Analysts Defend Iris Energy IREN After Culper Research's Negative Report

Analysts at Bernstein on have rebutted Culper Research's negative report on Iris Energy Ltd IREN, defending the company's AI and bitcoin mining prospects.

Culper Research’s recent report on Iris Energy Ltd (NASDAQ:IREN) has sparked a response from analysts at Bernstein, who defended the company's AI and bitcoin mining prospects on Thursday.

The Block reported that IREN shares fell over 13% on Thursday following Culper's report, which claimed that IREN shares were overvalued by 52% to 79%. Culper valued Iris Energy's crypto mining operations between $0 and $100 million.

A spokesperson for Iris Energy told Benzinga, "As a public company we are limited in how much we can say about reports of a certain nature. We encourage debate and value intellectually honest discourse. However, not all engagement meets these standards."

"We remain focused on our growth to 30 EH/s of mining capacity this year, serving our AI cloud service customers, and pursuing monetization opportunities for our broader power and land portfolio," the spokesperson added.

Bernstein's Take: Countering Culper's criticism of Iris Energy's (NASDAQ:IREN) Childress site, Bernstein analysts Gautam Chhugani and Mahika Sapra highlighted that the site is primarily intended for bitcoin mining, not AI operations.

Emphasizing that "IREN has not claimed it intends to retrofit its bitcoin mining site in Childress to AI," Chhugani and Sapra noted that around 65% of their fair value for Iris Energy is attributed to bitcoin mining.

Highlighting Iris Energy's 1.4GW pipeline site in West Texas as a key AI opportunity, Bernstein analysts countered Culper's criticism of Iris Energy's GPU build-out, stating that IREN would construct AI data centers with the necessary specifications.

In response to Culper's cost comparisons, Bernstein analysts noted that Iris Energy's current capital expenditure pertains to bitcoin mining costs, not AI/HPC costs. They also highlighted the new institutional cycle for bitcoin, driven by notably the Bitcoin ETFs.

Earlier this week, Bernstein initiated coverage on Core Scientific (NASDAQ:CORZ) with an "outperform" rating. Block (NYSE:SQ), co-founded by former Twitter CEO Jack Dorsey, announced a deal to supply Core Scientific with new ASIC mining chips, in a deal that could be valued at $300 million.

Bitcoin miners are increasingly becoming attractive partners for AI data center projects, given their available power supplies and operational capabilities, a trend that's being highlighted by major deals like Core Scientific's 12-year agreement with CoreWeave and Coatue Management's $150 million investment in Hut 8 (NASDAQ:HUT).

Bernstein analysts, who are predicting that bitcoin (BTC) could hit $200,000 by 2025, also noted that the pending approval of spot Ethereum ETFs could drive up institutional participation in the digital assets market.

The Impact of Bitcoin Mining to be Discussed at Benzinga's Future of Digital Assets Event: The event is set to take place on Nov. 19.

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.