Iris Energy
Limited, the publicly listed Wall Street Bitcoin (BTC) mining company (NASDAQ:
IREN) that recently pivoted to promoting itself as a high-performance computing
(HPC) data center operator, is facing a class action lawsuit alleging it
misrepresented its capabilities and prospects to investors.
Wall Street Bitcoin Miner Faces
Lawsuit over Alleged Misrepresentation of Data Center Capabilities
The
lawsuit, filed
in the United States District Court for the Eastern District of New York,
claims that Iris Energy and its executives made false and misleading statements
about the company’s ability to transition its facilities from Bitcoin mining to
HPC and artificial intelligence applications.
According
to the complaint, Iris Energy’s Childress, Texas facility, which the company
touted as a key asset for its HPC strategy, lacks critical features necessary
for such operations. The lawsuit alleges that the site has inadequate power
redundancy, cooling systems, and fiber connectivity.
The lawsuit
also cites statements made by Iris Energy’s co-CEO, Daniel Roberts, who claimed
the company had “built this base layer, this bedrock of high-performance
data centers that can do any high-performance compute.” The plaintiffs
argue that these statements were materially false and misleading, “because the
Company overstated the capabilities of its data center business and its
overall prospects.”
Iris
Energy’s stock price fell approximately 15% following the publication of a
critical report by Culper Research, which raised concerns about the company’s
HPC claims and the suitability of its facilities for such applications.
“Culper
further stated that it was ‘short IREN because we believe the Company has
dramatically misrepresented the strength and potential of its assets for HPC/AI
Applications’,” the lawsuit commented.
The class
action seeks to recover damages on behalf of investors who purchased Iris
Energy securities between June 20, 2023, and July 11, 2024, alleging violations
of federal securities laws.
Bitcoin Miners from Wall
Street Pivot to AI
IREN’s
shift towards AI is driven by increasingly challenging conditions in the
cryptocurrency mining market. The company’s latest fiscal year 2024 report
revealed that by adding AI industry support services to its offerings, IREN
managed to secure new revenue streams. Although the net loss still amounted to
$29 million, it was six times smaller than the previous year.
Finance
Magnates reported in
2023 that after a tough 2022, cryptocurrency miners began seriously looking
towards AI and HPC, which are highly energy-intensive industries.
An August report from VanEck this year confirmed this trend. According to Matthew Sigel,
VanEck’s head of digital assets research, the pivot from BTC to HPC/AI could
unlock $38 billion in value for mining companies by 2027.
“AI
companies need energy, and Bitcoin miners have it,” Sigel commented.
“As the market values the growing AI/HPC data center market, access to
power—especially in the near term—is commanding a premium.”
Examples of
such moves have been visible since last year. For instance, HIVE Blockchain
changed its name to HIVE Digital to better reflect the evolving nature of its
business, which now focuses not only on BTC mining but also on supporting HPC
and AI industries. The company expects this new venture to double its revenue
and has announced the construction of a new hydroelectric data center to
support this goal.
This article was written by Damian Chmiel at www.financemagnates.com.
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