Microsoft has formalized a deal valued at approximately $9.7 billion (AUD $14.8 billion) to secure AI cloud capacity from Australian company Iren. This five-year agreement marks Iren as Microsoft’s largest customer and enhances the tech giant’s capabilities in artificial intelligence.
The arrangement will allow Microsoft access to Nvidia accelerator systems in Texas, specifically utilizing the GB300 architecture designed for AI workloads. Iren confirmed that the deal includes a 20 percent prepayment. In addition, Iren plans to procure the necessary graphics processing units (GPUs) and related equipment from Dell for $5.8 billion.
Iren’s Transition to AI Services
Founded in 2018 as Iris Energy by former Macquarie Bank bankers, Iren initially focused on bitcoin mining but has since shifted its focus to AI services. This transition has proven lucrative, generating substantial revenue and propelling CEO Will Roberts onto the Young Rich List.
Once fully implemented, the deal with Microsoft is projected to yield approximately $1.94 billion in annualized revenue. Iren CEO Will Roberts noted that the new agreement will utilize about 10 percent of the company’s total capacity, which leaves room for further contracts and additional revenue streams.
“We’ve always viewed the major hyperscalers as natural partners,” Roberts stated. “We’ve been in discussions with several of them, and those conversations have accelerated as both their compute requirements and our AI Cloud capabilities have grown.”
Market Reaction and Future Prospects
Following the announcement, Iren’s shares surged by more than 28 percent in pre-market trading in the United States. Meanwhile, Dell’s stock experienced a modest increase of around 4 percent, while Microsoft’s shares remained relatively stable.
Iren is part of a competitive group of so-called neoclouds, which are data center operators specializing in AI, including companies like CoreWeave and Crusoe. Many of these firms began as cryptocurrency mining operations and have diversified their services to meet the growing demands of AI.
Since the beginning of the year, Iren’s NASDAQ-traded shares have risen more than 500 percent, driven by optimism surrounding the artificial intelligence sector, which has significantly boosted the market value of companies like Nvidia, now valued at over $5 trillion.
Microsoft has been increasingly reliant on leasing contracts with companies like Iren to enhance its resources as it seeks to expand its AI service offerings. Recently, the company acknowledged challenges in securing sufficient cloud capacity to meet the growing demand for its Azure services.
The installation of the new GB300 systems at Iren’s facility in Childress, Texas, will occur in phases throughout the upcoming year, supporting a total capacity of 750 megawatts. Additionally, Iren operates a 2GW facility at its Sweetwater Hub near Abilene, which is also witnessing strong interest in large-scale AI infrastructure deployments, according to Roberts.
This strategic partnership between Microsoft and Iren signifies a critical step in addressing the increasing demand for AI capabilities and cloud services, setting the stage for future collaborations in a rapidly evolving digital landscape.
