• Bitcoin Production Cost: $29,000 per Bitcoin.
• Current Mining Capacity: 21 Exahash, with an expansion to 31 Exahash weeks away and 50 Exahash planned for the first half of next year.
• Adjusted EBITDA: $2.6 million for the quarter.
• Bitcoin Mining Revenue: $54.3 million for the quarter.
• AI Cloud Services Revenue: $3.2 million for the quarter.
• Bitcoin Mined: 821 Bitcoin at an average realized price of $66,000.
• Net Electricity Costs: $28.7 million for the quarter.
• Cash at Bank: $98.6 million as of September 30, 2024, increasing to $182.4 million by October 31, 2024.
• Total Assets: $1.3 billion with no debt.
• Total Equity: $1.1 billion.

• Warning! GuruFocus has detected 1 Warning Sign with IREN.

Release Date: November 26, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Iris Energy Ltd (NASDAQ:IREN) is positioned as a low-cost commodity producer, focusing on cash returns for investors and producing Bitcoin at a low cash cost of approximately $29,000 per Bitcoin.
• The company is accelerating its expansion to 50 Exahash in the first half of next year, ahead of schedule, which positions it as one of the largest listed miners.
• Iris Energy Ltd (NASDAQ:IREN) has a strong balance sheet with no debt and significant cash reserves, providing flexibility for future growth.
• The company is committed to 100% renewable energy, purchasing renewable energy certificates for all its operations.
• Iris Energy Ltd (NASDAQ:IREN) is exploring alternative funding instruments, such as convertibles, to support growth plans, potentially reducing reliance on equity financing.

Negative Points

• The Bitcoin mining sector is under scrutiny, with increased competition and institutional interest, which could impact profitability.
• There is uncertainty in the market regarding the demand for AI and HPC services, which could affect Iris Energy Ltd (NASDAQ:IREN)'s expansion plans in these areas.
• The company faces risks related to supply chain disruptions and the procurement of long lead items, which could delay expansion projects.
• Iris Energy Ltd (NASDAQ:IREN) has not provided specific guidance on terms or timing for potential AI and HPC contracts, creating uncertainty for investors.
• The transition to spot pricing for energy procurement at the Childress site has increased electricity costs, impacting overall profitability.

Q & A Highlights

Q: How does Iris Energy view the strategic process versus the organic opportunity at the Sweetwater site? A: Daniel Roberts, Co-CEO, explained that there is no immediate decision beyond procuring long lead items for electrical infrastructure. The company is preparing for dual pathways, both for Bitcoin mining and AI-related opportunities. They are evaluating various options, including building out Bitcoin mining or pursuing build-to-suit options for AI data centers, and will compare these pathways as opportunities arise.

Q: What is the capital requirement to reach 50 Exahash, and how does Iris Energy plan to fund this expansion? A: Daniel Roberts noted that while they haven't provided specific numbers, they previously announced being fully funded to 30 Exahash. With approximately $200 million raised under the ATM, they estimate a $400 million funding requirement to reach 50 Exahash. The company is exploring alternative funding instruments and expects higher operating cash flows due to recent Bitcoin price increases.

Q: At what Bitcoin price level can the Bitcoin business become self-funded, and what are the plans for potential investor distributions? A: Daniel Roberts stated that operating cash flows and investing cash flows are considered separately. With substantial operating cash flows anticipated, the decision to reinvest or distribute these cash flows will be evaluated. The company is considering distributing Bitcoin or cash to investors, emphasizing the opportunity to generate Bitcoin at a cash cost of $29,000.

Q: How does Iris Energy appraise the strategic value of its assets, and what is the urgency in current market conversations? A: Daniel Roberts described the appraisal as a mix of art and science, involving modeling various pathways and scenarios. The urgency in market conversations is increasing, with more interest from hyperscalers and data centers. The company is cautious about setting expectations, focusing on controlling its destiny as a low-cost Bitcoin producer while exploring large-scale AI and HPC deals.

Q: What is the strategy for the AI cloud business, and how does it compare to Bitcoin mining investments? A: Daniel Roberts indicated a cautious approach to investing in GPUs due to current capital costs and market demand. While there is interest in longer-term contracts, the company is focusing on measured growth and waiting to see how the market evolves, particularly with the upcoming release of new NVIDIA chip generations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.