Iris Energy announces expansion of data center capacity and AI Cloud services

SYDNEY - Iris Energy Limited (NASDAQ: IREN), a company specializing in next-generation data center operations for Bitcoin mining and AI applications, has announced a significant expansion of its data center capacity and the commencement of quarterly reporting.

The expansion, which is fully funded, will see the company's data center capacity grow to 460 megawatts (MW) and its Bitcoin mining capabilities increase to 20 exahash per second (EH/s) by the end of 2024.

The company has completed a targeted at-the-market (ATM) equity-raising program, securing $301 million in cash with no debt, to fund this growth. In a recent update, Iris Energy outlined the progress of its Childress data center in Texas, where phase one is nearing completion with 60MW already operational and an additional 40MW under construction. The second and third phases, expected in the second half of 2024, will support the expansion to the full 460MW capacity.

In addition to its Bitcoin mining operations, which are projected to generate approximately $269 million in annualized hardware profit post-halving, Iris Energy is also expanding its AI Cloud Services. The company has installed 816 NVIDIA (NASDAQ:NVDA) H100 GPUs, which are estimated to bring in $14-17 million of annualized hardware profit with a payback period of approximately 24 months. Negotiations with customers for the new capacity are currently underway.

Iris Energy emphasizes its commitment to renewable energy, with its data centers powered entirely by sustainable sources. The company's growth strategy includes a land portfolio and executed connection agreements for 2,160MW of power, supporting the expansion of both its AI Cloud Services and Bitcoin mining operations.

The company's expansion and diversification into AI Cloud Services are part of its broader strategy to establish a strong presence in the high-performance computing space.

This business update is based on a press release statement from Iris Energy Limited.

As Iris Energy Limited (NASDAQ: IREN) continues to push the envelope in the realm of high-performance computing and Bitcoin mining, the company's financial metrics and market performance offer a window into its operational health and future prospects. With a market capitalization of $593.44 million, Iris Energy stands as a significant player in the industry. Despite not paying dividends, which can be a consideration for income-focused investors, the company's commitment to growth is evident in its expansion plans.

An InvestingPro Tip that is particularly relevant to Iris Energy's current situation is the impressive gross profit margin of 85.52% over the last twelve months as of Q2 2024. This high margin showcases the company's efficient operations and strong pricing power within its market segment. Additionally, analysts anticipate sales growth in the current year, which aligns with the company's expansion of data center capacity and the scaling of its Bitcoin mining capabilities.

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While the company holds more cash than debt, indicating a solid balance sheet, it's important to note that analysts do not anticipate the company will be profitable this year. The stock's price volatility is also a factor to consider, with a significant price uptick of 45.55% over the last six months, followed by a drop of 24.48% in the last three months.

Investors looking to delve deeper into Iris Energy's financials and stock performance can find an array of additional InvestingPro Tips to guide their analysis. Currently, there are 12 more tips available on InvestingPro, which can be accessed alongside real-time metrics and advanced analytical tools to make informed investment decisions. For those interested in a subscription, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

In summary, while Iris Energy's expansion and focus on renewable energy sources position it well for future growth, the company's high gross profit margins and anticipated sales growth are key metrics that investors should consider when evaluating the stock. The volatility in stock price movements and the lack of profitability this year are factors that require careful consideration as well.

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