IREN (Formerly Iris Energy) Is An Undervalued Stock!
๐๐๐Bitcoin price is trading near its highest levels in September following Dovish updates from the Feds and Bank of Japan. Bitcoin price rose to over USD 64,120 after the Feds cut the US interest rates by 50 basis points. The Bank of Japan has also decided to keep its interest rates steady after its August's hikes.
From the sunny shores of Australia is $Iris Energy Ltd(IREN)$
which changed its name from Iris Energy on February 16 2024 to better reflect its expanding next generation data centre business.
IREN owns and operates Bitcoin mining data centers. It also provides high performance computing solutions, including AI cloud services.
IREN share price has jumped 5.5% on Tuesday on news that it has increased its installed capacity to 20 EH/s. 1 EH/S is One Exa Hash which is 1 Quintillion per second or 1,000,000,000,000,000,000. Hash functions are used in many parts of Cryptomining. The larger the hash rate, the more effective and faster the crypto miner has to mine Bitcoin.
IREN says that it is on track to increase its installed capacity to 31 EH/S in 4Q, 2024. On September 16 2024, IREN announced the purchase of 1080 latest generation of$NVIDIA Corp(NVDA)$
For the year ending June 30 2024, IREN achieved an EBITDA of USD 108 million, up from USD 53.3 million in the previous year. IREN'S Bitcoin mining revenue has increased from USD 75 million to USD 184 million year on year. This was fueled by a significant increased in production of Bitcoin, resulting in the mining of 4191 Bitcoins at an average realised price of USD 44,000.
In addition to Bitcoin mining, IREN has strategically expanded into the AI Cloud Services sector. This new business line generated USD 3.1 million in revenue during its 1st year and highlights the huge potential for growth in AI solutions in the future.
Iris Energy is using 100% renewable energy in its operations. This not only aligns with global trends towards greener energy but also positions IREN as a leader in sustainable practices within the industry.
IREN is also diversifying into High Performance Computing (HPC) by leasing GPUs to AI companies such as Poolside.ai. This vertical integration offers a high margin business model. In contrast its competitors like Core Scientific only leases data centre space and power.
IREN's future cash flows are highly sensitive to Bitcoin prices. According to a report by Forbes, Bitcoin prices could reach between USD 100,000 and USD 150,000 by the end of 2025. As such IREN is well positioned to benefit if Bitcoin prices rise.
Performance wise IREN is up 5.5% on Tuesday and 16.6% year todate. In 2023, IREN has skyrocketed 109%.
Wall Street Analysts are bullish on IREN with a Strong Buy rating, Average Target price of USD 15.63, an upside potential of 97% according to Tipranks.
I have just started to invest in IREN as I believe it has lots of exponential growth ahead. Even though IREN 's primary source of revenue is from Bitcoin mining currently, it has diversified into the fast growing AI cloud sector.
The current macro economic backdrop with lower interest rates from the Feds will provide the tailwind for IREN to continue its upward trajectory. At the current price of USD 7.93 per share, it is golden opportunity to invest in IREN before it becomes a multi bagger in the future.
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