- The shares of Bitcoin mining company IREN, previously known as Iris Energy, experienced a significant decline on the Nasdaq after a critical report from Culper Research.
- The report accused IREN of being “wildly overvalued” and suggested a drastic reduction in its stock price, ranging from 52% to 79% lower than its current market value.
- “IREN talks a big game of its HPC plans but ultimately seems entirely disinterested in actually doing what it takes to compete in the space,” stated the report, marking a notable critique.
Bitcoin mining firm IREN faces severe valuation criticisms as shares fall sharply following a negative report from Culper Research. Discover the key details and implications.
IREN’s Stock Plummets Following Culper Research’s Damning Report
The shares of IREN, previously known as Iris Energy, nosedived by 24% on the Nasdaq, primarily due to a scathing report from the short-seller firm, Culper Research. According to Google Finance, IREN’s shares dropped to $10.36 before staging a minor recovery to $11.20 by the end of the trading day.
Questionable Infrastructure Plans Reveal Potential Overvaluation
Culper Research’s report highlighted that IREN’s ambitious high-performance computing (HPC) plans are undercut by inadequate investment in the necessary infrastructure. The firm cited IREN’s insufficient spending of less than $1 million per megawatt for its current data center, significantly lower than industry standards which range between $10 to $20 million per megawatt.
Discrepancies in Asset Valuation and Achievements
Further allegations included discrepancies in the valuation of undeveloped assets and power agreements. Culper accused IREN of inflating the worth of these assets to $5 to $12 million per megawatt despite a significantly lower spending figure of $4.7 million for a 1,400 MW West Texas interconnection deposit. Additionally, Culper pointed out that IREN misrepresented a Morgan Stanley research note, which actually estimated costs at $12 million per megawatt for fully developed infrastructure.
Comparative Valuation Against Industry Peers and Internal Challenges
Comparing IREN’s valuation to its industry peers, the report noted that while IREN is valued at $7.6 million per megawatt, similar mergers and acquisitions in the sector were priced between $2.3 million and $2.8 million per megawatt. The implication being, if IREN’s valuation was adjusted to these levels, its stock could drop by up to 55%. Moreover, IREN’s crypto mining operations were valued conservatively by Culper, ranging from $0 to $100 million, suggesting a generous estimate given the historical financial losses in this segment.
Insider Transactions and Missed Performance Targets Stir Investor Concerns
Furthermore, Culper noted IREN’s failure to achieve its ambitious hashrate targets, managing only 5.5 exahashes per second by April 2023, far below the goal of 10 exahashes per second. This underperformance, combined with insider selling by the co-CEOs Daniel and Will Roberts since February 2024, has further deepened investor mistrust and contributed to the stock’s volatility.
Conclusion
The critical report from Culper Research has significantly impacted IREN’s market valuation, highlighting substantial gaps between the company’s claims and actual investments and achievements. Investors are advised to carefully consider these findings and monitor ongoing developments within the company and the broader Bitcoin mining industry. The looming questions about IREN’s asset valuation and infrastructure investments will likely continue to influence its market performance.
