Bitcoin miner IREN overstated its compute ability and prospects, says lawsuit

IREN, formerly Iris Energy, was sued by a group of investors, claiming the crypto mining firm misled them about its high-performance computing (HPC) business.

A class-action suit led by Paul Williams-Israel filed in a New York federal court on Oct. 7 claimed IREN’s Childress, Texas, facility was framed as an HPC-ready data center when it wasn’t, and its computing capacity was significantly overstated.

The suit claimed the misleading information came from a June 2023 IREN statement announcing an expansion of its Childress site and a “revitalization” of its HPC strategy.

“The statement was materially false and misleading at the time it was made because it overstated the Company’s prospects in HPC, considering that its Childress site is ill-equipped to be used for data centers and HPC,” the complaint alleged.

Williams-Israel said that he and others may not have invested in IREN if they were aware IREN’s price was, as they claimed, “artificially and falsely inflated” by the allegedly misleading information.

IREN’s co-founders and co-CEOs — brothers Daniel and William Roberts — and the firm’s chief financial officer Belinda Nucifora were also named as defendants in the suit.

Williams-Israel also claimed IREN’s “proven” air cooling design aimed at preventing the Childress HPC center from overheating wasn’t tested properly.

The suit referred to a July 11 report from short-selling firm Culper Research, which claimed IREN’s air cooling design had only been tested in British Columbia, Canada — not Texas — where temperatures are “20 to 40 degrees [Fahrenheit] hotter year-round.”

Culper — which disclosed its short-selling position on IREN in the report — also accused the firm of talking “big game” about its plans to compete in the HPC space despite investing far less than what is required.

“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 suit is seeking to recover compensable damages caused by IREN, the Roberts brothers and Nucifora in amount to be determined at a jury trial.

IREN did not immediately respond to a request for comment.

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IREN’s share price fell 6.71% on Oct. 9 to $7.51 and was flat in after-hours trading, Google Finance data shows.

However, its share price is up 10.44% year to date.

IREN’s market cap sits at $1.42 billion — the seventh largest among Bitcoin miners, according to Companies Market Cap.

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