As a researcher with experience in the tech industry and a background in analyzing financial reports, I find Culper Research’s critique of Iris Energy’s transition into high-performance computing (HPC) and its valuation quite intriguing. The comparison of Iris Energy’s ambitions to “trying to win the Monaco Grand Prix in a Toyota Prius” is an apt metaphor, as it highlights the significant infrastructure gap between what Iris Energy currently possesses and what is required for HPC and AI applications.
Iris Energy, a Bitcoin mining firm, experienced a significant decline in its stock value by approximately 21% on Thursday. This downturn came following the publication of a skeptical report by Culper Research, an activist short seller, casting doubt on Iris Energy’s capacity to shift into high-performance computing (HPC) and raising concerns about its assessment.
According to Culper Research, achieving Iris Energy’s goals in the high-performance computing (HPC) and artificial intelligence (AI) sectors is akin to attempting to win the Monaco Grand Prix in a Toyota Prius due to the company’s inadequate infrastructure for such applications.
The short seller asserted that Iris Energy has invested under $1 million per megawatt in constructing its existing data centers, significantly less than the usual $10-20 million range for high-performance computing (HPC)-enabled facilities within the industry.
As a crypto investor, I’ve read through the report and it raised some red flags regarding Iris Energy’s valuation. The report suggests that the company’s shares could be overvalued by as much as 52% to 79%. To break down the valuation, the report categorized it into three parts: the value of existing facilities, the potential value of undeveloped power sources, and the crypto-mining operations. The report assigned a conservative estimate of $0 to $100 million to the crypto-mining operations.
According to Bloomberg’s latest update, insider sales by co-CEOs Daniel and Will Roberts of Iris Energy since February have intensified investor concerns. Notably, the company has gone through approximately $716 million in cash since 2020, with a significant portion coming from share issuances as reported by Culper.
When I checked the market data at the point of release, I noticed that Iris Energy’s stock price, represented by the ticker symbol IREN, had dropped by 13.18% to $11.20 per share during the trading session. The stock reached its lowest point of $10.36 earlier in the day. However, it’s important to mention that despite this daily decline, Iris Energy’s shares have still shown a significant gain of 65% so far in 2021.
The company is yet to respond to requests for comment on the Culper Research report.
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2024-07-12 05:57