Everyone wants exposure to artificial intelligence (AI), but the real constraint is not ideas or algorithms. It is power and compute capacity.

Iren provides the tangible infrastructure needed to run those workloads. The company has now landed a US$9.7 billion contract with Microsoft Corp (NASDAQ: MSFT) and has a US$30.1 billion backlog of work ahead. Investors tracking power expansion and megawatt energisation may find more insight than those focused on software headlines.

Powering up with cheap energy

At the heart of Iren's business model is a simple but powerful idea: secure the cheapest possible renewable energy and use it to run power-dense data centres.

The company began by using these data centres to mine Bitcoin (CRYPTO: BTC), a business where electricity cost defines competitiveness. With an average cost of just US$0.033 per kilowatt-hour, Iren ranks among the lowest-cost operators globally. By building facilities in areas with abundant or stranded power, such as hydro-rich British Columbia and wind-heavy Texas, the company has created structural advantages that rivals find difficult to replicate.

This model has produced a profitable foundation that now funds Iren's next chapter.

Pivot to AI cloud infrastructure

Iren is using profits from its Bitcoin operations to expand into AI cloud computing. The strategy is to self-fund new, liquid-cooled data centres and fill them with the latest Nvidia GPUs.

Today, Iren operates over 2,000 GPUs. By December 2025, that number is expected to rise to over 10,000, including thousands of Nvidia Blackwell B200 and B300 units. The company sees a long-term path to 20,000 GPUs, and potentially up to 60,000 in the years ahead.

Co-founder and co-CEO Daniel Roberts said in August that demand for Iren's AI cloud services is accelerating as the company prepares for the arrival of new Blackwell GPUs.

The Microsoft and Dell deals

The company's latest announcement takes that strategy to a new level. Iren has signed a multi-year, multi-billion-dollar agreement with Microsoft to deliver AI cloud capacity.

The contract covers 200 megawatts (MW) of infrastructure over five years and includes a US$2 billion upfront prepayment. Dell Technologies Inc (NYSE: DELL) will supply hardware and integration support for the new AI supercluster.

Execution remains key

Building AI training data centres is expensive and complex. Iren expects the total cost to be around US$14 million to US$16 million per MW, reflecting higher prices for GPUs, networking components, and power infrastructure. The company has been clear that supply chain constraints are adding pressure, but these challenges are industry-wide rather than specific to Iren.

Despite those costs, the economics of the Microsoft contract appear favourable. Prepayments will reduce financing risk, while ownership of both land and power assets gives Iren more control over delivery and margins.

A win for Australian innovation

It is rare to see an Australian-founded company play such a meaningful role in global technology infrastructure.

Iren sits at the intersection of two powerful trends: renewable energy and artificial intelligence. While execution will be closely watched, this latest deal shows how an Australian-owned business can compete on the global stage by combining cost discipline, innovation, and strategic positioning.

The post Australian data centre and compute stock surges on US$9.7 billion Microsoft deal appeared first on The Motley Fool Australia.

Iren Ltd (NASDAQ: IREN) has seen its share price explode by more than 110% in the past month. Six months out, the gain is even more eye-catching: more than 535%.

So what's behind the sudden rush of enthusiasm?

Powering up with cheap energy

At the heart of Iren's business model is a simple but powerful idea: secure the cheapest possible renewable energy and use it to run power-dense data centres.

The company began by utilising their data centres to mine Bitcoin (CRYPTO:BTC), a business where the cost of electricity is a defining competitive edge. With an average cost of just US$0.033 per kilowatt-hour, Iren is among the lowest-cost operators globally. By locating facilities in areas with stranded or oversupplied power, such as hydro-rich British Columbia or wind-heavy Texas, the company has built structural advantages that rivals struggle to match.

This model has created a profitable foundation that now funds its next chapter.

Pivot to AI cloud infrastructure

Iren is reinvesting Bitcoin mining profits to scale its AI cloud business. The strategy is to self-fund the construction of next-generation, liquid-cooled data centres and fill them with Nvidia's latest GPUs.

• Today, Iren operates around 1,900 GPUs.
  
• By December 2025, that number is expected to grow to 10,900, including thousands of Blackwell B200 and B300 units.
  
• The company ultimately sees a path to 20,000 GPUs, and longer term, up to 60,000.
  

Co-founder and co-CEO Daniel Roberts highlighted in August: "Demand for our AI Cloud is accelerating as we prepare for the delivery of approximately 9,000 Nvidia Blackwell GPUs over the coming months."

That demand is evident across the industry. Microsoft recently signed a major AI data centre deal with Nebius, and Oracle disclosed its own AI cloud backlog has quadrupled year over year. Investors see Iren's strategy, combining low-cost power with a fast-growing AI business, as a way to capture that surge in demand.

Analysts turn bullish

Another spark for the share price came this week when three analysts weighed in positively.

• Research firm Arete initiated coverage with a buy rating and a US$78 target, praising management's self-funding strategy.
  
• Roth/MKM more than doubled its target to US$82, while Bernstein lifted its target to US$75, from just US$20 previously.
  

The analysts noted Iren's clever reinvestment of Bitcoin proceeds into AI capacity, alongside an upgrade of its mining hardware, as factors that could strengthen fundamentals further.

Foolish Takeaway

With a double in its share price in a month, sentiment around Iren has flipped decisively. The company's unique mix of low-cost renewable power, Bitcoin mining cash flow, and rapidly scaling AI cloud infrastructure has investors paying close attention.

For Australian investors, it's a reminder that some of the country's most ambitious tech success stories don't always trade on the ASX. Whether Iren becomes the next household name like Atlassian or Canva remains to be seen, but right now, it's one of the most remarkable Aussie growth stories playing out on Wall Street.

The post From Bitcoin to AI, this Aussie tech stock just rocketed over 100% appeared first on The Motley Fool Australia.

Another homegrown company quietly following this path is Iren Ltd (NASDAQ: IREN). And lately, its share price performance has been anything but quiet.

At the time of writing, Iren shares have surged more than 78% in less than a month. Zoom out six months, and the stock is up an eye-watering 385%.

What Iren does

Iren operates at the intersection of two of the hottest trends in global markets: Bitcoin (CRYPTO: BTC) and artificial intelligence (AI).

The business started as a Bitcoin miner but has deliberately positioned itself to take advantage of the AI boom. Its operations are built around high-performance data centres, which can either secure the Bitcoin blockchain or rent out computing capacity to companies building AI systems.

Importantly, Iren does this while maintaining a commitment to 100% renewable energy. That means its vast computing operations, which consume significant electricity, are powered by clean energy sources, setting it apart from many peers.

This dual approach of mining Bitcoin and powering AI cloud services has made Iren one of the more unique tech-infrastructure plays on Wall Street.

A story of two Australian brothers

Iren's origins trace back to Sydney-based brothers Daniel and Will Roberts, both of whom worked at Macquarie Group Ltd (ASX: MQG) before deciding to strike out on their own. They saw an opportunity to build a new kind of infrastructure business: large-scale, power-dense data centres designed for Bitcoin mining and, increasingly, artificial intelligence.

Rather than build in expensive capital cities, the brothers donned backpacks and travelled across Europe, Canada, and the US to find the best opportunities. Their mission was simple: tap into stranded or wasted renewable energy — power that would otherwise go unused — and turn it into a competitive advantage.

That approach led them to places like British Columbia, where pulp and paper mills had shut down, leaving behind communities with excess hydroelectric power. Iren bought and repurposed facilities then put downward pressure on electricity costs by using power that was otherwise going to waste. The same strategy took them to Texas, where oversupplied wind and solar farms were bottlenecked by limited transmission lines.

By focusing on locations with abundant, underutilised clean energy, the Roberts brothers built Iren into a company that could mine Bitcoin cheaply and sustainably, while laying the groundwork for AI and high-performance computing.

Recent financial results

Two legs are supporting Iren's positive momentum: its profitable Bitcoin business and the rapid growth of its AI cloud operations. Together, they are reshaping the company's revenue mix, making it less exposed to Bitcoin cycles and positioning it for multi-year growth.

• Revenue: US$501 million in FY25, up 168% year on year.
  
• Net income: US$86.9 million, swinging from a US$28.9 million loss in FY24. 
• Operating Earnings (Adjusted EBITDA): US$278.2 million, up nearly 400% year on year.
• Bitcoin mining: 50 EH/s of computing power across 810 megawatts of operating data centre capacity. With power costs averaging just US$0.033 per kilowatt-hour, Iren is one of the lowest-cost producers globally.
• AI cloud growth: From 1,900 GPUs today, management expects to deploy 10,900 Nvidia GPUs by December 2025. The fleet includes next-generation Blackwell chips (B200s and B300s), with utilisation near 100% and margins in the high 90s.
  

These results highlight a company in rapid transformation. What began as a Bitcoin miner has evolved into a dual-engine infrastructure play, combining cash flow from Bitcoin with a fast-growing AI data centre business. The optionality of its power platform, coupled with liquid-cooled, power-dense data centres, gives Iren the flexibility to allocate resources where returns are highest.

Just as importantly, its financing structure has limited dilution. By securing non-dilutive leases covering 100% of GPU costs, Iren can expand capacity without weighing on shareholders. Add in Nvidia Preferred Partner status, and Iren's path to securing supply in a constrained GPU market looks solid.

Foolish Takeaway

Iren may still fly under the radar for many local investors, but it represents a rare Australian success story playing out on a global stage. With its shares up more than 385% in six months, momentum is firmly on its side.

Whether it can continue to grow into the next Aussie household name remains to be seen. However, one thing is clear: Iren has demonstrated that Australian entrepreneurs can build world-class tech companies that thrive in the most competitive global markets.

The post The Aussie tech success ASX investors are sleeping on appeared first on The Motley Fool Australia.