The Allegations of Culper Research

Culper Research revealed its short-selling position on IREN in its July 11 report and attacked the company for inadequate funding for HPC initiatives. Culper charged IREN of engaging in a “big game” about its aspirations for high-performance computing while neglecting the required financial investment.

“IREN speaks a big game of its HPC plans but ultimately seems entirely disinterested in actually doing what it takes to compete in the space,” Culper said. The article said IREN intends to create a comparable HPC center for the same cost and has spent less than $1 million per megawatt (MW) to establish its current center. Industry professionals believe the actual cost of building an HPC-ready data center to be between $10 and $20 million per MW, Culper pointed out.

The research said IREN is unprepared for the high-stakes HPC competition, comparing its assertions to participating in the Monaco Grand Prix with a Toyota Prius. Culper also said that IREN is overpriced and need to be sold 52 to 79 percent below its present worth.

Reactions of the Market and Insider Activity

Compared to other publicly listed miners, IREN’s enterprise value relative to its hash rate on a MW basis was underlined as quite high. Given IREN’s past financial burn, Culper ascribed a value of $0 to $100 million to its crypto mining operations—which she regarded as generous.

The latest Bitcoin halving event was also mentioned in the paper as a factor aggravating miner economics as IREN’s situation is expected not to get better soon. Culper listed various breaches of IREN such as failure to achieve operations of 10 EH/s by 2023 April; the firm only managed to achieve a 5,5 EH/s operation in April 2023.

Culper also realized insider selling of the shares by brothers and co-CEOs of IREN, Daniel and Will Roberts beginning February 2024.

Previous Culper Reports

Culper has aimed at a Bitcoin miner before now. Culper published a short seller report on CleanSpark in January 2021; in response, Culper refuted the claims and declared an inquiry into the claimed origins of the claimed misrepresentations.

Market Impact of IREN

Google Finance data shows that after the article, IREN’s shares dropped by 24.5% to $10.36 on July 11 then slightly recovered to $11.20 at the close of trade. The market capitalization of the firm now comes to $2.09 billion.

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