Microsoft has entered into a substantial agreement with Australian company Iren, valued at approximately $9.7 billion ($14.8 billion), making it Iren’s largest customer. This five-year contract grants Microsoft access to advanced Nvidia accelerator systems in Texas, specifically designed for AI workloads. Iren announced that the deal includes a 20 percent prepayment and involves an additional purchase of GPUs and related equipment from Dell, totaling $5.8 billion.
Founded in 2018 by former Macquarie bankers, Iren, originally known as Iris Energy, pivoted from bitcoin mining to AI services. This strategic shift has significantly boosted the company’s revenue, with CEO Daniel Roberts indicating that once the agreement is fully operational, it is expected to generate approximately $1.94 billion in annual revenue. The deal will utilize about 10 percent of Iren’s total capacity, allowing the company to pursue additional contracts and revenue streams.
Strategic Partnerships and Market Positioning
Roberts emphasized the natural synergy between Iren and major hyperscalers, noting, “We’ve always viewed the major hyperscalers as natural partners.” He indicated that discussions with multiple hyperscalers have intensified, driven by increasing compute requirements and Iren’s expanding AI cloud capabilities. Following the announcement, Iren’s shares surged by more than 28 percent in pre-market US trading, while Dell’s stock increased by around 4 percent. Microsoft’s stock remained relatively stable.
Iren is part of a growing segment known as neoclouds, which includes data centre operators specializing in AI services. These companies are competing to provide the necessary computing power to large hyperscalers like Meta and AI innovators such as OpenAI. Many of these firms, including Iren, began as bitcoin mining ventures before diversifying their operations to accommodate the rising demand for AI infrastructure.
The substantial increase in Iren’s stock value, which has risen over 500 percent this year through the close on Friday, underscores market enthusiasm surrounding the AI sector. This surge is partly attributed to the skyrocketing valuation of Nvidia, which recently achieved a market capitalization of $5 trillion.
Infrastructure Developments in Texas
The new Nvidia GB300 systems will be installed in phases at Iren’s facility in Childress, Texas, throughout the upcoming year. This infrastructure is expected to support 750 megawatts of capacity. Additionally, Iren operates a 2GW facility at its Sweetwater Hub near Abilene, Texas, where Roberts noted strong interest in large-scale AI infrastructure projects.
Microsoft has been actively securing cloud capacity through leasing contracts with various providers, including Iren, to meet the surging demand for its Azure services. The company acknowledged challenges in securing sufficient cloud capacity during its recent earnings report, highlighting the urgency of such partnerships.
This landmark deal not only solidifies Iren’s position in the AI cloud services market but also reflects the broader trend of traditional companies adapting to the rapidly evolving technological landscape. As the demand for AI services continues to grow, strategic partnerships like this one are likely to become increasingly important for both providers and consumers.
