Iris Energy Limited, a publicly-listed Bitcoin mining company on NASDAQ, is embroiled in a class action lawsuit that alleges the firm misrepresented its data center capabilities, claiming suitability for high-performance computing (HPC) and artificial intelligence (AI) applications. The lawsuit, filed in the United States District Court for the Eastern District of New York, accuses Iris Energy and its executives of making false and misleading statements about the company’s ability to transition from bitcoin mining to HPC and AI.
Central to the lawsuit is Iris Energy’s Childress, Texas facility, which the company had promoted as a key asset for its HPC strategy. The plaintiffs argue that this facility lacks the necessary power redundancy, cooling systems, and fiber connectivity required for such operations. Statements made by Iris Energy’s co-CEO, Daniel Roberts, are also under scrutiny. Roberts had claimed the company built a “bedrock of high-performance data centers,” which the plaintiffs allege overstated the firm’s capabilities and prospects.
The legal action follows a significant drop in Iris Energy’s stock price, roughly 15%, after Culper Research published a critical report questioning the company’s HPC claims and the suitability of its facilities. Culper Research disclosed its short position on Iris Energy, suggesting the company had misrepresented the potential of its assets for HPC/AI applications.
The class action seeks to recover damages for investors who purchased Iris Energy securities between June 20, 2023, and July 11, 2024, alleging violations of federal securities laws. This lawsuit emerges as Iris Energy, amid challenging conditions in cryptocurrency mining, pivots towards AI to secure new revenue streams, despite a reported net loss of $29 million—an improvement over the previous fiscal year.
This trend of Bitcoin miners venturing into AI and HPC industries is gaining traction, with companies like HIVE Blockchain rebranding to HIVE Digital, reflecting a broader industry shift. According to a report by VanEck, this transition could unlock significant value for mining companies by 2027, highlighting the growing importance of energy access in the AI/HPC data center market.
