
The Practical Islamic Finance Podcast
The Practical Islamic Finance Podcast
Another One Gives Up!
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Another One Gives Up!
In this episode, we will cover:
- Intro & Market Overview
- Bitcoin, Solana, & Dogecoin Updates
- Iris Energy: From Bitcoin to AI
- Why Bitcoin Mining is Tough
- AI Cloud vs. Bitcoin: The Profit Margins
- What This Means for Investors
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salam@practicalislamicfinance.com
ABOUT OUR PODCAST
Our podcast is about helping people ethically build wealth. We cover a broad range of topics, including stock and crypto investing, product reviews, and general financial well-being.
DISCLAIMER
Anything you hear in this video is an opinion. It is not personalized financial advice. Make sure you do your due diligence before making any investment decisions.
As-salamu alaykum, everyone. I hope you are doing well, Eid Mubarak, whether you started celebrating Eid today or yesterday, Eid Mubarak. I am glad you're able to join us. I hope you're enjoying your Eid. Today, by the way, is March thirty first, and the markets ended up green today, which is surprising considering how bad they started off the day. But they ended up eking out a win. The Dow Jones was up one percent. S&P was up point five five percent. The Nasdaq was flat. But I'll call that a win considering the macro and how much it stinks lately. And it does appear that. Some of the nervousness or a good portion of the nervousness is at this point priced in. The nervousness with regards to April second. What's going to happen on April second? The panic of the market has been priced in at this point and we're at wait and see mode. Let's see what happens on April second. Let's hope Trump doesn't. double down in a bad way on some of his proposals let's hope there's some flexibility some deals are made some retracement of some of the words that were said let's hope that happens and the market can breathe a sigh of relief and get on with its winning ways again Looking at some of the movers today, we're going to talk about Iris Energy. It was up point three, three percent. I think the update today that they had was huge. I'll tell you all about that in a second. But on any other day, the macro wasn't what it is. I think this stock would have reacted in a much bigger way. If you look at something like CleanSpark, CleanSpark, another Bitcoin miner got smashed down six and a half percent. Salam, Rashad. Nice to see you. Aeed Mubarak. Hafez. Salam, Aeed Mubarak to you as well. Bitcoin is at eighty two thousand. Solana is at one hundred and twenty five. Doge is at sixteen five. All right, so let's talk about what I want to talk about today, which is Iris Energy's update. This is, for those who are unfamiliar, by the way, this is the map of the market. Looks green, surprisingly. It looks green. Listen, nothing to write home about in terms of the percentages. You have Apple, which is almost the greenest box here in the market. less than three percent but still green nonetheless I'll take that all right so with regards to ios energy iris is a now it's calling itself a data center business used to be a bitcoin miner uh powering the future of bitcoin ai and beyond utilizing a hundred percent renewable energy so they were focused on bitcoin mining uh they're had a goal, they still have a goal of reaching fifty exahash or fifty two exahash by the end of the first half of twenty twenty five. They're on track to do that. They also have a small portion of their revenue coming from AI cloud services. They have a pretty robust portfolio of data center infrastructure. And a development portfolio, twenty nine hundred megawatts of grid connected power and land to go with it. So a very robust portfolio of assets. And in their update, this is from their X account. They mentioned the following operating data centers increased from five hundred and ten megawatts to six hundred and sixty megawatts. Install capacity increased from thirty one exahash to thirty five exahash. This refers to their Bitcoin mining capacity. And then here, I got buried in the middle. They just said Bitcoin mining expansion will pause at fifty two exahash. That means they're not investing anymore in Bitcoin mining. This is huge. This is basically the company saying we are pivoting from the Bitcoin mining business. We're going to take advantage of this bull run right now and what we have in motion. But we're pivoting from this Bitcoin mining business and we're basically going to become an AI cloud and AI data center business. This is very substantial and I think it's positive. I've been banging my hand on the table saying, hey guys, this makes a lot more sense to invest money in this direction as opposed to Bitcoin mining because of the following. If you look at the margins, the margins are just way, way better. As I always say on this channel, there are easy ways to make money and there are hard ways to make money. And Bitcoin mining is a very hard way to make money. If you look at the hardware profit margin, which basically only takes into account electricity and depreciation of the assets, That's at seventy percent. You haven't taken into account any of the other operating expenses. So you can almost think of that as the gross. The gross margin here for the Bitcoin mining is seventy percent. If you look at the gross margin for AI cloud services, that's at ninety six percent. So if you have a dollar and I say, and I, you know, pitch you two businesses, one of the businesses has a gross margin of seventy percent and the other has a gross margin of ninety six percent. Which one are you going to put your dollar into? It makes a whole lot more sense to put it in the ninety six percent margin business. That's what AI cloud services offers. And eventually this logic imposed itself on the company and they decided, you know, why the heck are we still investing in this Bitcoin mining thing? Let's get to, you know, where we want it to go because of Bitcoin. all of the sunk costs that we have in that direction. And so they'll get to the fifty two exahash that they said they would get to by the end of the first half of twenty twenty five. But after that, it's just going to be an AI cloud services, AI data data center business, which makes a lot of sense. And if you look at the valuations that the market is affording, Bitcoin miners versus businesses that are focused on AI data centers and cloud services, the valuation differences, the multiples that is, are quite different. So if you look at Iris Energy today, it has a price to sales ratio of four point seven. If you look at something like CoreReeve, which is just into AI data centers and cloud services, they're at double the multiple for price to sales they're at nine point seven so I do think that this transition to a more profitable business for iris energy will cause the and if it's able to successfully do this at at these upgraded margins the market is going to reward it with higher valuations So this is very good for the company. I did want to point out a few additional highlights here. Their AI cloud services annual recurring revenue increased month to month between February and March by eighty percent. So they reached twenty six million as of March thirty first. It was fourteen point four million on February twenty eighth. So in the span of just one month, they've increased their ARR by eighty percent, which is quite remarkable acceleration. If you look at their infrastructure growth, they are, keep talking about every update they tease conversations with players that are interested in you know investing in um in their sites and making them a and and basically perhaps having a co-location agreement or some other arrangement where the infrastructure that vast asset portfolio that I talked about that the company has is put to good use and the company can make some high margin dollars from them. They mentioned strong engagement in large-scale AI cloud opportunities with demand for multi-thousand DXG B-to-hundred GPU clusters. And they also mentioned that they are something that they emphasize throughout their update is that they're very aware of shareholder dilution and they are very keen on minimizing shareholder dilution. And so they're relying on shareholder dilution basically as just the last resort, which is great to hear. One of the things that they are mentioning that they are using for financing is prepayment by customers, which is awesome. And of their one billion ATM that they have, that they basically they can at the market sell shares and this would cause dilution for shareholders. But of their one billion, they've only utilized around eleven percent of that. They're relying instead on things that are not dilutive, which is great. It's great. And they raised one hundred eleven million using their ATM facility. And they sold shares at nearly double what they're at right now. So if you look at the price per share right now, Iris is at six dollars. Their average for the one hundred eleven million that they raised was eleven dollars per share. So I think this was a great update. I think that the company continues to execute at a very high level. It's making very smart decisions that I agree with. And so I think right now at six dollars a share, this thing is priced very attractively and it's very high up as PIF members know. It's in the top five, I think, in selections. for uh you know conviction adjusted upside uh for um on our watch list so uh with that being said there's only two days left to take advantage of the thirty five percent off because I wanted to uh the coupon to end the last day of Eid and previously you know I thought maybe Eid, the last day of Eid would be Tuesday. Now it may be Wednesday. So we're going to leave it till Wednesday, inshallah. So you basically have Tuesday, Wednesday to use it or today if you use it. But thirty five percent off. Don't miss out on this opportunity. I think it's a great opportunity. To take advantage of this coupon, it's a great opportunity to get serious about investing now that I think there are a lot of opportunities on the market. So with that being said, let's take some questions. Ayn Mubarak Azhar, nice of you to join us. Ayn Mubarak, Lubna. um I think nibbling on tesla at these prices will your future self will probably thank you not not investment advice what is the price of gold telling us it's telling us people are in risk off and in risk off mode and they're and they're panicked and typically when investors are panicked they go to gold what a beautiful look bro well thank you uh Thank you. Appreciate it. Ali, nice to see you. Did you ever end up looking at... We can talk about that on the members pick discord, Ali. It does look like a lot is priced in at this point. I mean, we didn't really get anything positive today, but the market was pretty flat. And I'll take that as a win, considering the movement that we've been getting in recent days. So same to you Ali Eid Mubarak. Yeah, let's go. Leave a like, by the way, on the live. Do you think iron can hit? Um, I don't think that's out of the realm of possibility. Um, I probably won't wait around until it reaches, but I think if they, you know, prioritize nine non-dilutive sources of funding. And they get this transition to the AI cloud business and high performance computing. They get the transition to it right. And all of a sudden their margin profiles improve dramatically. Then they don't really have to do as much raise and they can fund a lot of their expansion through free cash flows. or I'm sorry, through their cash flows, they can fund a lot of their expansion. And so, yeah, I think this transition away from Bitcoin mining is a good one. I think we're in the last probably twelve months of this, probably less than that last, maybe six to nine months of this Bitcoin cycle. So if they transition away from that into this high margin, secular trend, high performance computing, AI data center, AI cloud business, the sky's the limit for this company. I think there's going to be a lot of demand for what they're offering. Ait Mubarak, Amr. Nice to see you. Ait Mubarak, Kenza. Nice to see you as well. All right. So perpetual futures. I'm not really comfortable with those. Leave a like if you haven't already. Become a PIF member. Make sure to enjoy your Eid. That's the most important thing you can do today. Make sure to enjoy your Eid. Enjoy your Eid tomorrow. Make sure to Call up all your friends and loved ones. Check in on them. I'm sure they'll love to hear from you. Take care of yourself. As-salamu alaykum and peace be upon you all.