects and expansions are poised to enhance its capabilities in both Bitcoin mining and AI Cloud Services.
This update is based on a press release statement from Iris Energy Limited and includes forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those projected in these statements. Investors are advised to review the company's filings with the SEC for a more detailed understanding of the risks associated with these forward-looking statements.
In other recent news, Iris Energy has been making significant strides in its Bitcoin mining and AI cloud services. The company achieved a milestone by reaching an installed capacity of 20 exahashes per second (EH/s) for Bitcoin mining ahead of schedule. Iris Energy also reported a 42% rise in Bitcoin mining revenue to $21.4 million for September, attributed to capacity expansion and a 21% reduction in electricity cost per Bitcoin.
On the AI front, Iris Energy has secured seven new deals and served ten customers since inception. With the addition of 1,080 NVIDIA H200 GPUs to the company's fleet, the AI services are expected to contribute approximately 10% to run-rate earnings by year-end.
Analysts have been keeping a close eye on Iris Energy's developments. Roth/MKM confirmed its Buy rating on the company with a steady price target of $14.00. B.Riley and Macquarie also retained their Buy and Outperform ratings, respectively, with adjustments to their price targets.
These are recent developments in Iris Energy's progress, highlighting the company's strategic growth in both Bitcoin mining and AI cloud services. The company's data center operations are also expanding, with plans to increase capacity to 510MW in 2024. As Iris Energy advances its operations, the focus now shifts to the potential Childress AI Cloud pilots and the company's forthcoming strategic moves.
InvestingPro Insights
Iris Energy's recent operational updates align with several key metrics and insights from InvestingPro. The company's impressive revenue growth of 149.98% over the last twelve months reflects its expanding operations in both Bitcoin mining and AI Cloud Services. This growth trajectory is further supported by an InvestingPro Tip indicating that analysts anticipate continued sales growth in the current year.
The company's strategic expansion in AI capabilities and data center infrastructure is particularly noteworthy given its strong gross profit margin of 88.24%. An InvestingPro Tip highlights Iris Energy's "impressive gross profit margins," which could provide the financial flexibility needed to support its ambitious growth plans.
However, investors should note that Iris Energy is currently not profitable over the last twelve months, with an operating income margin of -14.39%. This aligns with the company's focus on rapid expansion and infrastructure development, which often requires significant upfront investment.
The market appears to be responding positively to Iris Energy's growth strategy, with the stock showing a significant return of 163.75% over the last year. This performance is reflected in an InvestingPro Tip noting a "high return over the last year."
For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for Iris Energy, providing a deeper understanding of the company's financial health and market position.
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