Microsoft Invests 9.7 Billion Dollars in IREN

Microsoft Takes the Reins with IREN

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

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

In addition, IREN established a partnership with Dell Technologies worth approximately $5.8 billion to purchase processors and related equipment. This agreement reinforces the transformation of cryptocurrency miners into a central player in the artificial intelligence wave and evaluates the opportunity to use land, energy, and data centers for AI workloads through 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 led to an increase in the shares of these companies by 100%, 160%, and 360% respectively over the year.

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

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

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