Shares in IREN fell 12% after the Bitcoin miner-turned AI infrastructure company posted record quarterly results that turned out to rely more on accounting manoeuvres rather than genuine business performance.
IREN’s Record Profit Unravels as Accounting Magic Masks Weak Core
7 November 2025 - 13:32 CET
By Stu Clelland
The Australian company reported a first-quarter net income of $384mn on revenue of $240.3mn, up 342% year-on-year.
On the surface, it looked like a turnaround story. In reality, almost all of that profit came from a $665mn unrealised mark-to-market gain on convertible-note hedges, a paper profit created by revaluing those financial instruments at current market prices. The figure boosted the bottom line without adding a cent of cash.
Without that gain, IREN’s operating income was negative $76.4mn, and adjusted EBITDA slid to $91.7mn from $121.9mn in the previous quarter. Meanwhile, SG&A costs, the overheads of running the business, including salaries and marketing, more than doubled, highlighting a surge in spending that has yet to translate into growth.
AI pivot built on promises
IREN’s much-publicised $9.7bn Microsoft contract announced earlier this week anchors its rebranding from miner to hyperscaler. The deal includes a 20% prepayment and phased GPU deployments through 2026, with management projecting up to $1.9bn in annual recurring revenue once fully operational. Yet AI cloud income last quarter was only $7.3mn, with almost all revenue still coming from Bitcoin mining.
The company plans to build out 140,000 GPUs across North America and claims it can reach $3.4bn in AI revenue by the end of 2026. That ambition depends on enormous capital spending and the success of servicing $1bn in convertible debt – a form of borrowing that can later be swapped for shares, potentially diluting existing investors.
Behind the numbers, investor fatigue
Even after a 600% share rally this year, IREN’s financials show soft core margins, with weakening profitability once non-cash gains are stripped out. Rising costs, heavy leverage, and modest underlying earnings suggest a company burning fuel faster than it builds engines.
The market’s verdict was blunt: what looked like a transformation was largely a revaluation. IREN’s ‘record quarter’ may have impressed on paper, but investors saw through it and hit sell.
