Even as it decommissions mining hardware to make room for AI infrastructure and expands its AI cloud offerings, IREN continues to derive the majority of its revenue from Bitcoin mining.
According to the company’s fiscal 2026 financial report filed on Aug. 27, Bitcoin mining accounted for $578.2 million—or roughly 81.8%—of IREN’s total annual revenue of $707 million. Meanwhile, AI Cloud Services brought in $128.8 million.
This ongoing shift resulted in a $638.8 million non-cash impairment, primarily driven by the retirement of mining equipment to convert data center locations for AI workloads. IREN also posted a net loss of $702.6 million, which was impacted by this impairment alongside other factors. While the charge did not represent a cash outflow of $638.8 million, it assigned an accounting value to assets that were retired prior to the replacement operations becoming fully functional.
IREN AI cloud revenue faces a $3 billion operating gap
As of Aug. 26, IREN recorded $1 billion in operating annualized run-rate revenue (ARR), compared to $4 billion in contracted ARR for its 2026 capacity. The company aims to have this larger run rate fully operational by Dec. 31.
ARR is determined by multiplying contracted GPU pricing by a full year of operating hours, which includes storage and associated services. Because ARR is an operational metric rather than a GAAP financial figure, IREN cautions that actual recognized revenue might be significantly lower. Bridging this gap relies on physical infrastructure being delivered and approved, alongside the firm’s assumptions regarding capacity utilization and pricing.
The Form 10-K notes that revenue typically begins only after data centers are constructed and energized, equipment is installed and commissioned, performance tests are finished, and customers formally accept the capacity. Any delays can postpone revenue generation while operating and financing expenses persist, potentially triggering service or delay credits.
The rollout follows a phased schedule. Microsoft accepted Horizon 1 in August, while Horizons 2 through 4 were slated for phased rollouts during the fourth calendar quarter of 2026, with contractual grace periods extending into early Q2 2027.
As of June 30, IREN maintained an installed Bitcoin mining capacity of roughly 23.2 EH/s spanning approximately 380MW. The business targeted the near-complete transition of that data center capacity to AI Cloud Services before the conclusion of the year.
Postponements also incur financing expenses. To fund the Microsoft agreement, IREN secured GPU financing through a delayed-draw loan set at the one-month SOFR rate plus 2.25%, alongside senior notes yielding 5.96%, with specific tranches subject to various conditions. An independent Mackenzie financing arrangement totaling up to $2.4 billion features a fixed rate of 9% and matures 30 months following each respective staged funding date.
According to IREN, Microsoft and NVIDIA accounted for a dominant portion of contracted revenue. Although new clients help diversify the customer base, counterparty, performance, and acceptance risks remain heavily concentrated.
While IREN holds contracts capable of replacing its mining operations on a run-rate basis, the regulatory filings indicate that this transition is not yet finished. The upcoming test will involve customer approval of the remaining infrastructure rollouts and the corresponding GAAP AI revenues they generate.
