Yesterday, the market continued its usual dance.
Together with its CY Q1 2026 results, $IREN Ltd(IREN)$ announced a slew of important developments that sent the stock up as much as 23% to $73 a share.
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$2.1B potential investment from Nvidia.
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$3.4B AI Cloud customer deal with Nvidia.
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New data center development in Spain.
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Plan to develop data centers in Australia.
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Construction is on schedule.
Then $CoreWeave, Inc.(CRWV)$ reported terrible earnings, sending Iren back to $60, and with it the whole neo-cloud sector. It is clear that Coreweave is the worst neo-cloud in terms of execution and cost overruns, but the market hasn’t realized that yet.
Each time they report an issue, they drag the entire sector down with them.
Usually, this creates a buying opportunity for those investors who have a brain of their own, instead of following the mass hysteria.
So in this report, I will look at the results of this quarter and tell you what is really going on.
Let’s begin.
1. Overall Financial Performance
Overall, Iren showed declining financial results due to its transition from bitcoin mining to AI cloud.
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Revenue $144.8M -21.6% Q/Q
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ADJ EBITDA $59.5M -21% Q/Q
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Net loss $247.8M +59.5% Q/Q
1.1. Revenue
Total revenue for Q1 2026 was $144.8M, a 21.6% decrease from the $184.7M reported in Q4 2025.
This was significantly below analyst expectations of $219M, as the transition from the bitcoin business is happening faster than anticipated.
Iren Fiscal Year Q3 2026 Earnings Press Release!
Bitcoin revenues fell by 33.6% Q/Q to $111.2M from $167.4M.
The revenue decline is the result of the change of focus from bitcoin to high-performance computing. To prepare sites for incoming GPU clusters, Iren reduced its operating bitcoin mining capacity, which, when coupled with a period of lower bitcoin prices and an increasing bitcoin global network mining capacity, led to a material reduction in mining income.
However, the part of the business that provides AI Cloud services saw a very large jump in revenue, growing by 94.2% compared to the last quarter, reaching $33.6M.
This growth shows that as more powerful chips are installed, the company can earn much more money from each megawatt of power it uses.
1.2. Profitability
Iren reported a meaningful 21% Q/Q decrease in ADJ EBITDA and 59.5% Q/Q increase in net losses!
Iren Fiscal Year Q3 2026 Earnings Presentation!
The $247.8M net loss was heavily impacted by a $140.4M asset impairment, which relates to decommissioning bitcoin mining equipment to clear space for new AI servers.
Iren is retrofitting its bitcoin mining operations because the company can generate higher revenues and earnings by putting AI GPUs in place of Bitcoin mining equipment.
Simply speaking, the company threw out most of the equipment whilst selling some of it, $22.8M of it, leading to a net write down of $140.4M.
Next, Irena also recognised a $23.7M accounting charge on the value of the derivatives it holds related to its convertible debt notes.
Iren purchased prepaid forwards and capped calls to hedge against dilution. Previously, these positions generated massive unrealized gains due to the stock’s rapid appreciation. However, this quarter there was a pullback of the share price, resulting in a reversal of those gains, creating a GAAP-level loss that does not reflect actual cash outflow.
So $161M of the $247.8M loss relates to one-time non-cash accounting charges.
1.3. Cash Position
Iren continues to maintain a strong cash position to support its growth.
Iren Fiscal Year Q3 2026 Earnings Presentation!
As of Q1 2026, the company has $2.6B in cash.
This large amount of capital is crucial because the company needs to pay for thousands of new GPUs and the construction of massive new data centers.
This quarter, they spent $1.48B on investing activities.
Iren Fiscal Year Q3 2026 Earnings Press Release!
Most of that, $1.36B, went on construction, equipment, and computer hardware.
However, Iren also spent $144.7M on pre-payments and deposits required for data center development.
$22.8M relates to the sale of bitcoin mining equipment.
The company has been active in raising money through several different channels.
Iren Fiscal Year Q3 2026 Earnings Press Release!
This quarter, Iren raised $380M from selling shares and paid $5.5M in commission to banks to facilitate this sale, for a net raise of $374.5M.
This relates to the filing Iren made this quarter to sell up to $6B in shares!
As I mentioned on X at the time of the filing, the company won’t sell all $6B of shares in one go. They will sell them at a few hundred million dollar increments when the need for cash rises.
Interestingly, there is no meaningful deferred revenue liability on Iren’s balance sheet.
This means that Microsoft has not yet paid the $2B pre-payment, which they are supposed to. Customer pre-payments appear on the balance sheet as deferred revenue liability, because the Iren still has to deliver the services for which it has already received payment.
Likely, this means that the pre-payment will happen when GPUs are turned online or close to that time.
Management believes that its current cash, combined with future money from its operations and new financing deals, will be enough to pay for its planned expansion costs.
1.4. Guidance
For the end of 2026, the company is targeting 480MW of active capacity and a fleet of 150,000 GPUs.
Iren Fiscal Year Q3 2026 Earnings Presentation!
This expansion is expected to support an ARR of $3.7B by the end of calendar year 2026.
As of the Q1 report, $3.1B of this ARR is already under contract.
The contracted ARR comes from three main areas.
First, a large contract with Microsoft is expected to bring in about $1.9B per year.
Second, a new deal with Nvidia is expected to contribute $0.7B annually.
Finally, existing deployments at the Prince George site contribute about $0.5B.
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2. Partnership with Nvidia
A very important part of the Q3 results was the announcement of a new partnership with Nvidia.
Iren Fiscal Year Q3 2026 Earnings Presentation!
This is a multi-year deal that makes the relationship between the two companies much deeper and includes:
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$3.4B AI Cloud contract
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$2.1B potential investment
Firstly, Nvidia has signed a 5-year contract worth approximately $3.4B to use Iren’s AI Cloud services.
Nvidia will use this capacity to run its own internal AI and research work. This project will use air-cooled Blackwell GPUs and will take up about 60MW of space at the Childress data center. Crucially, this is not just a bare metal deal, as Iren plans to utilise internal R&D and some recently acquired software capacity through Mirantis to provide managed AI cloud services.
These services have higher margins and will be a test of Iren’s transition from pure bare metal to AI software, but I will expand on this in the Mirantis section.
The company expects to start ramping up these services in early 2027.
Beyond this contract, the two companies are working together to build up to 5GW of AI infrastructure globally.
Working so closely with Nvidia ensures that Iren can get the best performance from the latest computer chips as they are released.
As part of this deal, Iren gave Nvidia the right to buy up to 30M shares of its stock at a price of $70 per share over the next five years. If Nvidia exercises all of these rights, it would mean an investment of up to $2.1B.
While this is certainly a positive development, the investment deal is not as great as the one Nebius signed with Nvidia.
Nvidia paid Nebius $2B at market prices to acquire an 8% stake in the company. In this instance, Nvidia risked real capital immediately and is supporting Nebius efforts to build AI data centers with cash.
Nebius already got the cash.
Meanwhile, the Iren deal gives Nvidia the option, not an obligation, to purchase 30M shares for $70 a share within the next 5 years. Yes, that is a 23% premium to Iren’s pre-announcement share price of $56, but Nvidia doesn’t risk any capital now.
Logically, Nvidia will only purchase shares at $70 if they are trading above that. Obviously, it won’t exercise their option if Iren trades for $60 as they would instantly be at a $10 loss.
Why do that if they can purchase it on the open market for $60?
Essentially, Nvidia is not taking any risk, and it’s not helping Iren financially right now. It will help only if the future, and only if Nvidia feels like it.
Whilst with Nebius, Nvidia made an immediate $2B investment, risking its capital.
That seems like a bigger sign of confidence.
With Iren, Nvidia is not risking anything. They will only invest if it’s profitable to do so, only if the shares trade above $70.
Nvidia has essentially negotiated a risk-free upside.
This deal is smart because it lets both companies have the cake and eat it, too.
Iren benefits from an immediate stamp of approval from the king of AI.
While the king of AI is not seeing any immediate outflow of capital and can claim that they are supporting the AI ecosystem.
However, Nvidia didn’t sign an AI cloud agreement with Nebius, so that is a plus.
Clearly, Nvidia wouldn’t have done so if they had no trust in Iren, they do.
But there is another angle from which to view this development.
Some analysts view it as Iren essentially giving an incentive to Nvidia to enter into the customer relationship.
Iren wants to have a flagship customer deal with Nvidia to attract customers and new capital. It also wants good margins on this customer deal to show profits in the income statement, but Nvidia doesn’t want to overpay.
Again, with these options, Nvidia is guaranteed to make a profit on the equity if the share price is above $70, taking no risk.
This would not appear on Iren’s income statement as a discount to Nvidia, because legally and accounting-wise, it is not. It is dilution.
Iren is phrasing this as an incentive for Nvidia for executing on delivering chips to them.
“ The $2.1 billion NVIDIA investment is structured to reflect that. Their rights to invest only vest as NVIDIA GPU infrastructure is deployed across our campuses, and only fully vest upon deployment of 600,000 GPUs. NVIDIA’s capital is directly tied to execution. That’s not a passive financial investment. NVIDIA is a partner who wins as we deliver. “ Daniel Roberts, Iren CEO
I am sorry, but this seems strange.
Iren is the customer, yet they reward their supplier with options that only vest if Iren buys 600K GPUs?
Let’s say each GPU is $40K, so that’s $24B.
So, for spending $24B, Iren gets rewarded with $2.1B and dilution, but only if its stock price is high enough.
You would think that Iren would be immediately rewarded for committing to spend $24B with Nvidia, but instead, Nvidia is rewarded for Iren spending $24B.
This is yet another strange circular deal of the AI ecosystem.
However, in the long term, this deal is clearly beneficial for Iren, which exceeds the option value.
Nevertheless, I still find the structure strange.
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3. Mirantis Acquisition
On May 5, 2026, IREN announced that it had agreed to buy a company called Mirantis for about $625M in an all-stock deal.
Iren Fiscal Year Q3 2026 Earnings Presentation!
Mirantis is an expert in cloud software and Kubernetes, which is a tool used to manage and organize 1,000s GPUs working together.
This acquisition is designed to give IREN the first software tool it needs to become a full-stack provider of AI services.
This is a divergence from their previous pure bare metal strategy. A reminder that in bare metal, the client comes with their own software stack and only pays for the usage of the equipment.
This has lower margins than AI cloud software services, so with this move, Iren is moving upmarket, with the goal of increasing margins and revenues from its existing capacity.
The main goal of buying Mirantis is to make it easier for customers to use the massive power of Iren’s GPUs.
In the AI computing industry, there is often a gap where companies have the hardware but struggle to set up the software correctly to use all the GPU power.
Mirantis helps bridge this gap with its technical expertise and its AI platform, which manages AI workloads across different types of servers and environments.
Mirantis will operate as a separate subsidiary, but its software will be integrated into Iren’s AI Cloud platform. This will help the company serve a wider range of customers who need more complex AI setups.
By providing a larger share of the software layer, Iren hopes to make its relationships with customers stickier, driving long-term retention.
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4. Capacity
The most important part of Iren’s business is its ability to secure power and build data centers fast enough to meet the huge demand for AI.
The company currently has a total of 5 GW of secured power, which is power that is already contracted or approved for use.
Iren Fiscal Year Q3 2026 Earnings Presentation!
The company targets 1,120MW by the end of 2027 and 5GW further out, likely in the 2029-2031 period.
Let’s look at its data center projects and their progress.
4.1. Horizon 1-4
The Horizon 1-4 project is a key part of the current build-out at the Childress site in Texas. This project involves 300 MW of data center space that uses liquid cooling.
Iren Fiscal Year Q3 2026 Earnings Presentation!
The company is currently commissioning the GPUs for Horizon 1, which will be handed over to Microsoft for its use in CY Q3 2026.
The other three phases, Horizons 2 through 4, are on track to be finished by the end of 2026.
This is a major milestone because it shows the company can build and launch a large-scale, high-tech site for a major customer on a very tight schedule.
4.2. British Columbia
The company is currently working to upgrade the British Columbia sites to support AI workloads instead of bitcoin mining.
Iren Fiscal Year Q3 2026 Earnings Presentation!
At the Prince George site, which has 50MW of power, Iren has already delivered the necessary GPUs and is in the process of setting them up. Once this is done, the entire site will be dedicated to AI.
The Mackenzie site has 80MW of capacity that is ready for new chips to be installed in the second half of 2026.
At Canal Flats, the company plans to change all 30 MW of its power over to AI services.
This work is happening while the provincial government is making new rules for how data centers use power.
In 2025 and 2026, the province is setting limits on power for AI and requiring companies to compete for new connections. IRen has said it will keep working and growing in the region by following these new rules.
The large $140.4M impairment charge this quarter was due to the cost of turning off bitcoin mining equipment at these locations to prepare for the AI upgrades.
4.3. Childress
The Childress site in Texas is the biggest focus for the company right now.
Iren Fiscal Year Q3 2026 Earnings Presentation!
It already has 60 MW of air-cooled data center space that is fully built and will be used for the new contract with Nvidia starting in early 2027.
Construction is also moving forward on two more phases, Horizons 5 and 6, which are part of the plan to reach over 1.2GW of capacity by 2027.
4.4. Sweetwater
On May 1, 2026, Iren reached a crucial goal at its Sweetwater site in Texas by energizing the first substation.
Iren Fiscal Year Q3 2026 Earnings Presentation!
This substation has a massive capacity of 1.4GW and is now connected to the Texas ERCOT power grid.
This connection is a huge advantage because getting power from the grid is often the biggest delay in building a data center.
The whole Sweetwater campus is designed to eventually support 2GW of total power.
The first phase of building the actual data halls is underway, and this site will be a major part of the company’s growth through 2027 and 2028.
By finishing the substation first, the company can now build and turn on new data halls one after another as they are finished.
4.5. Expansion to Spain
In May 2026, Iren entered the European market by buying data center developer Nostrum Group.
Iren Fiscal Year Q3 2026 Earnings Presentation!
This deal gave Iren 490MW of power capacity in Spain that is already contracted to the grid.
As of now, we don’t know how much Iren paid for this, and more clarity will likely come in the next few months.
4.6. Australian Market
Iren is also looking at expanding into the Asia-Pacific region, starting with Australia.
Iren Fiscal Year Q3 2026 Earnings Presentation!
The company is currently working on agreements to connect new sites to the power grid there. These Australian projects are part of the long-term plan for the years 2028 and beyond.
By having sites in North America, Europe, and Asia, Iren can provide AI services to customers all over the world.
5. No Hyperscaler Deal
Last quarter, Iren disclosed that they are negotiating at least one multi-billion-dollar contract that specifically requires a comprehensive software solution.
Today, we know that the customer was Nvidia, and this was likely the driver for the acquisition of Mirantis.
While Iren delivered the $3.4B customer deal with Nvidia, it is rather small, and Iren shareholders are impatiently waiting for a larger contract.
Especially considering that Sweetwater was successfully energised, there were hopes that the deal would be announced soon. However, prospective customers are likely waiting for more development work to be completed before signing on.
Multiple narratives emerged as to why the company didn’t announce a new deal. But the key concern was that Iren might be facing stiff competition from other AI data center developers. I disagree with this narrative.
Iren has already signed a major $9.7B contract with Microsoft, so the company is focused on finishing construction of its Childress, Texas data center to service this contract.
There is no need to rush into an agreement, there is plenty of time before additional capacity is set to come online!
Furthermore, the company revealed that they are currently in multiple advanced negotiations with both hyperscale and non-hyperscale enterprises.
“there’s nothing stopping us contracting that capacity today. It just gets easier the closer you get. The focus is on time to compute. The demand we know is there, and all it does is make the conversations and the negotiations that we are having live time for a lot of that capacity much easier when you’ve got a defined construction and delivery plan rather than trying to make things up on the fly in parallel with a full form agreement.” Daniel Roberts, Iren CEO
Iren is taking the time to negotiate the most favorable contractual terms. They could sign a colocation deal tomorrow, but they don’t want that. The company wants to get the best deal possible, and that simply takes more time.
6. Conclusion
The results clearly show a company that is going through very fast changes.
While the total revenue was lower than expected and the net loss was large, these numbers were driven by the choice to build for the future.
The 94.2% Q/Q jump in AI Cloud revenue and the $3.1B in contracted ARR are strong signs that the company’s plan is working.
The deals with Microsoft and Nvidia show that the biggest tech companies in the world are willing to sign long-term, multi-billion-dollar contracts with Iren.
The purchase of Mirantis also adds important software expertise that should help them move up the value chain.
With $2.6B in cash and 5GW of secured power, IRen has a lot of resources to keep building.
The main challenge for the company now is to finish its construction projects on time and get its new GPUs running for its customers. If it can do this, it will be in a very strong position to lead the global market for AI infrastructure and reward its shareholders.
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