Iris Energy, a Bitcoin mining company, experienced a significant drop in its stock price by nearly 21% on Thursday following a critical report from activist short seller Culper Research. The report raised doubts about the company’s ability to transition into high-performance computing (HPC) and questioned its valuation.
Culper Research compared Iris Energy’s aspirations to “trying to win the Monaco Grand Prix in a Toyota Prius,” highlighting concerns about the company’s infrastructure not being suitable for HPC and AI applications. The report also pointed out that Iris Energy has spent less than $1 million per megawatt on its current facilities, significantly lower than the industry standard of $10-20 million for HPC-ready data centers.
In addition, Culper Research expressed worries about Iris Energy’s valuation, suggesting that the company’s shares could be overvalued by 52% to 79%. The valuation was categorized into three parts: existing facilities, undeveloped power, and crypto-mining operations, with a value of $0 to $100 million assigned to the latter.
Recent insider selling by co-CEOs Daniel and Will Roberts since February, as reported by Bloomberg, has added to investor concerns. Culper Research highlighted that Iris Energy has burned through $716 million in cash since 2020, primarily funded by issuing more shares.
At the time of publication, Iris Energy’s stock, IREN, had dropped by 13.18% to $11.20 per share, reaching a session low of $10.36. Despite the day’s losses, shares are still up by 65% year-to-date.
Iris Energy has yet to respond to requests for comment on the Culper Research report.