IREN Crosses the Line: AI Cloud Now Outearns Bitcoin Mining as Contracted ARR Hits $4 Billion

IREN Limited (NASDAQ: IREN) closed the book on its Bitcoin mining era this week, reporting fiscal fourth quarter results in which AI cloud services generated more revenue than mining for the first time in company history. Investors sold the stock anyway, sending shares down roughly 9% Friday morning to about $36.70, as a headline revenue miss and a $684 million quarterly loss overshadowed the operating milestones underneath.

Key Points

• AI cloud revenue reached $70.5 million in Q4, up from $33.6 million in the prior quarter — a 110% sequential jump that pushed AI services to 51.4% of total revenue.
• Bitcoin mining revenue fell to $66.7 million from $111.2 million as IREN decommissions its mining fleet, a process management expects to complete by December 2026.
• Contracted annualized run-rate revenue now stands at $4 billion for 2026 capacity, with operating ARR reaching $1 billion following Microsoft’s acceptance of the Horizon 1 deployment.
• The company booked a $638.8 million non-cash impairment tied to retiring mining hardware, driving a $702.6 million full-year net loss.
• IREN secured $6.5 billion in GPU financing over three months, including $3.6 billion at approximately 6.0% tied to its Microsoft contract.

Revenue Missed, But the Mix Changed

IREN reported total Q4 revenue of $137.2 million, falling short of the roughly $157 million analysts expected. That miss drove the immediate selloff. Look at the composition, however, and a different story emerges.

AI cloud services delivered $70.5 million, more than doubling from the $33.6 million posted in the prior quarter. Bitcoin mining, meanwhile, contributed $66.7 million, down sharply from $111.2 million as the company powered down rigs across its fleet. For the first time, compute outearned crypto.

The full-year figures tell the same story on a longer arc. IREN generated $707.0 million in FY26 revenue, up from $501.0 million a year earlier. Within that, AI cloud services grew roughly eightfold to $128.8 million from $16.4 million. Adjusted EBITDA came in at $245.7 million, down modestly from $269.7 million, reflecting the transition costs of running two businesses at once.

The Loss Is Mostly Accounting

The $702.6 million full-year net loss looks alarming next to the $86.9 million profit IREN reported in FY25. Strip out the $638.8 million in non-cash asset impairments — nearly all of it from writing down Bitcoin mining hardware the company is deliberately retiring — and the picture changes materially. Management is expensing the exit, not bleeding from operations.

Co-Founder and Co-CEO Daniel Roberts framed the strategy around a physical-world constraint, noting that “the digital world can scale almost instantly, but the physical world cannot.”

Contracted Revenue Is the Real Headline

The number that matters most sits outside the income statement. IREN now carries $4 billion in contracted ARR against its 2026 capacity, which management describes as largely sold out. Operating ARR climbed from $500 million at quarter-end to $1 billion by August 26 once Microsoft formally accepted Horizon 1 — the first of four 50-megawatt liquid-cooled GPU deployments at the Childress, Texas campus.

Pricing has moved sharply in IREN’s favor. Three-year contracts now clear more than $25 million per IT megawatt, a 125% increase since November 2025. Five-year deals price just under $20 million per IT megawatt, up 70% over the same span. Recent three-year contracts hit a two-year payback target, and customer prepayments cover 45% to 55% of the associated GPU capital expenditure.

Beyond Microsoft, IREN signed a multi-year contract with a frontier AI lab and added Cohere, Prometheus, Perplexity, Figure AI, Fal AI, and Higgsfield AI to its customer roster. The company also obtained NVIDIA Exemplar Cloud status on GB300 NVL72 systems.

Financing the Buildout

Capital intensity remains the central risk, and IREN has been aggressive about pre-funding it. The company raised approximately $19 billion over the past twelve months and secured $6.5 billion in GPU financing in the past three months alone.

That financing splits into two tranches. An investment-grade facility tied to the Microsoft contract carries roughly 6.0% interest across $3.6 billion. A separate $2.8 billion package — including $2.4 billion led by Blue Owl and PIMCO at 9.0% fixed — covers additional deployments. Together, these facilities fund 90% to 96% of associated GPU capex.

IREN ended June 30, 2026 with more than $7.5 billion in cash and restricted cash, after raising $2.1 billion in equity, $3.0 billion in convertible notes, and $938 million in financing facilities during the quarter.

Management guided to $25 billion to $30 billion in FY27 capital requirements, with $14 billion already committed through GPU financing and prepayments and a target of $8 billion more. Investors should also expect SG&A to rise $40 million to $50 million sequentially in the first quarter of fiscal 2027.

Capacity Pipeline

IREN targets 0.5 gigawatts gross — 0.3 gigawatts IT — delivered in 2026, scaling to 1.2 gigawatts gross and 0.8 gigawatts IT in 2027. The announced pipeline exceeds 5 gigawatts, with additional multi-gigawatt development underway.

Horizon 1 is live at Childress. Horizon 2 is commissioning now, and Horizons 3 and 4 target Q4 2026 delivery. The company is developing sites at Sweetwater, Texas; Kiowa, Oklahoma; Mackenzie, Canal Flats, and Prince George in British Columbia; Bundey in Australia; and Badajoz in Spain. More than 4,000 personnel are mobilized across active sites.

What to Watch

The bear case is straightforward: IREN is spending tens of billions to build capacity for a customer base concentrated in a handful of AI labs, and a revenue miss in the first quarter of the new model is not a confidence builder. The bull case rests on the $4 billion in contracted ARR, rising contract pricing, and financing that covers the overwhelming majority of GPU capex before the equipment ships.

Investors tracking IREN should watch three things over the next two quarters: whether Horizons 3 and 4 land on schedule in Q4 2026, whether the mining decommissioning wraps by December as guided, and whether management closes the remaining $8 billion funding gap for fiscal 2027 without heavy equity dilution.