IREN Growth Realities vs. Hype
$IREN Ltd(IREN)$ raising $2B in notes is part of the course, and there will be more raises.
IREN certainly is a very promising AI infrastructure company, but some investors have delusional aspirations.
IREN will not generate $29B in revenues from 3GW in 3 years as some claim.
The $Microsoft(MSFT)$ deal costs $8.8B to bring 200MW online.
That is $44M per MW to have a bare metal facility.
If IREN were to turn 3GW into bare metal, they would need $132B.
There is just no reasonable scenario in which they raise that kind of money. Yes, MSFT will provide pre-payments and $Dell Technologies Inc.(DELL)$ vendor financing for GPUs, maybe $NVIDIA(NVDA)$ or $Advanced Micro Devices(AMD)$ will provide some additional vendor financing.
But I just don't see that getting close to $132B.
So it is very likely that a significant chunk of that facility will be colocation. Probably 40-60%.
Colocation pays like 4-5x less per MW than bare metal.
If 40% of 3GW is colocation, at $2.4M per MW, that would mean revenues of $2.9B
Remaining 60% of 3GW bare metal at $9.7M per MW would mean revenues $17.5B.
Together, that is $20B.
$20B is still awesome, but that's $9B less than pure bare metal.
That is a big difference.
Also, it will take more than 3 years to have all the facilities built, equipped, and connected with GPUs.
IREN is a great opportunity as it is, there is no need to have delusional expectations.
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