IREN sued for overstating computing capacity and prospects

IREN, formerly known as Iris Energy, is facing a class-action lawsuit led by investor Paul Williams-Israel, who claims the company misled investors about its high-performance computing (HPC) capabilities and business prospects.

Filed in a New York federal court on October 7, the lawsuit alleges that IREN overstated the abilities of its Childress, Texas facility, framing it as an HPC-ready data center when it was not.

The complaint stems from a June 2023 statement in which IREN announced an expansion of the Childress site and a renewed focus on its HPC strategy.

The lawsuit argues that these claims were "materially false and misleading," accusing IREN of inflating the firm's prospects and misrepresenting its capabilities in the HPC space.

According to Williams-Israel, these claims artificially inflated IREN’s stock price, misleading investors who might not have invested had they known the true state of the company’s operations.

The lawsuit also targets IREN co-founders and co-CEOs, Daniel and William Roberts, as well as the company’s chief financial officer, Belinda Nucifora.

The lawsuit cites a report from Culper Research, a short-selling firm, which raised concerns about IREN's air-cooling technology, claiming it had only been tested in British Columbia, not in Texas where conditions are significantly hotter.

The report criticised IREN's investments, stating that the firm was not adequately prepared to compete in the HPC market.

IREN’s stock price fell by 6.71% on October 9 to $7.51 following news of the lawsuit.

Despite this recent dip, the company’s stock remains up 10.44% year to date, with a market cap of $1.42 billion, placing it as the seventh largest Bitcoin (CRYPTO:BTC) miner by market capitalisation, according to Companies Market Cap.