IREN remains primarily a Bitcoin mining company by revenue, even as it retires mining hardware to create capacity for artificial intelligence infrastructure and expand its AI cloud business.
The company’s fiscal 2026 results, filed on Aug. 27, show that Bitcoin mining generated $578.2 million of IREN’s $707 million in annual revenue, representing approximately 81.8%. AI Cloud Services generated $128.8 million.
IREN’s transition to AI infrastructure resulted in a $638.8 million non-cash impairment charge, primarily related to decommissioning mining equipment as data center sites were converted for AI workloads. The company also reported a $702.6 million net loss, affected by the impairment and other items.
The impairment was not a $638.8 million cash outflow. Instead, it reflected the accounting value of assets retired before the replacement AI business had fully entered service.
IREN faces a $3 billion AI cloud revenue gap
As of Aug. 26, IREN had $1 billion in annualized operating run-rate revenue, or ARR, compared with $4 billion of contracted ARR tied to its 2026 capacity. The company is targeting the larger run rate to be operational by Dec. 31.
IREN calculates ARR by multiplying contracted GPU pricing by a full year of hours, including storage and related services. ARR is an operating measure rather than GAAP revenue, and the company warns that recognized revenue may be materially lower.
Closing the gap depends on delivering and obtaining acceptance for the required physical infrastructure, as well as meeting IREN’s assumptions for utilization and pricing.
According to IREN’s Form 10-K, revenue generally begins only after data centers have been built and energized, equipment has been installed and commissioned, performance testing has been completed, and customers have accepted the capacity. Delays can defer revenue while financing and operating costs continue, and may also trigger delay or service credits.
The deployment timeline is staged. Microsoft accepted Horizon 1 in August. Horizons 2 through 4 were scheduled for phased delivery in calendar Q4 2026, with contractual grace periods extending into the beginning of calendar Q2 2027.
Bitcoin mining capacity is being converted for AI workloads
As of June 30, IREN still had approximately 23.2 EH/s of installed Bitcoin mining capacity across roughly 380 megawatts. The company aimed to substantially complete the conversion of that data center capacity to AI Cloud Services by the end of the year.
The transition also carries significant financing costs. IREN raised GPU financing to support its Microsoft contract through a delayed-draw loan priced at one-month SOFR plus 2.25%, along with senior notes carrying a 5.96% interest rate. The financing tranches remain subject to certain conditions.
A separate Mackenzie financing facility of up to $2.4 billion carries a fixed 9% interest rate and matures 30 months after each applicable staged funding date.
Microsoft and NVIDIA together accounted for a substantial majority of IREN’s contracted revenue, according to the company. Although new customers are broadening its customer base, acceptance, performance and counterparty risks remain concentrated.
IREN has contracts that could replace its Bitcoin mining business on a run-rate basis. However, the filing does not show that the replacement has been completed. The next test will be customer acceptance of the remaining deployments and the GAAP AI revenue those deployments begin to generate.
