The market's reaction to IREN's $9.7 billion cloud deal with Microsoft has been, let's say, enthusiastic. A near 30% surge in pre-market trading, a 489% year-to-date gain—it's the kind of jump that makes even the most seasoned investor raise an eyebrow. But let’s pump the brakes for a minute and look at what’s actually happening here.
IREN, formerly a bitcoin miner, is now positioning itself as an AI cloud provider. This isn’t unique; other miners like Core Scientific (CORZ), Riot Platforms (RIOT), and CleanSpark (CLSK) are making similar moves. The Bernstein analysts are practically giddy, suggesting IREN could pull in $500 million in annual revenue by early 2026. (Bernstein lifted its price target for Core Scientific (CORZ) to $24 from $17, citing the company’s pivot toward high-performance computing (HPC) colocation and its plan to deliver about 590 megawatts of IT load by early 2027.) That's more than tripling their price target. The allure is obvious: repurpose existing infrastructure—power capacity, data centers—for the AI boom.
But here's the rub: bitcoin mining ASICs are about as useful for AI as a hammer is for brain surgery. These companies are betting big on GPUs, specifically Nvidia's GB300s. IREN's $9.7 billion deal with Microsoft covers five years and includes a 20% prepayment. They've also inked a separate $5.8 billion deal with Dell Technologies for GPUs and related equipment. The plan is to roll these out at their 750MW Childress, Texas campus, complete with new liquid-cooled data centers.
The scale is impressive, no doubt. But the financing is where things get interesting. IREN intends to fund this expansion using existing cash, customer prepayments, operating cash flow, and additional funding sources. That last bit, "additional funding sources," is doing a lot of heavy lifting. It’s a bit like saying you’re going to build a skyscraper using your savings, your paycheck, and… well, you'll figure out the rest later. It's not necessarily a red flag, but it warrants a closer look. Where exactly is this "additional funding" coming from? What are the terms? Details remain scarce.
And this is the part of the report that I find genuinely puzzling. The market seems to be pricing in the potential revenue from this deal as if it's already guaranteed profit. But building and operating AI cloud infrastructure isn't cheap. You're not just buying GPUs; you're talking about massive power consumption, sophisticated cooling systems, and a highly skilled workforce.
Bernstein's updated model values these miners using a "sum-of-parts valuation," including the "potential value of power sites earmarked for AI data centers—using a conservative $3 million per megawatt (MW) multiple." Conservative? Maybe. But it also highlights the core asset these miners possess: power. The article notes that shareholders’ rejection of the CoreWeave deal gives management more room to optimize value and hinted at a new partnership expected in the fourth quarter. That's the real gold in this AI rush. It’s not necessarily the AI itself, but the ability to provide the juice to power it.
Every U.S.-listed bitcoin miner the broker covers has pivoted toward maximizing the value of its power assets rather than betting on bitcoin price upside, analysts led by Gautam Chhugani wrote. The market is re-rating these companies not as bitcoin miners, but as "key enablers of the next generation of computing infrastructure." The question is whether that re-rating is justified.
Microsoft's Jonathan Tinter calls IREN's "expertise in building and operating a fully integrated AI cloud—from data centers to GPU stack—combined with their secured power capacity" a key reason for the partnership. He also added that, "This collaboration unlocks new growth opportunities for both companies and the customers we serve." It sounds great, but it's corporate speak. What does "secured power capacity" actually mean in terms of uptime, redundancy, and cost? And what are the penalties if IREN fails to deliver? These details are conspicuously absent.
IREN's stock is currently changing hands for $74.51, per TradingView — having already gained 489% year-to-date. In late September, analysts at research and brokerage firm Bernstein said IREN's AI cloud buildout could deliver $500 million in annual revenue by early 2026, more than tripling their price target for the stock to $75 — a price that's now already been hit. The stock has already hit Bernstein's optimistic target. Is there really room for further multiple expansion, as the analysts suggest? Or is the market getting ahead of itself? I suspect it's the latter. The race to AI is real, but not everyone who straps on running shoes wins.
The market's exuberance is understandable. Everyone wants a piece of the AI pie. But IREN's transformation from bitcoin miner to AI cloud provider is still in its early stages. The $9.7 billion Microsoft deal is a significant vote of confidence, but it's not a guarantee of success. The company's ability to secure financing, manage its capital expenditures, and deliver on its promises will ultimately determine whether this pivot is a stroke of genius or just another overhyped AI play.
