IREN's $9.7B Microsoft AI deal hits first major milestone

IREN completed the delivery of the first of four planned “Horizon” cloud deployments of artificial intelligence to Microsoft Corporation. With that, the first milestone of a five-year, $9.7 billion contract was completed, which underpins the transition of the former Bitcoin mining company into artificial intelligence infrastructure.

Horizon 1 is located at IREN’s Childress, Texas facility. It is reported to be a 50-megawatt facility with direct chip-level cooling and Nvidia GB300 systems. It is the first of four facilities of this type that the company plans to complete by 2026, and altogether the four facilities should provide a total of 200 megawatts of capacity.

Nvidia also awarded the facility its Exemplar Cloud status, a designation reserved for cloud providers who meet Nvidia’s performance and reliability standards for artificial intelligence workloads. “Delivering Horizon 1 underscores the power of our vertically integrated business model and our ability to deliver on complex AI infrastructure projects with speed and scale,” said Daniel Roberts, co-founder and co-CEO of IREN, in a statement.

Why Microsoft’s acceptance matters more?

Completing the build was one half of the test. As per the deal, Microsoft gets five days to validate the installation of each GPU deployment against mutually accepted standards. Upon completion of the acceptance process, the period for service commences, and IREN starts charging Microsoft monthly.

The key is the billing. IREN signed a cloud service agreement with Microsoft in November 2025, giving us an annualized revenue stream from the deal of around $1.94 billion when all four horizons are online. Microsoft needs to pay 20% of the total contract value upfront in four tranches.

IREN’s AI pivot puts $4B revenue target in sight

The magnitude of the shift is illustrated by looking at IREN’s accounts. The company was listed on the Nasdaq in 2021 as a Bitcoin miner, with the company having generated revenue from the mining business of $511.5 million in the first nine months of 2022 while earning just $58.3 million from its AI Cloud service. According to management, the company plans to reach annualized run-rate AI Cloud revenue in excess of $4 billion by the end of the year, with over 85% of revenue contracted.

The timeline reflects the health of IREN’s core business operations. In mid-August, the price of Bitcoin was hovering around $63,500, less than half of the price peak in October 2025. IREN has stated that the company plans to have 480 megawatts of AI cloud computing capacity in 2026 and 1.2 gigawatts in 2027 while moving out of mining operations.

This expansion is estimated to need about $5.8 billion in GPUs and related hardware purchased from Dell. IREN has secured funding for all but a minority of this expansion. This includes $3.65 billion of secured debt arranged in June and guaranteed by the Microsoft deal, according to The Block, covering 96% of the $5.81 billion in GPU spending and rated investment grade A by Fitch and A(low) by DBRS.

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