assalamu alaikum everyone I hope you are doing well my job in this live is to take a look at iris energy and figure out why the heck has it halved in price in the last five trading days uh so february twentieth this stock was trading at close to uh thirteen and a half dollars and now it's seven dollars and eighty six cents actually after hours it's up a bit seven dollars ninety one cents but sub eight dollars so what the heck happened here it's the second halving here except not for bitcoin but for the bitcoin miners so iris energy what is going on here should we sell something reveal itself that exposes the irrational exuberance that we previously held for this stock Fear not, I'm going to do what I always advise everyone to do when they're feeling panic about a certain asset that they're invested in. And that is to sit down, put the numbers in front of you, figure out what is a reasonable valuation for the stock. or asset, whatever it is, and ignore the noise that is coming from the market. Because over time, what's going to win out is the fundamentals for any asset. Remember in the short term, the market is a voting machine in the long term. It is a weighing machine and the weight will set you free. So let's look at Iris Energy. I'm going to go through my calculation that I did today with regards to Iris Energy. So Iris Energy, for those who are not familiar, is a Bitcoin miner. And they also, like pretty much all Bitcoin miners now, have a play on AI high performance computing, although it currently contributes a very small number to its bottom line. So their main assets are a thirty one exahash of Bitcoin mining, which is installed. And they're trying to get to fifty by the end of the first half of twenty twenty five. They have much grander goals after that. They also have twenty three hundred of grid megawatts of grid connected power. So different locations globally. And it is connected to the grid to the tune of. Now, let's look at this last quarter and see if we can make a reasonable valuation for this stock per share. So revenue in the last quarter was one hundred and twenty million. One hundred and thirteen of that came from Bitcoin mining. The rest came from AI cloud stuff. Adjusted EBITDA, so that's earnings before interest taxes, depreciation, amortization. That was sixty two point six million or fifty two point three percent margin. Now, annualize that you come out with two hundred and fifty million in EBITDA. The net profit was twenty million or ninety million, which was a very good improvement versus the fifty one million loss that it incurred in the quarter right before it. So you can get a feel of how aggressively this company is growing. Cash is four hundred and twenty seven million, and they do have convertible notes in terms of liabilities. Shares outstanding is two hundred and twenty million. The hash rate that was operating in the last quarter. So the average operating hash rate. Remember, I said they reached thirty one X a hash in in mining power last quarter, but they were installing that last quarter. It wasn't all running last quarter. What was running on average last quarter was twenty two point six X a hash. And their average cost for electricity to mine every one Bitcoin is twenty one thousand dollars. So in terms of the main the main cost, if you exclude the depreciation of the mining rigs themselves, the main cost for each Bitcoin that it mines, the electricity is twenty one thousand four hundred dollars. average realized price for the bitcoin that it mined in the latest quarter it says q two here but this is q two of its fiscal year which ends in december last year so so q two is q four on the calendar here so their average realized price for bitcoin sold last quarter was eighty four thousand Now, in my future estimates for this, for the purposes of this valuation, I'm going to assume a price per Bitcoin of one hundred thousand, even though I have a price target for Bitcoin of two hundred thousand by the end of this year. But I'm going to use one hundred thousand because this is going to be my margin of error. I'm fairly certain, inshallah, that. Bitcoin is going to be way above that price by the end of the year, but I'm going to use a hundred thousand in order to give me a margin of error in my, in my valuation. Now, CapEx for last quarter was around a hundred and thirty nine million. And that included around twenty five million in NVIDIA GPUs, which should help its high performance computing business. Salaam Rashad, nice to see you. Salaam Salman, nice to see you. All right, so let's go to. the where the rubber meets the road the future cash flows as I said the value of any business is the present value of its future cash flows it's not rocket science folks all you have to do is figure out what are the future cash flows for their business and discount those future cash flows to present day terms using an appropriate discount rate and you have a value for the business so So at fifty X a hash, which is the target by the end of Q two, so mid this year, at fifty X a hash, let's assume fifty X a hash, by the way, is twice as high as the average operating hash rate of last quarter. At fifty X a hash, let's assume that they're mining twice as many Bitcoin. I understand the network difficulty may change. I understand that. So it may not be exactly two times the amount of Bitcoin in the last quarter, but recall that I've assumed a hundred thousand price for Bitcoin. So that should, and also understand that they're not stopping at fifty X a hash. Fifty X a hash is where they are. at mid- twenty twenty five. They will grow beyond that in the second half of twenty twenty five. So I think a two X output of Bitcoin is reasonable. And so we're talking around twenty seven hundred Bitcoin quarterly at full capacity. and at a hundred thousand per bitcoin you have around two hundred and seventy million per quarter that is generated from their bitcoin mine in revenue uh from their bitcoin mining which comes out to around uh one point zero seven seven million annualized and their ai uh or high uh performance compute business that generated two point seven million in the last quarter. But as you saw from their purchase of video chips, as you saw from their purchase of different sites, Horizon one with seventy five megawatts GPU investments, this is. Forecasted to grow substantially, and let's assume it grows from two point seven million to ten million by the end of this year, which is just a fraction of the capacity that this that this company has for this business. Keep in mind, we mentioned at the top there, you know, one of its biggest assets was twenty three hundred megawatts of grid connected power. So let's assume that they get to ten million per quarter by the end of the year and realize that that's forty million per year. So now the total revenue, take the Bitcoin revenue, add it to the high performance computing revenue. That's one point one one seven billion. And so the EBITDA margin for Q two was fifty two point three. As I as I said, let's assume that it falls to fifty percent. Now, that means that in terms of EBITDA, we just have to have the revenue that we forecasted for twenty twenty five. So that comes out to five hundred and fifty eight million. Now, there's going to be a lot of capital expenditures, obviously. And I assume that CapEx remained high because they do have a lot of expansion planned. So at one hundred million CapEx per quarter, which was roughly what it was last quarter, come out to four hundred million annualized. And so the free cash flow for this business is around one hundred and fifty eight million by the end of this year. So that is the free cashflow. And that's what we're going to use when we're calculating the present value of the business. And we're going to assume, obviously, that this free cashflow is growing every year. I assumed that the free cashflow was going to grow at roughly the rate at which the business the long-term rate that is expected for bitcoin's growth uh so at twenty six percent growth uh we go from uh one fifty eight to two hundred and then uh dropped it to twenty percent uh the year after that and twenty percent the year after that so we go one fifty eight two hundred two fifty three hundred three fifty and then we have the perpetual growth rate at three percent so let's say that that's where the business stabilizes that in five years that's how how much it's going to grow, although I think that's probably conservative. But if we are to value the business five years from now, it comes at four billion, around four billion, the cash flows that are going to come after that. Sorry, I'm going kind of quickly. This is probably something that is familiar to me, not necessarily familiar to everyone watching. But, you know, if you get the gist of what I'm saying, I think this is I sometimes forget that, you know, I went through the CFA program. And so this is something I've done many, many times and I've been investing for a long time. So this is like second nature to me. Sorry if I'm going very quickly, but if you can get the gist of what I'm saying, I think it will be useful. So we bring back the terminal value of the business along with the cash flows in the next five years to today's terms using a discount rate, which is unchanged basically from what it is today, reflecting the risk that's involved in the business at twelve percent. And now, so now we have a discounted cash flow for each one of the cash flows for the next five years, including the terminal value of the company. And we can add them up. And if we add them up, the total enterprise value is three point one four one million, so around three billion. And to account for the cash, they do have four hundred twenty seven million in cash minus the convertible notes that they have. That's around one hundred million, one hundred ten million in net cash. Add that to the enterprise value to get our equity value. That's around three point two five zero. So that is the value of the business today based on these assumptions. Now, keep in mind, I assumed a Bitcoin price from here to the end of the year of a hundred thousand. Even though my actual target for Bitcoin is two hundred thousand by the end of this year. Now, if we divide the three point two billion by the two hundred and twenty million shares outstanding that the company has, we come out to a share price of fourteen dollars and eighty cents. Revisit the. The price right now at around seven dollars and eighty cents, you can see the upside. So with that being said, I'm not really that concerned. Now, this should serve two purposes. Number one, that you don't panic sell or say that I don't panic sell. This is not investment advice. Make sure to do your own due diligence. But also when you hear people talking about, you know, thirty, forty, a hundred dollars a share, you know, to discount those people's opinions because they haven't done the work. of actually valuing the company properly. So I believe that this is a reasonable valuation that I went through right now and therefore should guide further decisions, buying and selling. All right guys, let's take some questions very quickly. Hannibal about my Tesla prediction. the actually the the target is uh fifty percent growth so I actually don't think uh yearly so I actually don't think that and tesla the company was actually targeting twenty million vehicles by twenty thirty so I actually don't think ten million is that optimistic um okay ten percent tariff on china what a surprise yeah I think that, so for people who are really nervous about tariffs, I think number one, there's going to be a lot of exceptions to all tariffs. And I think a lot of it is for political consumption. I don't think it's going to be as devastating to the economy as some people may think and as inflationary as some people may think. And then number two, I also think that there's kind of a Trump put in the market wherein if the market starts doing badly, Trump really likes watching the market. And so it will inform his policy. And so. the market tanks doesn't recover then he will capitulate on tariffs that I think I am sure of LG is very down and it's the end of the world to him don't watch yourself losing money and hoping that the market will grow back up okay I would my advice would be to ignore those like people who are dramatic are not really good sources of advice, sorry, I'll just say you're under the bus, but that's what I typically, when you're, when you're investing, managing your own portfolio, you it's the cooler heads that you want to try and follow and ignore like dramatic voices. Mahmoud, nice of you to make it. I'm glad you were able to make it. I do think that it is buy time and obviously dollar cost average. Colonel Meow. Awesome name, by the way. And thumbnail. But yeah, I do think it is a good time to buy. Dr. Boss, nice to see you, brother. How long do you expect this drought to last? And with all this uncertainty, when should we expect the bull run to resume? Well, I don't know, obviously, but I have a hunch that March will be better than February and perhaps it is, you know, sentiment will change in the coming month as we, I think we'll rally going into the spring and we may level out going into summer. I love the new format on how to invest your money. Helps me out a lot. That's great. I'm glad you're finding benefit from it. You can always sell stocks for liquidity, but there is tax implications for that. Zuhair, wa alaikum salam. Nice to see you. Salim says it's a twenty dollar IS Energy this year possibility. It would require, I think, either like a really euphoric stage for Bitcoin's price or a. A hyperscaler hyperscaler deal, I think that would get it to twenty. It's definitely in our buy zone, IS Energy is definitely in our buy zone if you're going by our watch list. Inshallah, I'm also in the process of refreshing our course. So for people who want to do their evaluations on their own. Video about AMD, inshallah. Which data will Tesla use to train? humanoid robots? Well, that's going to, I think the concept of using vision for training that it has pioneered with its full self-driving is going to come in handy when training the robot. So I think the system is going to be, you just showed a robot what to do and it learns from there. I think that's like how you would teach a human basically. I think that's what's going to be the standard. So very exciting times that we're going into. All right, guys, thank you all. I hope you found this evaluation useful. Leave a like, become a PIF member, all that good stuff. And until next time, make sure to take care of yourself. Assalamu alaikum and peace be upon you all.