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Iris Energy (NASDAQ:IREN) is charging ahead in the Bitcoin (CRYPTO: BTC) mining arena, setting its sights on a substantial leap in computational power.
According to JPMorgan analyst Reginald L. Smith, the company has an ambitious target to reach 50 exahashes per second (EH/s) by 2025. This would align the company with U.S. mining giants like CleanSpark Inc (NASDAQ:CLSK), Marathon Digital Holdings Inc (NASDAQ:MARA) and Riot Platforms Inc (NASDAQ:RIOT).
Iris Energer is “exiting prop power trading after reporting an outsized hedge loss in July," Smith says. This strategic move allows Iris Energy to concentrate on expanding its mining operations, aiming to maintain all-in-power costs within a competitive range of three to four cents per kilowatt-hour.
The company currently operates at 15 EH/s and plans to double its capacity to 30 EH/s by the end of 2024. The newly set goal of 50 EH/s by 2025, up from a previous target of 40 EH/s, would place Iris Energy among the top U.S.-listed miners, a cohort that includes CleanSpark, Marathon Digital, and Riot Platforms.
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Smith highlights Iris Energy “energized 4.5 EH/s since the end of July.”
Today, the company operates 15 EH/s, making it the fifth-largest publicly-listed miner by installed hashrate.
To support this growth, the company is improving its operational efficiency, aiming for a blended fleet efficiency of 15 joules per terahash (J/TH) once it hits 50 EH/s, a significant improvement from its current 19 J/TH.
However, Smith cautions that while reaching 30 EH/s is fully funded, hitting the 50 EH/s target depends on executing ASIC purchase options successfully.
Iris Energy’s Cloud Services is also booming. The segment’s revenue soared to $2.5 million in the fourth quarter, more than doubling quarter-over-quarter. However, not all news was positive.
Poolside, one of the firm’s “original partners,” is not renewing its contract with Iris Energy. This development “surprised us," Smith said.
Despite this setback, Iris Energy is exploring new partnerships. The company is also launching a pilot GPU program at its Childress facility in the second half of 2024.
Financially, Iris Energy is well-positioned, exiting June with $405 million in cash and no debt.
However, operating expenses are increasing due to higher employee compensation and SG&A costs. This led to a $10 million sequential decline in adjusted EBITDA to $12 million.
"The path to 50 EH/s is ambitious but achievable," Smith concludes, citing Iris Energy's strong cash position and focused operational strategy as key enablers of future growth.
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Image: Illustrated with Midjourney
