IREN Reports Significant Loss as AI Cloud Revenue Soars Despite Bitcoin Mining Decline

IREN's Financial Overview

IREN, a Nasdaq-listed firm, has seen a stark decrease in its Bitcoin mining revenue, plummeting 58% to $28 million in the most recent quarter. The company plans to phase out its cryptocurrency mining activities completely by the end of 2026.

Revenue Highlights

The company's revenue report, released on November 5, highlighted that its AI cloud operations surged by 182%, reaching $200 million for the quarter ending September 30, up significantly from $71 million the prior quarter. Overall, IREN's total revenue rose to $228 million, marking a 66% increase from $137 million recorded in June.

Meanwhile, the firm experienced a net loss of $263 million, an improvement from a $684 million loss in the previous quarter, and adjusted EBITDA grew from $19 million to $66 million.

Bitcoin Production Decline

The financial results also confirmed a substantial decline in Bitcoin production, which fell from 2,039 BTC a year ago to just 402 BTC. The average operating hashrate dropped significantly, from 45.3 exahashes per second (EH/s) to 8.8 EH/s, as the company phased out mining equipment in favor of its AI developments.

IREN reported that Bitcoin prices had weakened and production levels had decreased, contributing factors to the reduced mining revenue, which had dropped from $67 million in June to its current $28 million, an alarming 88% decrease from $233 million in the same quarter last year.

Strategic Transition

Strategically, IREN is committed to completing the transition away from Bitcoin mining by December 31, 2026, expecting only minimal mining activities to persist into 2027. As of the end of September, the company's existing Bitcoin mining capacity stood at around 7.9 EH/s, equivalent to approximately 180 megawatts.

Significantly, IREN continues to sell its mined Bitcoin, revealing no holdings on its balance sheet by September's close. This shift in focus towards AI has seen other Bitcoin mining firms like Marathon Digital Holdings (MARA) and CleanSpark also exploring the AI infrastructure avenue.

AI Cloud Services Performance

The earnings report underscored the strong performance of the AI cloud services, accounting for nearly 88% of IREN's revenue, compared to about 52% in June. From the $200 million generated, $135 million was attributed to AI cloud services, while $65 million was derived from cloud leasing, buoyed by Microsoft’s acceptance of Horizon data center deployment undertaken in August.

Company co-founder and co-CEO Daniel Roberts noted the significant milestones, indicating that this quarter, the first Horizon project began servicing Microsoft, highlighting the rapid growth of their AI cloud revenue and annual recurring revenue (ARR).

IREN's current revenue backlog has climbed to $20.3 billion, which is a 22% increase, with two-thirds related to investment-grade clients.

Future Outlook and Market Reaction

In July, the company had announced $2.8 billion in new contracts, raising its anticipated annual recurring revenue target to over $4 billion. However, the latest earnings have adjusted the expected delivery timeline for this target from December 2026 to January 2027, potentially extending through February.

The market reacted sharply to the earnings announcement, with IREN shares closing down nearly 17% at $18, recovering slightly in after-hours trading. The revised timeline for capital expenditures for AI infrastructure raised investor concerns, as the company anticipates $15 billion in additional capital needs during fiscal 2027.

It plans to leverage $9 billion from available cash and financing, while sourcing the remaining $6 billion through targeted financing avenues, focusing on GPU and data center funding.

At the end of September, IREN’s total assets stood at $20.6 billion, comprising $6 billion in data center assets. Following the quarter, the company expanded upon an agreement with an AI research firm and secured a five-year contract worth about $22 million per megawatt in annual revenue, with a notable prepayment by the customer for GPU-related capital expenditures.

Construction is ongoing to augment IREN's AI cloud capacity, particularly at its facilities in Childress, Mackenzie, and Sweetwater, with several projects advancing towards completion.