Letter to the saver

Iren, not just bitcoin: Artificial Intelligence is the new bet

The company validates cryptocurrency transactions and wants to diversify. The stock has very high multiples and remains sensitive to the volatility of the digital asset

by Vittorio Carlini

10 November 2025

6' min read

Translated by AI

Versione italiana

6' min read

Translated by AI

Versione italiana

Diversification is a well-known strategy in finance, aimed primarily at reducing risk. With reference instead to business models, it is often exploited to find new sources of revenue and, therefore, profitability. Such is the case with IREN Limited. The US group, which is listed on the Nasdaq, has - for some time now - been pursuing a greater articulation of its business. What is it all about? To answer the question, it is first necessary to recall the corporate purpose of the group.

TRIMESTRI A CONFRONTO

The company is mainly active in the so-called 'mining' of bitcoins. This consists of running computational centres in which specialised hardware (ASICs or GPUs) are used to solve complex cryptographic calculations to validate blocks in the bitcoin blockchain, receiving in return the reward in cryptocurrency tokens. Notably, the company has reached an installed mining capacity of around 50 EH/s (exahash per second) of computing power in the first half of 2025, a figure that places it among the largest public miners in the world. The claimed efficiency is about 15 J/TH, due to the use of low-cost electricity from renewable sources and vertical integration of infrastructure.

STORIA DEI RICAVI

The Halving

That said, it must be remembered that the mining business is subject to volatility: bitcoin price, regulation, energy costs and competitiveness are all risk factors. Not only that. A further hazard (which drives diversification) is - according to various experts - the so-called halving. That is to say: the scheduled event every four years in the Bitcoin network. When it materialises, the reward that miners - including IREN - receive for validating a block is reduced by half. The goal? To limit the amount of new tokens put into circulation, keeping the cryptocurrency scarce over time. With fewer bitcoins produced, the supply grows more slowly. Halving is therefore a mechanism that helps preserve - deflationary effect - the value of the digital asset in the long run. The last halving took place on 19 April 2024 and resulted in a reduction from 6.25 to 3.125 bitcoins per validated block. That said, it is clear that, as a side effect, there is the impact on the profitability of miners.

Of course! Validators of exchanges on the blockchain make operations more efficient in order to sustain margins. For example, on the infrastructure front, IREN signed an agreement for a 600 MW grid connection in Texas, bringing its 'Sweetwater' hub to a total capacity of 2.75 GW in West Texas. This provides access to low-cost, high-quality energy in an ideal environment for high-volume, low-cost mining. More. The group has focused on more efficient machinery which - together with greater economies of scale - aims to keep the unit cost of bitcoin mining down. However, such approaches clearly do not seem sufficient for the company.

STORIA DELLA REDDITIVITÀ

Diversification

Hence, the group is - in fact - developing the strategy of a broader diversification: next to traditional mining, the plan to provide Artificial Intelligence (Ai) cloud services, high-performance computing (HPC) infrastructure, GPU-clusters and next-generation data centres has been activated. Already in the last two financial years, the project started to have an impact on the income statement. According to the Bloomberg terminal, in the fiscal year 2022 2023 the adjusted revenue generated by the AI-related cloud computing was 1.6 per cent. In the following financial year, the weight of this area rose to 3.3%. One might say: still limited percentages. True! And yet, on the one hand, the speed of increase is not insignificant; and, on the other hand, one has to look at the cost of sales (always adjusted). That referring to the core business of validation is - in 2024 - 99.17% of the total, while for cloud AI it stops at only 0.83%. In the first quarter of 2025- 2026, then, the 'cost of revenue' of bitcoin mining was 79.9 million compared to 0.7 for cloud computing. Put differently: the margin that can be assumed on the new business is predictably higher than that of traditional validation. So IREN's bet on AI is not surprising.

LA LIQUIDITÀ

The understanding with Microsoft

This is confirmed by the recent agreement between the 'miners' and Microsoft. The agreement is articulated. Firstly, it is envisaged that IREN will provide - over the next five years - the Redmond group with access to NVIDIA GB300 GPUs, for a total value of around $9.7 billion (including a 20% down payment). In addition, the crypto company has obliged itself to purchase - for 5.8 billion - from Dell Technologies the GPUs and equipment accessory to the entire operation. In short: if the expected advances and cash flows are as expected, the partnership should support IREN's business. The market, on closer inspection, reacted in an articulate manner to the publication of the agreement. At first, in the wake of the agreement, enthusiasm - in the session of 3 November - led the way (+11.5%). The movement continued and strengthened on 5 November, when the share price rose a further 14.6%, supported by short position coverings and expectations of more stable multi-year revenues.

However, in the two days that followed, IREN 'ate' a large part of the descriptive increase on the Nasdaq. The reason? Because analysts began to reason about the weight of the investments required to implement the deal and the need for further financing. In other words: the initial enthusiasm for the strategic news was followed by a closer examination of the operating costs and financial risk profile.

The quarterly figures themselves confirmed the need to proceed with caution. IREN did present revenues above estimates, but was marked by double-faced profitability. On the one hand, the group posted an operating loss; on the other, it achieved a net profit of EUR 384.6m. The development can be explained in the following way: at the level of operating income, it was - above all - the depreciation of the large investments in AI-related infrastructure that weighed heavily. Net income, on the other hand, was supported by the revaluation of financial instruments related to multi-year contracts for GPUs and cloud services, which generated an unrealised income of USD 665 million. This effect more than offset the weight of operating costs, keeping net profit in the black. In short: this is an example of an income statement representative of a company that is - indeed - changing its skin. And, in the face of which, the do-it-yourselfer has an obligation to exercise great, great caution.

Multiples in the stock market

Also because - besides being an erratic stock - IREN's shares are characterised by extremely high multiples. An example? According to Seeking Alpha, the non-GAAP P/e on the current fiscal year is 67.8 times. Not only that. The Ev to Sales ratio and Ev to Ebitda ratio are also higher than those of the reference segment. True! In this period, several hi-tech companies boast 'nonsense' multiples, and yet they continue to rise. And yet, over and above the many alarms about the possible bubble in stocks related to artificial intelligence - it is clear that a company like IREN cannot be considered a drawer stock. First, because the high multiples are - inevitably - also the effect of a not insignificant run of the stock itself: since the beginning of the year, the stock has risen 581.8%. And, secondly, because the very fact that the transformation is underway means that there is some uncertainty as to the final outcome.

The sector

That being said, it should be noted, however, that somewhat the entire bitcoin mining sector is aiming at the same goal. Cipher Mining, for instance, has entered into a ten-year, roughly $3 billion agreement with Fluidstack - an Ai infrastructure company also backed by Google - to lease some of its computing capacity to clients in the Artificial Intelligence sector. In such a context, the sector's Etf grew far more than bitcoin in 2025. A trend that - referring to various validation companies - could attract attention. Always, however, holding firm to two considerations. The first is that - never before as in these cases - risk capital must lead one - before hoping for capital gain - to ask oneself: how much are you prepared to lose? And the second is to assess one's own risk appetite.

The US group IREN is not to be confused with the Italian multi-utility company Iren.

Further reading

The stock trend

Vittorio CarliniRedattore
Luogo: Milano
Lingue parlate: Italiano, Inglese
Argomenti: Finanza, Tecnologia, Analisi fondamentale
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