Microsoft's $9.7 Billion Investment in IREN

Microsoft Takes Control with IREN

Microsoft represents a significant transformation in the crypto mining sector with its agreement with IREN worth approximately $9.7 billion. In a statement made on Wednesday, the Australia-based IREN became Microsoft's largest customer. Under this five-year agreement, this neo-cloud operator specialized in data centers for artificial intelligence workloads will provide Microsoft access to Nvidia chipsets.

IREN's shares increased by 10% on the first day and have recorded an approximately 580% rise since the beginning of the year.

Additionally, IREN has formed a partnership with Dell Technologies valued at approximately $5.8 billion to purchase processors and related equipment. This agreement reinforces the transformation of crypto miners into a central player in the artificial intelligence wave and assesses the opportunity to use land, energy, and data centers for artificial intelligence workloads with long-term contracts.

Many miners, such as Riot, TeraWulf, and Cipher Miner, have redirected their resources towards high-performance computing infrastructure and artificial intelligence. This shift has resulted in share price increases of 100%, 160%, and 360% for these companies respectively throughout the year.

Bernstein analyst Gautam Chhugani and his team stated, "Bitcoin miners are now an integral part of the AI value chain. They provide warmed power shells for AI data centers, which is considered the biggest bottleneck for execution."

Chhugani added, "Every Bitcoin miner listed on the U.S. stock exchange has undergone a transformation towards optimizing the value of energy assets rather than maximizing Bitcoin earnings." Fluctuations in Bitcoin prices and a crowded mining space have pressured profit margins, while Bitcoin's four-year 'halving' event has further eroded revenues over time.

IREN announced earlier this year that it would stop expanding its Bitcoin mining operations and prioritize its artificial intelligence cloud and data center business. Bernstein has rated the shares as 'Buy' with a price target of $75, stating, "As IREN continues to scale its artificial intelligence business, we believe there is still room for multiple expansions."