Bitcoin mining firm IREN — formerly Iris Energy — fell 24% on the Nasdaq after a report from short seller firm Culper Research slammed the company as “wildly overvalued” and claimed it is failing to splash the cash required to compete in the AI industry.
Culper — which disclosed its short-selling position on IREN — accused the company of talking “big game” about its high-performance computing plans while investing far less than what is required.
“IREN talks a big game of its HPC plans but ultimately seems entirely disinterested in actually doing what it takes to compete in the space,” claimed Culper in a July 11 short-seller report.
Culper claims the firm has spent less than $1 million per megawatt to build its existing center and told investors it will complete a similar HPC center for around the same price.
“Meanwhile, leading operators, analysts, and experts all confirm that the true cost to develop an HPC-ready data center is ~$10 to $20 million per MW,” it noted.
“To analogize, IREN claims that it’s set to win the Monaco Grand Prix, but just arrived to the track in a Toyota Prius.”
The report also accused IREN as being “wildly overvalued” and should instead be between 52-79% cheaper.
The research firm made its case by highlighting IREN’s extremely high enterprise value relative to hash rate on a MW basis compared to other publicly-traded miners.
“We ascribe $0 to $100 million in value to the Company’s crypto mining operations, which again we feel is generous given that the business has historically burned cash,” Culper said.
Culper said the last halving event “further decimated” miner economics and therefore cant see IREN improving its position anytime soon.
Culper also noted that IREN has failed to fulfill its promises on several occasions, including one that it would attain a hashrate of 10 exahashes per second by April 2023, when in reality, it only reached 5.5 EH/s by that point.
The researchers also pointed to insider selling of shares from the firm’s co-CEOs, brothers Daniel and Will Roberts, since February 2024.
Cointelegraph reached out to IREN but didn’t receive an immediate response.
It's not the first time Culper has targeted a Bitcoin miner.
Culper wrote a short seller report on CleanSpark in January 2021, but CleanSpark hit back a week later, claiming much of the accusations made were “false” and announced at the time it would be investigating the sources of the misrepresentations and the identity of those behind Culper.
IREN shares fell 24.5% to $10.36 on July 11 before partially recovering to $11.20 when trading hours closed, Google Finance data shows.
The company’s market cap now sits at $2.09 billion.