Iris Energy (IREN) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved an adjusted EBITDA of $2.6 million with Bitcoin mining revenue of$54.3 million and AI Cloud services revenue of $3.2 million [67] - The average operating cash rate increased from 9 exahash to 12.1 exahash during the quarter [68] - Closing cash at the bank was reported as$98.6 million, with cash increasing to $182.4 million by October 31, 2024 [70][72] Business Line Data and Key Metrics Changes - The company mined 821 Bitcoin at an average realized price of$66,000 [68] - Net electricity costs increased by $4.6 million to$28.7 million, primarily due to increased usage at the Childress site [69] - The transition to a spot pricing strategy for electricity procurement at Childress is expected to reduce the cost of Bitcoin mined to $26,700 if applied for the entire quarter [69] Market Data and Key Metrics Changes - The company is positioned as a low-cost commodity producer, with an expected cash cost of$29,000 per Bitcoin [9][22] - The average power cost at Childress is reported to be over 0.03 per kilowatt-hour, contributing to lower overall costs [30] Company Strategy and Development Direction - The company plans to accelerate its expansion to 50 exahash in the first half of next year, previously targeted for the second half [12] - The strategy focuses on large-scale projects to provide lower execution risk and rapid expansion at low cost [13][25] - The company aims to transition to a U.S. domestic issuer status in 2025 and is working towards inclusion in major U.S. indices [21][22] Management's Comments on Operating Environment and Future Outlook - Management noted that the Bitcoin mining sector is at an inflection point, with institutional interest returning to the space [7] - The company is optimistic about generating substantial operating cash flows in the near term, supporting potential investor distributions in 2025 [22][63] - Management emphasized the importance of prudent capital management and generating strong cash-on-cash shareholder returns [23] Other Important Information - The company has secured 2.3 gigawatts of contracted capacity, with a focus on sites with executed interconnection agreements [55][58] - The Sweetwater Data Center project is expected to be one of the largest Bitcoin mining facilities or AI factories in the world, capable of supporting over 90 exahash of Bitcoin mining or over 800,000 GPUs [54] Q&A Session Summary Question: Strategic process versus organic opportunity at Sweetwater - Management is preparing for both Bitcoin mining and AI-related opportunities, comparing each pathway as an opportunity cost [76][79] Question: Capital intensity on the Bitcoin Mining business - The funding requirement to go from 30 to 50 exahash is approximately 400 million, with ongoing discussions about capital needs [81] Question: Bitcoin price and self-funded growth - Operating cash flows are expected to be substantial, allowing for potential distributions to investors while maintaining a focus on reinvestment [87][89] Question: Long-lead time items for Sweetwater - Long-lead procurement is set up to enable full capacity on the high-voltage substation by April 2026, with a progressive build-out of data center capacity [92] Question: Fiber interconnect at Sweetwater - Access to fiber is not an issue, with multiple Tier-1 carriers available, ensuring low latency suitable for both AI applications and Bitcoin mining [94] Question: Demand post-FERC announcement - There is perceived increased demand, but management emphasizes the importance of closing deals to create tangible value for shareholders [117] Question: Future plans for AI cloud business - The company is taking a measured approach to GPU investments, focusing on Bitcoin opportunities while monitoring market conditions for AI [120]