IREN Ltd is repositioning its business around artificial intelligence infrastructure, with a multi-billion-dollar buildout that signals a decisive move away from bitcoin mining. A new research note from Bernstein outlines how the company could phase out mining operations and replace them with high-margin AI cloud services.
The report describes a structural shift in mining economics. Bitcoin’s price remains below its previous peak, while operational costs and competition continue to pressure margins. In contrast, demand for AI compute capacity has surged, driven by enterprise contracts and long-term agreements.
“IREN will eventually sunset the Bitcoin mining business as it retrofits existing sites to accelerate cloud deployment,” Bernstein analysts wrote.
Microsoft deal anchors multi-billion expansion
A central element of IREN’s transition is its long-term agreement with Microsoft. The company has already contracted a large share of its GPU capacity to support AI workloads under a five-year deal.
Out of 150,000 GPUs planned for deployment, a significant portion has been allocated to Microsoft. The remaining capacity targets additional enterprise clients and on-demand cloud services. Bernstein estimates that the full deployment could support an annual revenue run rate of about $3.7 billion.
The agreement also includes customer prepayments. These funds help finance infrastructure development and reduce reliance on traditional borrowing. According to the announcement, IREN has funded most of its $5.8 billion GPU investment through a mix of prepayments, GPU-backed financing, and internal capital.
Financing costs remain relatively low, with funding structures tied to contracted assets. This approach addresses concerns about the capital intensity of AI infrastructure projects.
Mining infrastructure gets repurposed
IREN has not shut down its mining operations outright. Instead, it has started converting existing facilities into AI data centers. Sites in Texas and British Columbia form the backbone of this strategy.
The company replaces ASIC mining rigs with GPU systems designed for machine learning and high-performance computing. This transition allows IREN to reuse power infrastructure, cooling systems, and physical space that once supported bitcoin mining.
The company’s total power portfolio stands at about 4.5 gigawatts. This capacity supports both current operations and future expansion. Additional sites in Oklahoma and Sweetwater provide room for further growth.
Bernstein assigns no long-term value to bitcoin mining in its updated model. The report projects that mining revenue will decline steadily and reach zero by the end of the decade as power shifts toward AI workloads.
Revenue projections highlight scale of transition
The firm expects IREN’s AI cloud revenue to grow from a small base in 2025 to more than $1 billion within two years.
By 2027, projections place revenue between $2.1 billion and $2.6 billion, depending on deployment pace and contract mix. Longer-term estimates point to about $6 billion in annual cloud revenue by 2030.
Profitability metrics also reflect this shift. Bernstein projects adjusted EBITDA margins above 80 percent once operations reach scale. That level would generate nearly $5 billion in earnings before interest, taxes, depreciation, and amortization.
These projections depend on full utilization of GPU capacity and continued demand from enterprise clients. The Microsoft agreement provides a foundation, while additional contracts will determine the pace of expansion.
Stock target trimmed but upside remains
Bernstein reduced its price target for IREN shares to $100 from $125. The firm maintained an Outperform rating despite the adjustment.
The revision reflects dilution from recent equity issuance and a reduced contribution from bitcoin mining. It does not signal weaker expectations for the AI business.
Google Finance data shows IREN stock trades below $50, which implies significant upside if the company executes its strategy. The shares have delivered strong gains over the past year, despite recent volatility linked to broader market conditions.
The company has also expanded its capital raising efforts. It increased its equity offering program to $6 billion after raising $1 billion through share sales. Major financial institutions, including Goldman Sachs, JPMorgan, and Citigroup, are involved in managing the offering.
Industry shift extends beyond a single company
IREN’s strategy reflects a broader movement among bitcoin miners. Companies such as TeraWulf and HIVE Digital have also started allocating resources toward AI and high-performance computing.
The shift comes as crypto-linked equities face pressure from price volatility in digital assets. At the same time, technology stocks tied to artificial intelligence have attracted strong investor interest.
The contrast has influenced capital allocation decisions. Mining firms now evaluate whether power capacity generates higher returns through bitcoin production or AI workloads.
From early mining to hyperscale computing
IREN built its business on bitcoin mining. The company now aims to operate as a hyperscale AI cloud provider. This transition relies on existing infrastructure, long-term contracts, and access to low-cost power.
Artificial intelligence is the primary growth driver for the sector. The report frames bitcoin mining as a legacy segment within IREN’s future model.
The outcome depends on execution. GPU deployment, customer demand, and financing conditions will shape results over the next several years. The company has already committed billions to the transition, with most funding secured through structured agreements.
The shift marks a turning point. Bitcoin mining once defined the company’s identity. AI infrastructure now defines its trajectory.
Jordan V.
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