Editor’s Note: This article has been updated to include a response from Iris Energy ( IREN ).

Iris Energy Limited ( IREN ) shares fell sharply on Thursday after Culper Research released a short report titled “Iris Energy Ltd (IREN): A Prius at the Grand Prix.”

What Happened: Culper Research issued a bearish report claiming that Iris Energy’s reliance on air cooling systems is inadequate for high-performance computing (HPC) needs, as competitors have shifted to liquid cooling to handle modern GPUs’ higher power densities.

“We are short Iris Energy Limited ( IREN ), a bitcoin miner that now promotes itself as a high performance computing data center play. IREN was founded in 2018 as a bitcoin miner, but now in 2024 claims its facilities have always been primed for HPC,” Culper Research said in the report.

The short report alleges that Iris Energy's ( IREN ) power cost advantages in Texas are unsustainable for HPC operations, which require high reliability and uptime, necessitating new, more expensive power agreements.

Culper Research further claims that the remote location of Iris Energy’s Childress, Texas facility, which it says lacks robust infrastructure and proximity to major metro areas, raises concerns about latency and access to skilled labor.

Iris Energy ( IREN ) has responded to the Culper Research report, with a spokesperson telling Benzinga, “As a public company we are limited in how much we can say about reports of a certain nature. We encourage debate and value intellectually honest discourse. However, not all engagement meets these standards.”

“We remain focused on our growth to 30 EH/s of mining capacity this year, serving our AI cloud service customers, and pursuing monetization opportunities for our broader power and land portfolio,” the spokesperson added.

See Also: Delta Signals Trouble Despite Healthy Travel Demand And Record Traffic

The report also alleges that Iris Energy ( IREN ) overstated the value of its undeveloped land and power, misrepresenting a Morgan Stanley report's context to inflate perceived value. Additionally, Culper claims Iris Energy’s history of missed deadlines and insider sales by co-founders brings management’s credibility into question.

“IREN is run by Co-Founders, Co-CEOs, and brothers, Daniel Roberts and Will Roberts, who appear to remain in Sydney, Australia, thousands of miles from the Company's facilities in Texas and British Columbia,” Culper Research said.

IREN Price Action: Iris Energy ( IREN ) shares were down 13.8% at $11.13 at the time of publication, according to Benzinga Pro.