Short-selling institution Culper Research released a report stating that Iris Energy, a mining company, experienced a sharp drop of 13% in its stock price after its mining sites in Childress were deemed unsuitable for artificial intelligence or high-performance computing operations. Culper Research stated in the report that Iris Energy’s stock price plummeted due to this reason.
Analysts’ endorsement: AI and mining capital expenditure comparison is meaningless
However, another brokerage firm, Bernstein, disagreed with Culper Research’s bearish view. Two days ago, Bernstein gave Iris Energy a “outperform” rating and even set the target price at $26. On the same day, Bernstein continued to defend Iris Energy, stating that the company had never expressed any intention to convert its Bitcoin mining sites for artificial intelligence use. On the contrary, the company has expanded most of its plans for Bitcoin mining, and the existing power and data center infrastructure at the Childress site are highly suitable for Bitcoin mining.
Bernstein estimates that 65% of the company’s value comes from Bitcoin mining, while the remaining 35% comes from artificial intelligence/high-performance computing, completely disagreeing with the notion that mining activities are of no value.
The report points out that Iris Energy’s potential advantage in artificial intelligence mainly comes from its 1.4 GW site in West Texas with power interconnections, and the opportunity lies in monetizing the land and power supply. Bernstein states that the current capital expenditure benchmark of $1 million per megawatt reflects the capital expenditure of Bitcoin mining, and comparing it with AI/HPC capital expenditure is meaningless.
Bernstein states that Iris Energy’s valuation is consistent with other Bitcoin mining companies such as CleanSpark (CLSK) and Marathon Digital (MARA), and the entire valuation is driven by mining.
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