If you only look at IREN’s earning miss, you are focused on Bitcoin margins and short-term EPS.
As @dawsdaws pointed out, IREN’s most valuable asset is its 4.5GW power pipeline (including the latest massive 1.6GW addition in Oklahoma).
Hyperscalers (Microsoft, Google, Amazon) all dramatically increased their CapEX spending and are desperate for sites that already have the permits and grid connections to handle massive loads.
Bitcoin miners are typically valued at low multiples of cash flow. AI infrastructure companies enjoy a higher multiples. IREN is currently stuck in the middle, but its underlying assets are shifting toward the latter.
If IREN meets its construction milestones for Microsoft, it proves they can operate at the “Hyperscale” level. From the satellite images and the company’s recent releases, the constructions are on track.
Daniel Roberts IREN’s co-founder with his brother Will Roberts were from Australia’s largest investment bank, Macquarie Bank. They were investment bankers and specialised in power, land, environment, constructions, finances, and etc. They built IREN from a small power company to one of the biggest bitcoin miners in a short period time. Every time the brothers said something, they would deliver on time.
Moving toward a projected $3.4 billion in ARR by the end of 2026 would fundamentally change the company’s financial profile from “cyclical miner” to “steady infrastructure utility.”
The big drop in share price due to the earnings miss is a classic example of looking in the rearview mirror. IREN is spending heavily now to secure the hardware (GPUs) and infrastructure needed for the pivot. This creates a temporary drag on earnings (CapEx and interest) before the massive AI revenue starts hitting the books.
Looking in details, IREN’s previous quarter’s good earning number was due to a one off gain from its capped calls. The bad earning this quarter was due to the stock prices drop caused capped call loss.
The “Big Miss” was essentially an accounting mirror of the stock price:
(Q1) Stock goes up then Derivatives gain value causes “Record Profit”.
(Q2) Stock goes down then Derivatives lose value causes “Record Loss” .
By ignoring these non-cash swings and focusing on the $3.4 billion ARR target and the 4.5GW power pipeline, you are focusing on the factory (the asset) rather than the accounting for the insurance on the factory (the derivatives). The “bears” are essentially selling a house because the insurance policy’s “paper value” changed, while ignoring the fact that a massive new tenant (Microsoft) just signed a lease.
As @dawsdaws noted, IREN hasn’t announced a new deal yet, but they are in a leveraged negotiating position because they own the power. They don’t have to take the first bad deal that comes along; they can wait for high-margin contracts.
IREN’s potential isn’t about how many Bitcoin they mine next month; it’s about becoming a biggest landlord for the AI revolution. If they successfully convert their 4.5GW pipeline into AI data center capacity, the current “earnings miss” will likely be seen as a minor blip in a massive growth phase.
We are looking at the Asset Base (Power + Deals), while the rest of the bears is looking at the Income Statement (Current EPS). In a high-growth pivot, the assets usually tell the truer story of the future.