Was I Wrong About IREN

Asalaamu alaikum everyone, I hope you are doing well. Today is July 11th and Tesla is down around 8% to 242 Bitcoin is right below 58,000. Sorry to keep you waiting. I was going through the IRS energy short report and I was trying to get through it as fast as possible. I have basically the highlights I've gathered in this presentation and I'm going to go over the short report that came out today about the IRS energy basically saying it's not worth what it's being traded at right now. I'm going to go over the main points there and see whether there's merit there or not. As I like to always say, I keep an open mind but not so open that my brain falls out. I make sure that I subject everything to critical interrogation before accepting it. So we'll do that with some of the main points brought up in the short report. To be honest, I don't really think the short report was that thorough. It wasn't really that serious. I think if you just want the conclusion and you want to go back to your day, the short report doesn't change anything about my thesis on IRS energy and I'll tell you why. In this live in Charlotte. So without further ado, let's get started in Charlotte. Now financial advice to your own due diligence before making any investing decisions and do leave a like. I really do appreciate all the likes that we've been getting. We have been consistently getting above 100 likes every life. So I really appreciate that. All right. So the big news today was the CPI report and it actually surprised on the downside. So we were expecting plus one. We got minus one minus point one. That is month over month. So we actually got deflation, not even this inflation, but we got deflation amount over month. And we got a yearly inflation, if we include everything, a yearly inflation rate of 3%, which is above the 2% target of the Fed, but it's headed in the right direction. As you can see by that solid blue line. So this is great. This has really good implications with regards to what is likely to be the monetary policy moving forward. If you look at the market and what it is pricing in in terms of probabilities for a rate cut in September. Now, for the first time since the start of the year, I believe we are at 95% almost for a rate cut. So if you take the probability to 87 plus the eight for a 50 basis point cut, add that together. There's a 95% chance above 95% chance that we get a rate cut in September. At least that's what the market is pricing in cheaper money is typically good for stocks. As I mentioned in yesterday's lives that live, there's about six trillion sitting on the sidelines right now tied up in money market accounts when, you know, interest rates are no longer attractive, that money is going to flow into risk assets like equities. Typically, that's what has happened historically. Today, the other big news, by the way, very quickly regarding Tesla, they postponed the August 8th event for Robotaxes, the very highly anticipated August 8th event. To me, that just changes perhaps the timeline of things and perhaps because the runway to the event is longer, it ends up reaching a higher price prior to the event. Nothing really fundamentally has changed about Tesla just because they changed the date of the presentation on Robotaxes until that date. What it does tell me though is that they're taking this event very seriously and they are trying to, or they plan on having something very material, very exciting during this event and therefore they need more time. So if anything, I think this just confirms that this event will be special one day and perhaps this will increase excitement for it. The market right now is kind of bummed out about the change in the event date. However, we do still have earnings coming up July 23rd for Tesla. So I think those earnings may have the same impact that the delivery numbers had in terms of providing a catalyst for the stock and then you have a lead up to the event which I think will build excitement. That being said, Tesla for us is a long-term play or we do think that this could be even a 10 trillion plus company. We're currently sitting less than one trillion. We could get to 20 trillion if humanoid robots end up being what I think they could be. So we're still early in the game, changes of a month in the rollout of Robotaxes. That doesn't change anything. It may change our plans for swing trades if we had any but nothing fundamental about the stock. So that's what I'll say about Tesla. So let's talk about the aggressive short report that came out today from Culper Research. To be very honest, I was not familiar with Culper Research and for good reason. It's because their calls have stunk over time. I'll give you an example of one of their calls not too long ago, a month ago, one of their calls and what happened to the stock that they made their call about at the end of this life. So let's talk about what they said about iris energy. So iris dropped today. I think this was close to its low 1036 was it's low for today. Right now, iris is at 1107 so recovered a bit. But needless to say, iris energy did not react positively to the short report. But what was in this short report? And by the way, this was a lot of algorithms that did this. I don't think because the the drop came so fast, it's not humanly possible for a human to actually process the information in the short report and come out with a conclusion. So I think this was an automated drop and just one of the ways in which the market gets manipulated by shorts. So one of the first points that they bring up is that, hey, the CEOs, they have a CEO and a co-CEO. So the CEO and his brother, basically. And they're saying, oh, well, they're selling and they're selling their shares, they're dumping their shares, making it seem like this is something recent. But actually they use screenshots from December of 2023. So they used that were sold in a selling event that's from December of 2023, were now July of 2024 to say, oh, well, the CEOs are dumping on the shareholders. Well, the CEOs, when they sold, they sold for less than $6 a share. Now, as I showed you, the company is trading for more than $10. So the CEOs, when they sold, they weren't selling because they thought, OK, this is going to zero, this is going way lower, we're selling at a great price. And this is why I always teach, you know, selling can often be noise. It's buying that is signal, willful buying that is signal. So these CEOs were not like, oh, we no longer believe in the company or else they're, you know, terrible at actually evaluating the prospects of their own company. They were selling because they had some need for the cash or they just wanted to take, you know, some risk off of the table for themselves. They had some need for liquidity was at the end of the year, who knows to have some tax obligations, but, you know, selling at under six and then seven months later, the company being worth $10, $11 and this is after a substantial retracement. It was close to $15, not too long ago. That's hardly scandalous, that's hardly proof of anything. The second point they bring up is something that we already knew, which is that, hey, iris energy dilutes its shareholders a lot. Well, it's not just iris energy that the luster shareholders, every public Bitcoin miner dilutes their shareholders. They either dilute or they take on massive amounts of debt, that's just the nature of the Bitcoin mining business. So they say, meanwhile, since 2020, iron has burned $716 million in cash and funded this charade by diluting investors to seemingly no end. Share count has exploded 12x in the past four years. Well, this is an interesting statement to make. And here, I mean, what you're looking for, and you'll never get authenticity from short sellers, because short sellers are in debt. They're basically indebted, they're borrowing the shares, they're in debt. And what do people in debt do? They lie. They deceive. They embellish. That's what people who are indebted do. And so because they're desperate, they're time constrained. It's not like they can just be long and just wait for the thesis to play out. They're getting charged fees and the higher the stock, the more pressure is on them and they have to constantly be adding to their equity at their brokerage in order to not get liquidated. So they need things to happen quickly, short sellers do. So they will embellish and they'll use provocative language and they'll twist the truth. So when you use terms like burn $716 million in cash, well, the market cap, if you look at the dilution, I mean, the majority of it happened in the last 12 months. And the market cap for IRS energy went from 250 million 12 months ago to 2.11 billion in the last 12 months. So if assume they spent, you know, the 716 million in cash in this last 12 months, all of it, they spend it in the last 12 months, well, they created about$1.1 billion in shareholder value more than what they spent. So it's hardly fair to say that they burned that cash. They are actually, they have 300 plus million dollars in cash on their balance sheet right now. So their cash rich, they're fully funded for their expansion plans to get to 20 extra hash in mining power by the end of Q3 and 30 extra hash by the end of Q4. So they've increased their mining power with this cash from basically nothing four years ago to 20 extra hash right now. And they're one of the largest public coin miners out there. So they say they burned through the cash is hardly fair. And then they say they get caught up on the high performance computing play and the capabilities not of the company, but of this specific location that they have in children's Texas. So they say, okay, if we look, iron is now claiming that has developed HPC ready data centers. Actually, this is not true. I haven't seen this claim be made by that they were ready. The IRS was ready. But what iron is actually building lacks numerous HPC critical features. The proof is in iron's financials. Iron is spending less than one million per megawatt while two HPC data centers cost 10 to 20 million per megawatt. Well, first of all, as I mentioned, I just never said everything was ready. They never said, okay, investment is done in high performance computing. We're done. We're ready. We've, all of our centers are ready for high performance computing. What they've said, and I've listened to their earnings calls, they've said, we've had this in our mind since the start and we've built the skeleton of our operations such that we can add to them to accommodate HPC capabilities in the future. Furthermore, they keep talking about children's and how Texas is not necessarily a great place to do high performance computing because of the weather. But they never said that they were going to do high performance computing in children's. The report seems to completely forget that the majority of the business of this company is Bitcoin mining. It's not high performance computing. They have mentioned that they want to get more serious about it, but the vast, vast majority of this company's business is Bitcoin mining. And there was nothing said about children specifically being used for high performance computing. It was never said that children's was not going to be a pure Bitcoin mining facility. The company has other locations, namely in British Columbia and the AI cloud services that they provide are not just theory. They already have customers. So poolside, a customer that they contracted with initially in February and then they extended their contract with them. So they are paying for access to NVIDIA GPUs that the company has. They mentioned this is in their latest investor presentation, IRIS Energy's latest presentation. We are seriously impressed by the performance of the host device, DMA transfers. The number is 3x bigger than any other hardware setup we have worked with. So we're not talking about things that are in theory, but we're actually talking about things that have happened and the language that they're using, I think, is pretty clear. They're testing the on-demand market. They're not saying they're ready to go full throttle here. And they mentioned equipment financing presents a potential path to scale. So there's ready admission that there's additional investments that are needed here for the high performance computing to actually take off and become a big part of their business. They haven't implied something else. If you look at the picture, actually, you see Irons NVIDIA H100 GPU deployment at its Prince George data center, not Childress, Prince George, Canada. So everything the company is communicating is that there's additional investments needed We're testing this out. We think it's a good source of diversification for the business. The data center that is providing these AI cloud services is in British Columbia, Canada. They don't say that they're going to change the Texas Childress location to become a, you know, provide high performance computing or AI cloud services. So the report is basically putting words in the IRIS energy management's mouth and then saying, oh, hey, these words are not true. Well, these words were never spoken. And then the entire report, I think, you know, just to, you know, illustrate how I think unfair this report has been. The entire report was focused on this green part and almost never addresses the lion's share of the IRIS and business, which is Bitcoin mining, 99% of the business is Bitcoin mining, less than 1% is AI cloud services. And their entire short report is centered on, hey, these, you know, the AI cloud services or high performance computing will not work. Well, that doesn't make much sense to me. Certainly doesn't seem like, and, you know, they say it hasn't worked and will never work. And that's, again, just the telltale sign that someone is being, you know, unfair in their assessment is because, you know, to say it hasn't worked is one thing, but will never work. I mean, why is that? I mean, certainly there's no, there's no denying the market for high performance computing. There's no denying the demand and the shortage indeed for data centers. So will never work is just a basically you're saying management is incompetent or management doesn't have it in it to make it work. Because the market demand is there, the funding for making the necessary investments, the market is fully willing to provide that funding. So why isn't that it would will never work? That doesn't seem like an objective statement to me. That seems like a statement from someone that is desperate for the stock price to go down. That seems like someone who has a short position, something that someone like that would say, you know, it's not just, you know, it hasn't worked, but don't have any hope that it will work in the future. This is what a short will say about a company that they're shorting because they're desperate and they need to embellish information in order to cause a emotional reaction from investors. And Kalper doesn't exactly have the investment firm that came out with this report, doesn't exactly have a great track record. This is just one example from a month ago, their short report came out on axon therapeutics on June 11, 2024. The low for the stock was $64 one month later today, the stock is trading for$84. So you would have bagged in more than 30% return in one month. If you just ignored their drivel and in the case of ice energy, I just don't think that the report, I keep an open mind. I think that, you know, the number one way to get burned in investing is not to be humble and not to be open minded. So I make sure I remind myself of that all the time. But at the same time, I'm able to identify things when they aren't objective. And I think the short report today was not objective. And it was clearly, you know, motivated. I actually would not be surprised if they've already closed their short position. I mean, they got a 13% now. At one point, it was 14% downward movement on the stock. They were short. If they haven't closed, I think they probably should. Because it just doesn't make sense. It doesn't add up for someone to have a short position on a company, you know, that's in a field that's in a market that is hot right now. So Bitcoin, everybody knows that Bitcoin is, you know, post-having right now. Historically, this is the time where, you know, Bitcoin goes on a run. We've had a pullback. It's, you know, if you look at serious commenters on the topic, price targets range anywhere from 100k to 150k by year end. We're talking about a Bitcoin miner right now. Why would you be short at this time for this company? Even if you think long-term, the fundamentals will catch up with the company. But at this time, with momentum where it is, where when, you know, excitement about Bitcoin miners and Bitcoin is where it is, when the liquidity cycle is where it is and, you know, liquidity set to increase, why would you be short at this time? This doesn't seem like a long-term position. This seems like, to be honest, the cash grab. I would not be surprised if they had closed their short position already. There are so many other much less attractive sectors that you could be shorting, that don't have the benefit of momentum or hype behind them. And you choose Bitcoin mining stock that has been, you know, one of the best performers. That doesn't make much sense to me. So if you enjoyed this overview of the short report, then do leave a like and appreciate that. Come up here, I have a member to follow our portfolio's move for move. Without further ado, let me go to questions. Chocolate has so much suspense, and this was in anticipation of the slides. suspense always makes things exciting. Hair says, he wasn't wrong about iron because I just bought the dip and shot like works out. Samalik, my everyone, Walikum, Saddam. Chad says, allow me to answer again. No, you are not wrong. Ali says, in Islam, Bitcoin and Ethereum are considered as a man or money. And then what are small crypto like XRP and LPT and et cetera, considered as, well, I would say that Bitcoin, you could consider it as a store of value, but you can't really. It's not really a means of exchange. Ethereum, I would not consider it a man. The rest of the, the rest of the symbols, XRP, LPT, I think they're just investments. I don't think they have anything to do with money. Yeah, indeed, I have yet to meet a short seller with good managers. This is actually true. Short selling is haram. Yeah, I do believe that. Well, first, I mean, the obvious reason is that involves interest. So you do have to pay interest to the broker that facilitates it. You can watch my video on short selling to understand this, how it works a lot better. It's a good time to buy iron and bit tier. I think definitely down days are better times than up days to buy. And so we've had a down day on both those names. So yeah, I did buy a smidge of a bit dear today. Yeah, if members know that. All right, guys, leave a like and until next time, make sure to take care of yourself. As-salamu alaykum and peace be upon you all.