If our readers have been following Disruption Banking’s coverage of Bitcoin miners pivoting to data centres, such as Hut 8 and MARA, as well as to high-performance computing (HPC) infrastructure and AI compute, like Cipher Digital (formerly Cipher Mining), this question is one of a few familiar ones here.
Daniel and William Roberts built IREN Limited (NASDAQ: IREN) around Bitcoin mining. The company still produces Bitcoin, and mining still supplied most of FY26 revenue. Its latest quarter suggests that is no longer the business investors are principally being asked to value.
AI Cloud Services generated $70.5 million in the three months to 30 June, slightly more than Bitcoin mining’s $66.7 million. Three months earlier, the figures were $33.6 million and $111.2 million respectively. It is the first disclosed quarter in which IREN’s AI Cloud revenue exceeded mining. For the full year, mining was still $578.2 million against $128.8 million of AI Cloud, about 82% of revenue. The crossover has arrived quickly. It has not arrived cheaply.
The Mining Machines Are Going
IREN reported a $684 million quarterly net loss. The largest piece was a $450.4 million non-cash impairment, principally mining hardware being decommissioned as sites were converted for AI Cloud. On top of that sat a $102.1 million decline in the fair value of mining hardware classified as held for sale. Those are separate lines. The full-year impairment bill was $638.8 million; the held-for-sale mark for the year was $110.6 million.
The direct-cost comparison explains the attraction. AI Cloud produced $70.5 million of revenue with $9.2 million of direct cost, against $66.7 million and $24.1 million for mining. Both measures exclude depreciation and amortisation; GPU financing and wider platform costs also sit elsewhere. Mining revenue fell 40% during a quarter in which IREN continued decommissioning machines. Adjusted EBITDA fell from $59.5 million to $19.2 million, which IREN attributed to higher employee costs and investment ahead of the AI revenue ramp. This is no longer AI being bolted onto a miner. One business is being built in the space the other still occupies.
$4 billion Is Contracted. $1 Billion Is Running
IREN says it has $4 billion of contracted annualised run-rate revenue, or ARR, attached to its 2026 AI capacity, which is largely sold out. That $4 billion is 2026 capacity only. It does not include the NVIDIA cloud contract, which IREN says is about $700 million of ARR and ramps in 2027. It has also signed an unnamed “leading frontier AI lab”, per its FY26 results news release. Other recent signings include Cohere, Prometheus, Perplexity, Figure AI, Fal AI and Higgsfield AI.
But only $1 billion of ARR was operating as of 26 August. IREN says ARR is not GAAP revenue and warns that recognised revenue may be materially lower. The rest still depends on delivery, commissioning, testing and customer acceptance.
Microsoft has accepted Horizon 1, the first of four 50MW liquid-cooled deployments at Childress under a five-year, $9.7 billion contract. Horizon 2 is being commissioned. Horizons 3 and 4 are in late-stage construction and are targeted for delivery in the December quarter.
IREN expects those December quarter deliveries to land late in the period, so the associated recognised revenue shows up mainly in the March quarter. Contracted ARR is not near-term P&L.
NVIDIA occupies three seats at IREN’s table: GPU supplier and strategic partner, potential investor with rights to invest up to $2.1 billion subject to GPU deliveries, and customer under a five-year, $3.4 billion cloud contract. IREN’s annual report says Microsoft and NVIDIA represent a substantial majority of contracted revenue. The new signings widen the customer list. Concentration remains.
Anthony Lewis Has to Finance the Build
IREN appointed Anthony Lewis CFO in September 2025 after more than 22 years at Macquarie, where he finished as co-treasurer. He now oversees a considerably more complicated financing operation.
Microsoft’s deployment has $3.65 billion of investment-grade GPU financing at a weighted-average 6% rate, excluding fees. With prepayments, IREN says this funds 96% of the associated GPU capex.
IREN has lined up $2.8 billion for non-investment-grade customer deployments, including a $2.4 billion facility led by Blue Owl and PIMCO at a fixed 9% for Mackenzie. That covers about 90% of the associated GPU capex. Recent customers are also prepaying 45%-55% of GPU and ancillary capex.
The Cash Already Has a Job
IREN finished June with $5.90 billion of cash and cash equivalents, $1.67 billion of restricted cash and approximately $7.59 billion of current and long-term debt. It raised $4.74 billion through ordinary shares during FY26 and received $6.30 billion of gross convertible-note proceeds. Convertible principal outstanding at year-end was $6.75 billion.
That $7.59 billion is mostly convertibles plus a first slice of GPU debt. Only about $938 million of the GPU facilities had been drawn by 30 June. The $3.65 billion Microsoft facility and the $2.8 billion of non-investment-grade GPU financings are largely committed capacity, not cash already owing on the year-end balance sheet.
It also carried about $1.84 billion of deferred revenue at 30 June, $46.5 million current and $1.80 billion long-term. That is customer prepayment sitting on the balance sheet as a liability until capacity is delivered, accepted and recognised. It is cash IREN already has. It is not yet revenue.
Its cash-flow statement shows how capital-intensive the year became: $3 billion went into property, plant and equipment, and $1.34 billion into computer hardware.
The FY26 results presentation puts FY27 capex at $25 billion-$30 billion. IREN identifies $14 billion from cash, committed GPU financing and prepayments, and targets roughly $8 billion more. Data-centre finance, operating cash flow, corporate debt and equity are expected to provide the rest.
IREN Is Hiring for AI
IREN says headcount nearly tripled during FY26 and points to five recent C-suite appointments. Lewis is one of them. In early August, it also completed its acquisition of cloud-software company Mirantis.
The aggregate consideration was approximately $544 million, comprising 12.6 million IREN shares plus approximately $40 million in cash and restricted stock units. That is an unusually large organisational change for a company that was primarily selling mined Bitcoin not long ago.
What Investors Need Next
IREN is still producing Bitcoin, but the direction is difficult to miss. AI has overtaken mining in quarterly revenue for the first time, even though mining still dominated the year. Mining hardware is being written down and removed. Employees are being added. Billions are being borrowed and raised. Customers are paying before service begins.
IREN’s 2026 capacity is already largely contracted, so the next question is not simply whether IREN can find AI customers. It is whether IREN can turn $4 billion of contracted ARR into recognised revenue quickly enough to support its capital structure while pursuing $25 billion–$30 billion of FY27 capex.
Do you know which frontier AI lab signed with IREN, or how its remaining capacity will be financed? Contact the Disruption Banking editorial team.
Author: Richardson Chinonyerem
The editorial team at #DisruptionBanking has taken all precautions to ensure that no persons or organisations have been adversely affected or offered any sort of financial advice in this article. This article is most definitely not financial advice.
See Also:
Why IREN is Shifting Away from Bitcoin Mining to Data Centers | Disruption Banking
How Bitcoin Miners Became the Backbone of the AI Compute Boom | Disruption Banking
