IREN's $9.7 Billion Microsoft Deal

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Rohit Malhotra
November 13, 2025

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The Rise of Bitcoin Mining Neo Clouds

On November 3, 2025, IREN Limited made headlines with a landmark $9.7 billion cloud services agreement with Microsoft, marking a transformative moment not just for the company but for an entire emerging sector: Bitcoin Mining Neo Clouds (BMNCs). This five-year contract represents one of the largest AI infrastructure deals in recent history and validates a fundamental shift in how former cryptocurrency mining operations are evolving into critical AI computing infrastructure providers.

Deal Structure

Microsoft agreement showcases innovative financial engineering that benefits both parties. Microsoft will gain dedicated access to NVIDIA GB300 GPUs deployed across IREN's 750-megawatt campus in Childress, Texas, with rollouts occurring in phases throughout 2026. The deal includes a 20% upfront prepayment from Microsoft, allowing IREN to accelerate infrastructure development while Microsoft secures much-needed AI computing capacity without the capital expenditure burden of building new data centers or purchasing depreciating chip inventory outright.

With an estimated annual run-rate revenue of approximately $1.94 billion and a projected EBITDA margin of around 85%, this contract transforms IREN's financial profile. The company will use the prepayment, along with existing cash, operating cash flows, and additional financing, to fund the deployment.

Complementing the Microsoft deal, IREN has a separate $5.8 billion agreement with Dell Technologies for GPU procurement and related equipment, including deployment services, servers, InfiniBand networking, cabling, software, and licensing. This arrangement also benefits Dell, positioning the company to capture significant hardware demand as AI infrastructure expands.

Technical Execution

What sets IREN apart is its vertically integrated approach. Unlike companies that rely on third-party colocation services, IREN builds and operates its own data centers through in-house design, engineering, and construction teams. This eliminates counterparty risk and allows for tighter margin control.

The initial deployment consists of four 50MW phases (Horizon 1-4) at the Childress facility, totaling 200MW of critical IT load. The estimated all-in capital expenditure ranges from $14-16 million per MW of IT load, broken down as follows:

  • $9-11 million for data center infrastructure with Tier III equivalent concurrent maintainability

  • $3 million for deployment of 100MW supercluster architecture with flexible rack densities ranging from 130-200kW

  • $2 million in acceleration costs to achieve full 200MW capacity delivery by 2026

The facilities feature both air and liquid cooling capabilities, essential for handling the thermal demands of high-density GPU deployments. Direct-to-chip liquid cooling systems are particularly critical for next-generation AI workloads, and IREN's experience developing these systems positions it well for future expansion.

Bitcoin Miners Become AI Cloud Providers

IREN's deal didn't happen in isolation. On the same day, Cipher Mining announced a $5.5 billion, 15-year lease agreement with AWS for 300MW of capacity at its Barber Lake facility, with operations beginning in July 2026. Both announcements signal a paradigm shift in cloud computing infrastructure.

These Bitcoin Mining Neo Clouds possess several strategic advantages:

Energy Infrastructure: Years of cryptocurrency mining have given these companies expertise in securing low-cost, high-capacity power—often from renewable sources like hydro and wind. IREN's Childress campus runs entirely on renewable energy, addressing both cost and sustainability concerns.

Existing Facilities: BMNCs already own or control megawatt-scale facilities with the electrical infrastructure necessary for power-intensive computing. Converting these sites for AI workloads requires less capital than building from scratch.

Operational Expertise: Managing high-performance computing clusters, dealing with heat management, and optimizing power consumption are core competencies these companies developed through mining operations.

Hybrid Business Model: Many BMNCs maintain bitcoin mining operations alongside cloud services, using cryptocurrency holdings as financial leverage for facility expansions while diversifying revenue streams.

Competitive Landscape

IREN now joins a growing tier of specialized AI cloud providers positioned between traditional hyperscalers and pure-play data center operators. Companies like CoreWeave, Crusoe Energy, and Nebius have pioneered this space, focusing on GPU-intensive workloads that hyperscalers like Amazon, Google, and Microsoft struggle to provision quickly enough.

Among the BMNCs, IREN ranks as one of the larger players. Other notable players include Riot Platforms, which some analysts view as potentially undervalued relative to peers.

The market has responded enthusiastically. IREN's stock surged 20.47% in pre-market trading following the announcement. Even Dell Technologies saw gains due to its equipment supply role.

Future Potential

The Microsoft contract is just the beginning for IREN. The company has already secured 3GW of grid-connected power capacity across multiple sites. Beyond the initial 200MW deployment at Childress, IREN is advancing design work to potentially convert the entire 750MW campus to liquid-cooled AI deployments, providing an additional 450MW of capacity for future phases (Horizon 5-10).

IREN operates as an NVIDIA Preferred Partner with multi-jurisdictional AI Cloud capabilities. The company's IREN Cloud platform now services a diverse customer base ranging from hyperscalers to model developers to AI-native enterprises. With the Microsoft contract, IREN will scale its footprint to 100,000 GPUs.

At its Prince George facility, IREN has approximately 23,000 GPUs deployed, contributing an estimated additional $500 million in annual recurring revenue. Combined with the Microsoft contract, the company projects total ARR exceeding $2.5 billion once fully operational.

Why This Matters for AI Development

The emergence of BMNCs as credible infrastructure providers addresses a critical bottleneck in AI development: computing capacity. As large language models and AI applications grow more sophisticated, the demand for GPU clusters has outpaced supply. Hyperscalers like Microsoft, Meta, and Google are capacity-constrained despite massive capital expenditure programs.

These secondary AI cloud providers offer several benefits:

  • Speed to market: Converting existing facilities is faster than building new hyperscale data centers

  • Specialized focus: BMNCs concentrate exclusively on GPU-intensive workloads

  • Geographic diversity: Sites in locations with abundant renewable energy and favorable power economics

  • Flexible partnerships: Willing to structure creative deals like Microsoft's prepayment model

For hyperscalers, these partnerships provide imperative capacity relief without the full capital burden. Microsoft's approach with IREN exemplifies this strategy—accessing cutting-edge NVIDIA GB300 GPUs through an operating expense model rather than purchasing and managing the hardware directly.

The New Cloud Layer

The announcements from IREN mark the maturation of Bitcoin Mining Neo Clouds as a distinct infrastructure sector. What began as cryptocurrency mining operations has evolved into sophisticated AI computing providers with valuable assets: power capacity, facilities, operational expertise, and financial flexibility.

As AI demand continues accelerating, expect more hyperscalers to follow Microsoft's lead in partnering with BMNCs. These companies represent a new layer in cloud computing architecture—specialized, efficient, and positioned at the intersection of energy infrastructure and computational demand. IREN's $9.7 billion deal isn't just a company milestone; it's validation of an entirely new approach to scaling AI infrastructure in an era of insatiable computing appetite.

Ryan Johnson is the Chief Product Officer at CallRail, an AI-powered lead intelligence platform serving 200,000+ businesses with over $100M ARR.

In this conversation, Ryan and I discuss:

  • At over $100M ARR as a product-led growth company, how do you balance self-service PLG motions with the enterprise features and pricing that get you to that scale?

  • What organisational structure actually works for maintaining product velocity at that scale, without coordination becoming the bottleneck

  • How does product strategy fundamentally change at every stage, and what stays constant?

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