IREN Fallout: News, Sentiment, Outlook & Valuation Analysis!

We break down IREN’s biggest new headlines and why a single compensation filing can swing investor sentiment faster than any quarterly update. We zoom out from red days on the chart to the long game: power, talent, contracts, and the mechanics that could turn IREN into a full-stack AI infrastructure player. 

• Bitcoin price action and what it signals for risk appetite 
• Red tape across AI infrastructure stocks and potential rotation 
• IREN’s run from $5 to $76 and why trimming matters 
• New C-suite hires from Oracle and Google ecosystem roles 
• What the $800M RSU grant actually is per Form 4 filings 
• Vesting periods and holding restrictions that limit near-term selling 
• Say-on-pay votes as the shareholder lever on compensation 
• How social sentiment flips and what that reveals about conviction 
• The NVIDIA relationship and the 30M share purchase right at $70 
• Power pipeline math across megawatts and gigawatts 
• A valuation framework tied to revenue per megawatt and EBITDA margins 

Also make sure you pop over to the website poweranalysis.io. Newsletter comes out tomorrow, 100% free. Let us know in the comments section below if you're currently holding shares of Iron and how you're feeling about the company currently!

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Transcript

Welcome And Viewer Requests

SPEAKER_00 0:00

Hey guys, welcome or welcome back to the channel McNally Money, the official home of power analysis. A big episode on deck for you today where Anthony and I are going to be talking all things iron, including strategy, outlook, earnings expectation, today's recent RSU news, and of course, recent hires or additions to the team. We've got a lot to talk about. Should be a great episode. Before we get into it, take a second, smash the like button, guys. Big help to myself and the channel. Anthony absolutely loves it. If you're not already subscribed, McNally Money, feel free to join. And let us know in the comments section below if you're currently holding shares of Iron and how you're feeling about the company currently. With that being said, let's get into today's episode. All right,

Bitcoin Bounce And Sector Selloff

SPEAKER_00 0:49

guys, Thursday afternoon, away we go. This is not going to be an episode you want to miss. We're talking all things iron here, Anthony. Some big announcements overnight. We're going to be talking strategy, power pipeline, and an updated valuation analysis. Before we get into that, though, Bitcoin showing a little bit of strength. We saw it break 62 today, currently above 61 and a half. So starting to make a bit of progress from where we were in that 58 range.

SPEAKER_01 1:16

Yeah, up nearly 3% today, which is uh which is nice to see. We've we've seen that uh we've shown you the the the one-year chart a couple of times this week, which uh doesn't look great because we had that all-time high in October last year, and ever since that date, there the Bitcoin price has been pulling back, pulling back. Last couple of months, it's been in that sort of uh 60 to 65,000 range, and we saw it drop below 60,000. How long was that going to be? But this is taking it a couple of thousand uh above that rate there. So um happy in this position here. But as I say, Bitcoin will do what it does, it's uh it's a volatile asset class, and um you know time will tell where we get to. Um, but as I say, I don't tend to zoom in on on days like this. I haven't sold any Bitcoin. I bought some Bitcoin last week, so I'll keep buying when it's low because that's the opportunity. People will say, Um, I didn't want to buy me if it was its all-time high. Now you've got an opportunity to buy at 60,000. How many people out there are making that uh decision to do that?

SPEAKER_00 2:14

It's a good question. Now moving over to the AI infrastructure players, again, a complete sea of red. We've got some significant uh downward movements for many of the household names here. We're talking keel, cypher, iron, which we'll talk about extensively. The only one currently bucking the trend, bit foo foo. But Anthony, if you look at the day range here, I think this is probably the most consolidated we've seen at that low end of the range.

SPEAKER_01 2:40

Absolutely, and you can see that um, you know, from the day range there, we're at the lowest um point of the day ranges for the most of these stocks. I took a look on pre-market, and and most of my portfolio was in green. And so ever since the uh since the markets opened properly, uh, we've we've seen this this pullback, and and like you say there, you just highlighted four or five, Core Scientific, Wi-Fi, Iron, Terra Wolf, Keel, they haven't got a contract yet. Cypher have three or four contracts, um, you know, all in double digits uh down today. So it looks like you know, a whole sector down. Now, this can't be said for the same for some of the Mag 7 who are doing, you know, doing quite well today. I looked, I was listening to CNBC earlier, and some of the some of the biggest companies in the world are having better days than we're seeing in this space here, so it's not sector-wide, um, but it might be like a little bit of movement of uh of money from one uh set of asset classes into another set of asset classes. It could be as simple as that there, but um, not one element to think about. It's it's probably just a maybe some profit taking. Um, but we've seen a loss this over the last month. We're not going to show the heat map today, we've shown um that you know on every podcast up to now. We're gonna focus on one particular company um who had a couple of announcements last night and more announcements this

IRIN Price History And Taking Profits

SPEAKER_01 3:59

morning. That's Iron. And so we wanted to give the time to tell that story behind those announcements and give our view and also the views of some of you guys out there who've been following the stock for a number of years and uh helping the community as well.

SPEAKER_00 4:14

Yeah, most definitely. Now, you had the privilege of jumping on the horn with Mike Power this morning. We got some insight onto the announcements. We're gonna lay this out in chronological order. So we've got a one-year chart up on iron. We've talked a lot about this impatience it feels in the market. We saw that tremendous run from five to 76 last year. But realistically, Anthony, five, six hundred percent return year after year is not sustainable. Iron, even with this pullback, still up respectable, nearly 150% over the last 12 months.

SPEAKER_01 4:47

Yeah, and and and people gotta remember, you know, we talked about this last year. The share price was five dollars and thirteen cents in early April last year. That share price got to $76 at its high. And I think the intraday high even went to probably above of $80. Now, everybody who's bought shares in a company over the last three or four years, and even in the last couple of years, is probably sitting on great profits, and uh, you know, uh, you may not, you know, listen to my advice, but um, you know, it does doesn't mean you have to keep the the stock forever. There are opportunities to sell this stock, and I know that we had a conversation, but I think the share price was at $73, and you made a decision to sell a few shares that day, take some profits, lock some profits in. I was locking profits in around about the $50 to $60 range last year, and and even uh earlier in the year, in sort of like August period, there was locking in profits uh at a far lower rate than that there because I set myself targets, and when I reached the target, I sold the shares. I don't tend to look back on on uh you know, if I've sold shares, the what-if scenarios, I'll leave the what-if scenarios to 2021, when I think everyone in the space um felt having moved into this area for for one of the first times, was felt they were invincible, the share prices were rocketing. You know, people say, Oh, when will I get a 10x? People were making 20, 30x in the space of a couple of months in early 2021, all for it to be lost for the remainder of that year in 2022, which um you know, as soon as these shares went up, they were they were going down in in in in even speedier fashion. And if you don't know the the the space that well, you you got left hanging a little bit. I'm I've owned up to having a couple of stocks that really didn't sit well in my portfolio. The only benefit was is I started to learn more about the companies, I made some better decisions, and I was able to use some of those stocks as um to help reduce the amount of capital gains that I've achieved over the last two or three years, knowing the information and and you know, and the and the wealth of knowledge I've I've picked up on a day-to-day basis, doing what I'm doing in the space now, listening to a lot of people out there, talking to CEOs, understanding the companies, going out to visit sites, building up uh you know, a knowledge base there that doesn't happen overnight, six, seven years building this knowledge base up in this particular area. I'm accounting by background, I love numbers, and so that's helped me this last three or four years. But believe you me, even some with my background um uh picked out uh you know some some wrong strategies. And I'm probably grateful I did it then because I've learned so much from them to bring that forward today.

SPEAKER_00 7:32

Yeah, and uh a good point. Everyone who was holding this stock at 76 had the opportunity to take profits and trim. Whether or not you decided to do that, I guess is is kind of hindsight. Now, we wanted to talk through the news that came out last night, then we'll get into the RSUs, talk about the power pipeline and maybe our outlook for IRIN on a bigger picture.

New C-Suite Hires And Strategy Shift

SPEAKER_00 7:52

They appointed two new C-suite members at IRIN, the chief product officer and chief development officer. I'll let you walk through their profiles here, Anthony, but both with hyperscaler backgrounds and another piece of this jigsaw coming together. We've talked about the recent MA news, the Marantis acquisition, Spain, Southern Australia, and the staffing or the human capital uh really putting this masterpiece together.

SPEAKER_01 8:19

Yeah, it's a bit like an artist with a paintbrush there. They're just putting the picture together now. And these two hires there have just deepened that vertical integrated AI cloud bench, for all words to call it there. So Cambi's um Aghili has been named the chief products officer. He's gonna lead the AI cloud product strategy, including bare metals GPU, managed services. He joined from Oracle, so vast amounts of experience. And um at Oracle, it was cloud infrastructure, where he was the VP of products for its multi-cloud platform. A massive amount of experience there, great addition to the team. The second one to mention is Michael Noodleman. He's been named the Chief Development Officer as a senior appointment in the company. He leads global data center development and expansion of the 5 gigawatt secured power portfolio. And we'll come on more about that 5 gigawatt of portfolio later in the podcast. There, he brings 20 years across Google, Cyrus One, and Beal Infrastructure with great, great background in all three there. Now, this is going to strengthen all three of their stack layers: the power, land, and the cooling, and reinforce that data center, compute, and software, um, you know, managed services and enterprise support there. Both of these hires are from San Francisco. This is an area that really IRAN are focusing on. Um, and you'll come on to talk a little bit more about some of their branding in the space there. But I believe, you know, these hires and what they've been doing all these last six months, building this company. Um, remember, you know, a year ago, this was a Bitcoin mining company, effectively, which starting to look at HPC. Now you can see it's a HPC company who just actually got a small amount of Bitcoin mining, which will soon disappear. And we'll talk about that again a bit later in the podcast, there. But it's having that awareness of the name iron. People need to be, you know, talking about iron on a sort of like day-to-day basis, like when they talk about these other companies. Interestingly enough, if you look at what iron do and look at the companies that we talk about on a day-to-day basis, maybe iron doesn't fit in um as cleanly uh, you know, in that group of other miners. I think they may be sort of like closer to what we call the neo-clouds and the envious or the core weaves of this world because they offer a different type of solution for uh clients. And when you think about the difference between iron and and and core weave, you have to think about the fact that iron owns its sites, has its own power, and has got a a growth of power pipeline that is getting closer and closer to six gigawatts of power. And from what they delivered over the last year, that number's going to rise um in the foreseeable future as well.

SPEAKER_00 11:08

It is, yeah. And just a quick note they call out both of these new hires, San Francisco based. If you remember the Golden State Warrior announcement, also a little contentious last week. That's exactly where they play. So they specifically, Mike Power, mentioned to us not just going after customer awareness, but also talent awareness. Uh, case in point, these two new hires. Now, Mike goes on to say Iron's large-scale grid connected power portfolio is a key advantage. We hear from Cambiz, Iron is building a differentiated full stack AI platform. So, to your point, Anthony, going after more of that value chain or value stack compared to some of the co-location peers. Now, we'll come on to the power pipeline in a second, but the other headline that made a ton of noise on social media uh is this RSU grant.

The $800M RSU Grant Breakdown

SPEAKER_00 11:58

So you can walk us through the actual logistics here. I know we have some of the CEDAR filings, then we'll talk about the reaction.

SPEAKER_01 12:05

Yeah, so so last night Iron um announced the approval of a total of $800 million of RSU grants to co-COs and a number of other uh directors and senior members of the team there uh amid what we call in this growth um uh push and this just strategic shift to AI. And um, you know, we've highlighted uh some of the SEC filings. Um, these are the form fours that uh explain when a director or a senior um reporting person, normally the chief finance officer or the chief legal officer, whenever they have a change in their share values held, a form four has to be completed so that the market is aware that people in key appointments are buying or selling shares or receiving shares. Now, in this case today, we've got copies of um Daniel's and Will's uh Form 4s to show you that they uh received the 9,099,000 shares yesterday in terms of this RSU given there. There was also an additional 552 shares received, I think those performance uh-based um shares. And if you look at the total amount of shares that they have uh currently now, so the amount of securities owned after the transactions that occurred yesterday, that's 23.6 million shares each that are held in the Owasi Capital Trust. And so, you know, at the share price today of around about $38, you could say that the value of those shares today is around about $900 million uh dollars. Now, before we all start running for the hills, I mean it is a serious amount of money that you know we could go down the CEOs of all the companies that we talk about on a daily basis, and I can tell you now there are a couple of other CEOs that are certainly vying for getting their shares maybe at the billion or even higher than the billion dollars. Um, this isn't uh totally unusual, but it does show you that um you know, companies that are in sort of still in their infancy, iron IPO'd less than five years ago, and a lot of these companies are you know around about that uh age in terms of um being being public companies, you know, we talk about the oldest miner out there, Hive Digital, that's about eight years, nearly nine years, and the likes of Keel and Hutt were also around eight years ago, but many of the others weren't around that long ago in terms of the the business model, and so you know, when you're seeing these sort of like new companies that have had a phenomenal 2025 in terms of that share price increase, you can see that a number of shareholders are sort of scratching heads and saying that's a lot, a lot of them of shares to be issuing now. Um, you know, but there are some um, you know, some caveats to this. And before we come on to them, there I've also included the form 4 for one of the other directors. This is an independent director. We all know uh Mike Halford from his contributions on X uh via spaces meetings, and also he he he puts out a number of tweets on a regular basis. He's very opinionated in the space, has a lot of uh knowledge in the space, um, has been pretty much accurate on most of the deals that he's um he's talked about out there. You know, a lot of people listen to what he has to say. Um, he tends to talk, you know, a lot of sense in the space there, and he has that knowledge there. I've been on a few spaces with him in the past there, and we've always had a uh you know an enjoyable discussion, and not always on the same page in terms of you know my thoughts on mining, his thoughts on mining, but end of the day, I think we respect each other's uh points of view there, and we're not just coming in there with with little or no loads, we've actually got some sort of understanding that that can support the way we we we highlight certain areas. But he he also received uh a little over 6,600 shares yesterday. And the good thing about this form is it highlights how many shares he's received as an independent director from the company, and that's around about 127,606 since the IPO. That's when Mike became a director. And it also tells you that Mike's one of the few directors on the board that's been buying his own shares during that period as well, and he bought a significant transaction of shares back in the sort of like 2023 period, there maybe in 2022, when the shares were sort of between, I'm gonna say between $1.50 and $2.50, maybe up to $3, buying hundreds of thousands a share. He could see the real value. I was buying shares at that point, maybe not in the same size brackets as Mike, but at the same time, you know, with the work I've been doing in my articles and writing for Compass Mine, I could see that Iron were a company that were consistently performing in that top two or three of all the companies that I talked about, and that was probably about 15 to 18 companies on a regular basis. And when you've got companies that constantly perform, not by one metric, but by 10 or 15 metrics, then you think you you know you're starting to see a pattern then, and so iron's always been a big part of my portfolio. I think if I go back and look at my trades in iron, I've probably purchased more um iron shares and sold more iron shares than any other company that I hold at the moment because there's been so much uh good opportunities um in the space to do that on a regular basis. The volatility of these stocks here over the last few years is far greater than the volatility of Bitcoin, and Bitcoin is volatile, but it does give shareholders an opportunity to buy and sell on a more regular basis. And uh, I've used some of that strategy to help me uh when there's been an opportunity when the share price has dipped, and you you think that's now cheap enough to look at. And people be looking at today's share price and thinking, you know, oh, it's pulled back again. I think there's one comment, you know, nine days on the trot. Now we're in the red. Is this now coming into an area where this is maybe an opportunity for people who couldn't buy at $76, but they're now being able to buy half that price at around about $38. But we saw quite a few um different types of comments um from today, Rice.

SPEAKER_00 18:22

We certainly did, yeah, and we'll walk through those. Before we do, though, Anthony, I just wanted to get your comments on this say on pay concept.

Say-On-Pay And Investor Backlash

SPEAKER_00 18:29

Uh, as public companies, we talk a lot about the AGMs. You have an opportunity to put your voice in here. These numbers are eye-watering, but these are part of the voted comp packages. We saw investors in core scientific push back against the core weave deal. This is exactly why we bring up those AGM or voting opportunities.

SPEAKER_01 18:50

Absolutely. And I think uh, if I remember rightly, the shareholders riot voted against their stock compensation package, and I think the same happened at MARA as well. Um, so it does happen. You get the opportunity. Saion Pay is a corporate governance mechanism that gives shareholders the opportunity to cast a formal vote on executive compensation and remuneration packages. So, what you tend to find uh, you know, a uh a director or a senior member of the team there, CEO or CFO or chief legal officer there, then package will be made up of a of a salary, of a bonus, of and of equity uh in terms of stock compensation. And what we're seeing in these packages now is that the salary and the bonus effectively makes up a very, very small part of the of the total package. And in some instances now, the stock compensation could be as high as 90 or 95 percent of the total compensation that these executives are receiving. And you know, they'll be a lot of times based on uh they have to achieve certain um targets of the company. It it could be on sort of like looking at eBit Dart, percentage of e-bit dart, it could be on share price performance, and share price performance really is a good one because when shareholders are voting on compensation on the basis of a share price increasing, then everybody benefits. If the if the shareholders benefit, they're less likely to have an issue if the if the compensation to executives is is in line with that there because everyone benefits. And the great thing about the opportunities we've had Bryce is we've brought this up with many of the CEOs um and that we've had on the channel in terms of interviews, and we always ask the some, you know, people say, Do you ask the difficult? We have the difficult questions, and we asked the recent uh question to Ashoganu, the CEO of Hut 8, and he gave us uh uh you know clarity on the understanding from his perspective on stock compensation itself.

SPEAKER_00 20:51

Yeah, he did a great episode to watch, and that was really one of the main sticking points. As we move into the reaction here, you can see uh James Chanos or Jim Chanos fairly even keeled, talking about 17% of projected revenue. Uh, you talked about some of those numbers, but as we move into some of the additional comments here, really quite surprising, Anthony. Some of the most hardened iron bulls, the content providers, producers, um by Sam talking about disgusting, silent capital, who is the account posting that nine red day streak, uh saying this is reckless spending, missing deadlines, paying themselves like their Elon Musk. Uh, even our good friend Bitcoin Butcher, who holds the iron spaces, going on to state that he actually exited his iron position based on this news in the morning and reallocated to some of their peers being New Era, Terra Wolf, and Cypher. So interesting, Anthony, how quickly sentiment can change. We invest in these companies for a long duration, but you are seeing some capitulation in maybe some of these other uh iron investors.

SPEAKER_01 21:58

Yeah, and actually, you know, you you a First value, you have to think, you know, this was a significant amount of stock to issue out, you know, 800 million dollars of shares. But there are a couple of caveats to this that people probably may not be fully aware of. The vesting period that means the period that these shares are locked up, you can't sell these shares, you know, uh, until that vesting period ends there. That's a four-year vesting period, and on top of that, they've added a two-year holding period on top. So some of these shares can't be sold until the year 2033. That's six years locked out in total. They can't sell, they can't transfer, they can't even monetize along the way. That refers to these particular shares. Shares that they've already got on there may be outside of vesting periods, and they were maybe able to sell some of their shares. So remember, they received nine million as this part of RSU, but both co-CEOs have gotten in the region of 23 and a half million. So if they need to raise capital for another house or a I don't know, an aeroplane or a football team or whatever you want to buy, they could do that with some of the other shares. But this particular package now is really to make sure that they're fully focused on delivering everything that they've got in the plan between now and 2031. And in 2031, that's the earliest opportunity that they can receive uh future grants of um of RSUs, so nothing for the next five years. They will be receiving their salary and they'll obviously be receiving bonuses, which generally a lot of these companies bonuses can be something like up to 200% of the of the salary. So the salary for a typical CEO is maybe around a million dollars a year. The bonus could be you know another couple of million dollars on top of that, there. So they are paid you know fairly handsomely for their day-to-day. But if you want, you know, if you're saying that their biggest part of their package is all about you know how the company uh will perform in the future, then you know you're locking people in for a long time to do that. Um, and so you know, for those that aren't aware, there are some caveats, and hopefully that's explained. Well, if you don't fully understand those, put a note in the comments and we'll try and give you a more succinct and uh explainable uh you know uh answer to the question.

SPEAKER_00 24:21

And I gotta say, Anthony, if I had 23 million shares in iron, I don't think there'd be anyone more invested in seeing the success of the company, especially as you look out six years. Again, the pieces starting to come together, but the market maybe uh feeling not quick enough. Now, to that point, Silent Capital then went on later in the day saying he actually purchased uh $250,000 worth of iron. So that's the same account that was calling this reckless, uh, paying themselves like Elon. So again, just be aware of the differences in conviction here. Now, where we wanted to spend some more time, Anthony, is talking about what we see in terms of the future for

Power Pipeline And Nvidia Signals

SPEAKER_00 24:59

Iron. So you talk about that next 12 to 18 months. Uh, Mike had said this is going to be a very pivotal time for the company. You and I feel this NVIDIA partnership is a lot deeper than maybe meets the eye. So we know they're using NVIDIA GPUs as part of the Childress initial Microsoft contract. They've ordered tens of thousands more for their own sites and their own CSP model, and announced that five gigawatt AI uh infrastructure partnership with NVIDIA, which interestingly enough exactly matches their portfolio of power. So we feel something big is brewing here, but maybe we haven't seen the full uh picture so far.

SPEAKER_01 25:41

Yeah, and just to add to that, Bryce, as part of the uh partnership, Iran issues to NVIDIA a five-year right to purchase up to 30 million shares of ordinary stock at an exercise price of $70 per share, which resulting in the right to invest up to $2.1 billion. Now that's subject to certain conditions, including regulation and regularity, uh, obviously reports there for the SEC. But you know, giving you know, NVIDIA an opportunity to take a share of the company, there might be more to this than actually meets the eye. You know, you know, is this going to be a really long-term um partnership that can deliver more than just one company passing machines to another company? Um, you know, maybe maybe more to it than meets the eye, Bryce.

SPEAKER_00 26:29

I think there is. Now, if you start to run the numbers here, we just mentioned Horizon 1 to 4, that's 300 megawatts. You've got Childress uh expansion up to 400 additional megawatts. Sweetwater just got energized for 300 megawatts, and Canal Flats up here in Canada for an additional 30 megawatts. So you start to add up those numbers compared to the revenue they have just off that initial Microsoft contract. Then you factor in the Mirantis acquisition, the fact that they've got the software stack on top of the bare metal now, or that full value uh stack proposition, the numbers start to get pretty big pretty quick.

SPEAKER_01 27:08

Yeah, absolutely. And if you think about their expansion plans, I mean 2026, we're in there at the moment now, 480 megawatts on on track to the end of the year with an AIR to around about 4.3 billion dollars. Fast forward to 2027, that 480 megawatts becomes 1.2 gigawatts. Now the growth there of 730 megawatts has been quite clearly articulated. We're talking about effectively 400 megawatts at Childress. You've mentioned the 30 megawatts at Canal Flats and the recent energization of 300 megawatts at Sweetwater 1. That's 2027. You've then got the likes of Sweetwater One 1 and 2, which is a remaining 1.7 gigawatts of power. You've got that Keoa site there, 1.6 um uh gigawatts of power in Oklahoma, and you've this the talk of the 490 megawatts in Spain there, taking that total to three point nearly 3.8 gigawatts of power. And we haven't even mentioned the 800 megawatts of of capacity looking to install in South Australia, where they're already going around and making sure permitting, making sure the local community are in favour of a of a facility that this size being built and what it brings to the community there, and they're ticking all the boxes in that region there as well. So this is going to be exciting times. I'm just wondering, we see a big uh announcement like that there, and we see the recourse of that announcement on social media today. Um, I haven't rushed out to sell any of my shares. I don't think you've sold any of your shares. I looked in my portfolio earlier, it was still saying 464% up on my iron shares because obviously I was buying the iron shares when Mike was buying his iron shares and I was paying very little for them, and I've seen them rise. They were significantly higher last year, and I didn't sell at the 70 um dollars like you did, Bryce, but I managed to sell a little bit less than that. And and as I say, iron's been a very, very good share to me over the last three or four years um in terms of being able to constantly you know buy and then sell as it's grown and then rebuying as the market dipped, it's been a very, very good share because of that volatility. It gives you sometimes, even on a daily basis, maybe five to ten percent uh change in share price. And if you multiply that over a few days, you get the opportunity to really take some nice profits and still maintain uh a reasonable amount in your portfolio. So I don't look at today as being uh doom and gloom. I've got we're trying to highlight the bigger picture. This is there is a bigger picture to this, and um, you know, I think that you know we're just at the very, very start. They've only announced a 200 megawatt deal with Microsoft. We're talking, you know, five and six gigawatts of power. What's that gonna look like when that's fully energized? And we'll come on to discuss later in the podcast what it might look like financially as well for them.

SPEAKER_00 30:18

Yeah, I was gonna say I was definitely taking some profit above 70. There's no way I'm trimming sub 40, but I think that volatility really is a feature rather than a flaw, as we've heard Michael Saylor say with Bitcoin. Now,

Valuation Math And What It Implies

SPEAKER_00 30:31

you've done some valuation analysis updates for IRIN. You talk about that full 5-6 gigawatt portfolio. We think the future is very bright for IRIN. Case in point, Anthony, if you were to take that 700 and change uh total megawatts, you convert it into critical. What are we talking in terms of share price here for IRIN? Uh, if and when they make that next leg up.

SPEAKER_01 30:55

Yeah, you've got to remember this is a different type of valuation because iron are doing things themselves there. They were criticized initially. Why weren't they going down the co-location route? And then they signed that fantastic deal with with Microsoft. You get a hyperscaler and as your first deal, and you know, that um that contract is is going to be you know starting to bring in those revenues, you know, in the next you know, couple of quarters. By the end of the year, it'd be fully fully finished Horizon 1 to 4. Um, it's a five-year deal initially, and you're bringing in significant uh revenues there. Now we've looked at you know that 730 megawatts. What does that look like in compute power? That's going to bring you in approximately about 500 megawatts of compute power. Now, using the similar revenue assumptions that the Microsoft deal is in place there, I know that uh some people suggest well that was the first deal. Maybe we've seen an increase in sort of revenues that companies are achieving, but let's keep it at the same level just for you know, and if anything happens, we we start to get more potential from the from future contracts. But using the same um levels of revenues there, we're going to bring in um revenues of about uh 9.5 million dollars per megawatt. But if you multiply that out to the 500, that's 4.75 billion dollars a year. Using 80% as your e-bit dar margin, you'll get approximately $3.8 billion of e-bit dar per year. And for this particular exercise, I'm not using 15 as a multiple because iron are going to be you know providing a CSP uh deal, so they'll be providing the GPUs. That means they'll probably get a better, uh, effectively better margin in the long term. I'm going to give them a 20 multiple. That's still quite optimistic. You know, I'm I'm hearing on CNBC today some of the hyperscalers like um Amazon and and and Meta are you know a quoting something like 40 times or 45 times multiples. I'm using 20. I think I'm being a little bit optimistic here. Now remember the uh the capital to to deliver um these uh sites when you're doing everything yourself is significantly higher, it's no longer 10 million dollars. We've got it down as 39 million dollars per megawatt, and that's based on what they were paying at the children's site there. So not for the not for the faint faint hearted at all, but that's been built in as well there. Now, what you get when you multiply that out there, you get uh the the value created is around about $55 billion of value created, and if you divide that by the number of diluted shares at the last earnings update, which was about 357 million shares in change, that could give you an implied share price increase of about $154. And if you want to look at that in in in terms of 100 megawatts, then divide that by five, you get $31.62 per 100 megawatts. Compare that to today's share price at um just around you know, uh just under $39, around $38.80. You're nearly getting you know today's share price for every 100 megawatts of additional allocation to um HPC that you can deliver uh going forward, and they've got you know the best part of six gigawatts in total, of which they've only allocated probably less than 10% of the whole amount. So you can start understanding that you know this is only representative of what they're going to do by the end of 2027. Once you start looking at 2028 and onwards, these numbers will mount up. And bear in mind, I've been you know a little bit pessimistic. EBIT DAR rates of 80% that could be higher. Revenues per megawatt, again, I've used the Microsoft revenues. We're seeing higher revenues when you go to Nebius's website. When we're seeing um, you know, uh analysts put out there revenues of between $4 up to $8, up to $9 per hour for GPUs. These were around about $2.91. So plenty of scope to increase that revenue per megawatt, plenty of opportunity to increase the eBIT DAR or reduce the EBITDA percentage, depending on how you favor it at the moment. But you can use my sensitivity analysis there to calculate what it would look like, you know, with with with a bit more pessimism or a bit more optimism, and uh, you know, even the most pessimistic position there would still give you $42 for delivering that 500 megawatts of compute power over the next 18 months, as opposed to maybe $250 for the contracts if it's a more opportunistic uh amount there. So, really broad brush, 154 probably smack in the middle of of where that that that number is there, but really gives you, you know, we're trying to give you a balanced view here, and yes, everyone's disappointed, you know, in the share price today, and the share price over the last sort of like 10 days has pulled back a little bit, and people are sort of like um that we we talked about before this this lack of patience, you know, these deals are not going to come around every weekend. There's a lot of work involved in these deals, negotiations can take you know a minimum of six months. We know that from Patrick Fleury on a co-location deal. They're only building the facility and make it making sure the power's there for the customer, and that took six months. When you're providing the GPUs as well, there's probably additional uh conversations in terms of a service contract to make sure that you're delivering or able to deliver exactly what the client requests, not just from the facility, but from the GPUs as well. So there's probably a lot more conversations, but I can tell you now, having spoken to Mike earlier today, he fully understands where shareholders are coming from. He's sorry that in the case of some of those who are sort of like close to Iron in terms of they've been big supporters over the last couple of years, that they decided to sell their shares. He thinks we're just at the start of it. I I tend to sort of agree, I think there's a lot more to come from Iron. And bear in mind, I don't think anybody expected last April the share price would get to $76 six months later. Um, I think if the share price would have you know trebled or quadrupled to say $20, people would have been really happy. And today we're sort of like struggling because the share price is only $38, it's still seven times higher than it was in April last year. And as we show from the earlier chart, there nearly 150% over the one year based at the moment, um, which is which is which is fairly phenomenal. Yes, there are stocks that are that are higher than that, but um I've got to think here what we talked about with the opportunity, this stock has got a lot further to go upwards and it has to go downwards.

SPEAKER_00 37:59

I definitely agree. And you think about the complexity of a CSP contract negotiation versus co-location, to your point, Anthony, a lot more questions to answer. Uh, we hope

Brand Awareness, Risks, And Closing

SPEAKER_00 38:10

today you guys really reflected a zoomed-out view of Iron. This is a company that has delivered on every promise to date. They've quickly grown from a Bitcoin miner to one of the top miners, now to one of the top AI infrastructure players, uh, maybe soon to be NeoCloud. And this stuff takes time to assemble. We talk about the human capital, we talk about the deals, the power, uh the software stack. It takes time to put these pieces together. But you and I believe uh Masterpiece is coming. We also have Eric Jackson on the channel tomorrow, a big fan of Iron, Cypher, and Open Door. So I'll be curious to get his thoughts on the RSU grant and the outlook. I'll pass it back to you for closing thoughts, Anthony. But I think uh for me as a fundamental investor, this story is just getting started and we're pretty excited about where it's going.

SPEAKER_01 39:01

Yeah, and and I and a couple just a couple of things to finish with there. I hope we've we've provided that balance here. You know, as I say, we're not looking at this from uh, you know, what's happened today, we're looking at what's going to happen in the years to come. They've got so much opportunity here. They're building or they're drawing this picture of where they expect to be. And you can see now that the pieces of that of that puzzle are fitting together quite nicely. The highs they've just hired, the fact that the brand awareness, you know, from when we were at the Bitcoin conference using the sphere to highlight Iron's branding in Las Vegas there, to buy the stake in the in the in the Golden State uh Warriors there, you know, it's that brand awareness. We're seeing that, you know, that that that iron will be on the on the shirts there for every game. So it's having that awareness. You hear, oh yeah, I've heard that that company name before. You know, a couple of years ago, people, you know, I wouldn't have heard of Iron to a certain extent, so we're a very niche, niche area here. You know, Bitcoin mining isn't there sort of like the big area. Bitcoin itself was is has got a lot of followers. Bitcoin mining doesn't have anywhere near the same amount of followers, so we are quite niche in what we do. Now that we're breaking out and breaking into areas which has got a lot of followers there. If you look at the likes of technology and look at AI and HBC and people using this on a daily basis, IRA wants to be part of that group and they want to be one of the big players in that group there. The only final caveat I will say is obviously, you know, um uh you know, there wasn't uh a major pullback on the stock compensation issued last year to the to the two CEOs, and that's really because the share price rallied from $5 to you know to $76. When the share price is increasing, we're all benefiting from that, there's very few people are going to be critical. Um, we have seen criticism against other companies where maybe some of the targets felt um you know not as high as they could have been, and and stock compensation was awarded. My caveat here is now that this has been awarded now, and you get other mining companies or other companies in the space to go out there and look at independent uh companies to review uh salary and and and and pay packages for for CEOs and directors. Um, this is another one that they can review and say, well, this is what iron have paid their top team, what do we need to pay our top team? And so it sort of like starts to get into sort of a hamster wheel scenario. So that's the only sort of negative sign I can see from this particular issue here, is it gives uh recourse for other companies to follow suit. Um, I'd be more inclined that you know, if the shareholders are benefiting from uh the the decisions and the uh that these uh directors are making and and and improving the stock and improving the market capitalization and the value, and we're all benefiting that way, then that should be, you know, that should be uh the the the reason they're getting the stock compensation. Um, you know, making sure that they're that they're they're truly adding value to the company and and keeping them tied to the company if they are bringing that value. This RSU's issue today certainly ties them in for quite a long time, in some instances up to the next seven or eight years um from where we are today. But um, as I say, that's the only sort of like real uh sort of like you know negative thoughts on it. It gives opens the door for us to follow.

SPEAKER_00 42:29

Yeah, we'd love to hear your thoughts in the comment section below. Again, a very contentious uh topic today. Let us know how you're feeling about iron if you're buying, selling, uh, your stance on them. Also make sure you pop over to the website poweranalysis.io. Newsletter comes out tomorrow, 100% free. A lot of great information in there, uh, including some information not available on the website. So there you have it, guys. A deep dive into iron news outlook and strategy. Let us know your thoughts. We'll see you back here tomorrow for Eric Jackson. Looking forward to hearing his thoughts on the topic as well.