Reported IREN Stock Plunge After Criticism
Shares of the Bitcoin mining company IREN, previously Iris Energy, dropped by 24% on the Nasdaq following negative evaluations from Culper Research, a short-selling firm.
Released on July 11, the report described the company as “highly overpriced” and suggested that its stock should be valued significantly lower than its current market price, ranging from 52-79% lower.
Underinvestment in HPC Plans
As per Google Finance figures, IREN’s shares experienced a 24.5% decline, hitting $10.36 before partially recovering to $11.20 at the closing bell post the report’s release.
- Culper Research accused IREN of boasting about its high-performance computing (HPC) plans while failing to invest adequately in the required infrastructure.
- The report indicated that IREN spent less than $1 million per megawatt on constructing its current data center, significantly lower than the $10 to $20 million per megawatt estimated cost to develop an HPC-ready data center.
- IREN claimed inflated valuations for undeveloped land and power agreements, leading to questions about the company’s transparency in financial matters.
Culper Research on IREN’s Valuation
Culper Research emphasized the disparities in IREN’s valuation concerning its industry peers, highlighting that IREN traded at a substantially higher figure per megawatt compared to recent industry mergers and acquisitions.
- The report questioned IREN’s cryptocurrency mining operations, assigning a value range of $0 to $100 million, citing historical cash burn as a concern.
- Additionally, Culper pointed out IREN’s failure to achieve its hashrate targets, which may have led to insider selling concerns by the company’s co-CEOs, Daniel and Will Roberts.
Concluding Thoughts
The report unleashed by Culper Research on IREN’s mining operations has sparked considerable scrutiny and evaluation within the industry and investor circles.
Investors are cautioned to conduct their thorough due diligence before engaging with any company in the cryptocurrency mining sector, ensuring transparency and accountability in financial dealings.
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