Bitcoin mining company Iris Energy saw its stock drop nearly 21% on Thursday after activist short seller Culper Research released a critical report doubting the company’s ability to transition into high-performance computing (HPC) and questioned its valuation.
Culper Research compared Iris Energy’s ambitions to “trying to win the Monaco Grand Prix in a Toyota Prius,” arguing that the company’s infrastructure is not suitable for HPC and AI applications.
The short seller claimed Iris Energy has spent less than $1 million per megawatt on its current facilities, much lower than the $10-20 million industry standard for HPC-ready data centers.
The report also expressed concerns about Iris Energy’s valuation, suggesting that the company’s shares could be worth 52% to 79% less than their current price. Culper categorized the valuation into three parts: existing facilities, undeveloped power, and crypto-mining operations, assigning a value of $0 to $100 million to the latter.
Based on Bloomberg’s report, recent insider selling by co-CEOs Daniel and Will Roberts since February has added to investor worries. Culper noted that Iris Energy has burned through $716 million in cash since 2020, mainly funded by issuing more shares.
At the time of publication, Iris Energy’s stock, IREN was down 13.18% to $11.20 per share, after hitting a session low of $10.36. Despite the day’s losses, shares remain up 65% year-to-date.
The company is yet to respond to requests for comment on the Culper Research report.
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