IREN Raises $2.6B in Convertible Bonds as AI Cloud Revenue Soars 94% in Pivot from Bitcoin

IREN upsizes convertible note to $2.6B, reports Q3 revenue miss but AI cloud revenue jumps 94%, and targets $3.7B ARR by 2026, with mixed analyst ratings.

IREN is accelerating its transformation from a bitcoin miner to a dedicated AI cloud provider, and it is doing so with a war chest that just got a lot heavier. The Sydney-based firm upsized its convertible note offering to $2.6 billion after seeing “enormous” demand from institutional investors, tapping the capital markets to fund a rapid expansion of its data center and GPU fleet. The notes carry a 1% coupon, mature in 2033, and come with an initial conversion price of roughly $73 per share. To cap dilution, IREN has entered into capped-call transactions that lift the effective conversion ceiling above $110.

The financing arrives alongside third-quarter results that illustrate the scale of the company’s operational shift. Total revenue for the period came in at $144.8 million, well below the $219.87 million analysts had penciled in and down from $184.7 million in the prior quarter. The decline was driven almost entirely by the shrinking bitcoin mining segment, where revenue slid to $111.2 million from $167.4 million as IREN deliberately retired mining hardware to redirect resources toward AI infrastructure. On the other side of the ledger, AI cloud services posted a stunning 94.2% sequential jump to $33.6 million, up from $17.3 million.

The restructuring comes at a heavy near-term cost. IREN took $140.4 million in impairment charges, mostly tied to decommissioned mining equipment, and booked unrealized losses on convertible note hedges. Yet the operating picture is healthier than the headline numbers suggest: adjusted EBITDA reached $59.5 million, representing a 41% margin, underscoring that the core business remains cash-flow positive even as the balance sheet absorbs the transition.

What investors are really focused on, however, is the contracted revenue pipeline. IRen’s annualized recurring revenue under agreement now stands at $3.1 billion, anchored by a long-term deal with Microsoft expected to generate $1.9 billion per year, a separate pact with Nvidia valued at $0.7 billion, and a $0.5 billion commitment from the Prince George site for GPU deployments. Management is targeting $3.7 billion in annualized recurring revenue by the end of calendar 2026, and the company is already planning a build-out to 5 gigawatts of data center capacity by 2028.

The first phase of its Sweetwater campus in Texas is now operational, and its hardware fleet has grown to 150,000 graphics processors. IREN is also pursuing an acquisition of Mirantis to gain better access to enterprise clients in areas like AI orchestration, virtual machines, and Kubernetes.

Wall Street remains deeply divided on the stock. JPMorgan lifted its price target to $46 from $39 but kept an “Underweight” rating, while BTIG raised its target to $80 from $75 with a “Buy.” Macquarie is even more bullish at $90, citing structural growth in digital infrastructure. The stock itself closed in Europe at €47.08 on Wednesday and traded at €46.99 on Thursday, leaving it up 28.85% year-to-date and a staggering 557.20% over the past twelve months.

Yet the volatility is extreme — at 118% — and short sellers hold roughly 18% of the free float, betting that the lofty valuation cannot be sustained. With a trailing price-to-earnings multiple of about 112.6 versus the IT sector median of 30.5, IREN’s stock is priced for perfection. The next several quarters will determine whether the contract pipeline translates into actual revenue growth fast enough to justify that premium.