NVIDIA Bets $2.1B on IREN to Build 5 GW AI Factories

NVIDIA has spent three years dominating the GPU market. Now it's buying into the land and power that makes GPUs useful at scale.

On May 7, the company announced a strategic partnership with IREN Limited - a vertically integrated AI cloud and data center operator - to deploy up to 5 gigawatts of AI infrastructure across IREN's global pipeline. Alongside that, NVIDIA signed a separate $3.4 billion, five-year contract for access to IREN's managed GPU cloud services to run its own internal AI and research workloads. IREN shares jumped more than 9% after hours.

TL;DR

NVIDIA holds a 5-year warrant to buy up to 30 million IREN shares at $70 each - a $2.1B ceiling on the potential stake
A separate $3.4B cloud contract uses IREN's Blackwell GPU fleet for NVIDIA's internal AI work
Target: 5 GW of NVIDIA DSX-aligned AI factories across IREN's global data center footprint
Flagship deployment: IREN's 2 GW Sweetwater campus in West Texas, substation energized May 1
IREN targets 150,000 GPUs rolled out by end of 2026; Sweetwater is rated for 700,000+ at full build

The Deal

The Warrant Structure

NVIDIA's investment isn't a direct cash purchase. As part of the partnership, IREN granted NVIDIA a five-year right to acquire up to 30 million shares at $70 each - a maximum outlay of $2.1 billion, conditional on regulatory clearance. The warrant gives NVIDIA upside exposure to IREN's growth without an immediate balance sheet commitment.

That structure matters because IREN is still partly a bitcoin miner. AI cloud services created $33.6 million in Q3 FY26 revenue versus $111.2 million from bitcoin mining. Total Q3 revenue was $144.8 million, down from $184.7 million the prior quarter as bitcoin prices fell. Adjusted EBITDA came in at $59.5 million on a 41% margin. A warrant lets NVIDIA gain from the AI pivot while sidestepping the mining side of the business.

The $3.4B GPU Cloud Contract

The cloud deal is more concrete than the warrant. Under a five-year agreement, IREN will deploy air-cooled Blackwell GPUs inside 60 megawatts of its existing Childress, Texas data centers, with ramp beginning in early 2027. NVIDIA will draw on that capacity for its own AI training and research. For IREN, that's $3.4 billion in contracted revenue before a single hyperscaler customer signs on.

Together, the two deals give IREN roughly $5.5 billion in committed and potential NVIDIA exposure - more than enough to fund a meaningful portion of the Sweetwater buildout.

Inside the DSX Stack

The 5 GW partnership isn't just about square footage. NVIDIA has been pushing data center operators toward a specific architecture it calls DSX - a framework that treats compute, power, cooling, and networking as a single codesigned system rather than four separate procurement decisions.

NVIDIA DSX Stack Layers
─────────────────────────────────────────
DSX Air       Simulate the full AI factory in the cloud
DSX Exchange  Integrate IT, OT, and AI operations signals
DSX Flex      Connect to grid demand-response, onsite generation
DSX Max-Q     Optimize token throughput per watt of available power
─────────────────────────────────────────
Hardware base: Vera Rubin NVL72
  72 Rubin GPUs + 36 Vera CPUs
  Fully liquid-cooled, fanless, cableless
  >200 kW per rack
  NVLink 6 scale-up | Quantum-X800 InfiniBand scale-out

Vera Rubin NVL72 at the Base

The rack-scale system underpinning DSX-aligned deployments is the Vera Rubin NVL72, unveiled at GTC 2026. It packs 72 Rubin GPUs and 36 Vera CPUs into a fully liquid-cooled, fanless, cableless enclosure drawing more than 200 kW per rack. NVIDIA claims 35x better token throughput than Hopper-generation systems at equivalent power, and AI inference at one-tenth the cost per million tokens versus Blackwell. The NVL72 ships in H2 2026; all six chips are back from fabrication and in workload validation now.

Aerial view of IREN's Sweetwater campus in West Texas IREN's Sweetwater hub in West Texas spans 2,200 acres with 2 GW of total power capacity. Source: iren.com

Power as Programmable Resource

Where DSX differs from a standard data center spec is how it treats electricity. DSX Flex connects AI factories to utility grid services, letting operators shift load dynamically, integrate onsite renewable generation, and participate in demand-response markets. DSX Max-Q then uses those power signals to tune GPU use and token output within whatever budget the grid and the contracts allow. The result is closer to a software-defined power plant than a traditional colocation facility.

DSX Exchange sits one layer above, integrating signals from IT infrastructure, operational technology (cooling, electrical distribution), and AI operations agents into a common data plane. DSX Air, the cloud-based digital twin layer, lets teams simulate and pre-validate the full stack before committing to physical build. For operators like IREN, that simulation capability cuts the risk of overbuilding cooling or under-provisioning power for a specific GPU density.

IREN's Infrastructure Position

From Bitcoin Miner to AI Factory Operator

IREN - formerly known as Iris Energy - built its business by securing cheap, renewable-rich power contracts in jurisdictions with grid excess, then deploying bitcoin mining rigs to fill that power. The model transferred directly to AI cloud: same grid connections, same cheap electrons, different load. The company now describes itself as "a vertically integrated AI Cloud provider" delivering data centers and GPU clusters for training and inference workloads.

The transition is still underway. Bitcoin mining generated 77% of Q3 revenue. IREN is building capacity that won't produce significant AI cloud revenue until 2027 at the earliest.

Sweetwater, Texas

The flagship deployment for the NVIDIA partnership is IREN's 2 GW Sweetwater hub in West Texas, spanning two sites across 2,200 acres. At full build, the campus can support more than 700,000 liquid-cooled GPUs. On May 1 - one week before this deal closed - IREN announced the successful energization of its 1.4 GW Sweetwater 1 substation, connecting the site to the ERCOT grid. Data center capacity ramp is expected to start in 2028.

IREN Sweetwater data center campus facilities IREN's Sweetwater facilities sit inside renewable-rich grid corridors in West Texas, positioned for the ERCOT market. Source: iren.com

IREN also operates sites in British Columbia and is building toward European and Asia-Pacific locations, giving the 5 GW total a global scope even if Sweetwater controls the near-term pipeline.

Deal at a Glance

Metric	Value
NVIDIA warrant size	Up to 30M shares at $70/share
Maximum investment	$2.1B
GPU cloud contract	$3.4B over 5 years
Total deal exposure	~$5.5B
AI infrastructure target	5 GW
Sweetwater capacity	2 GW (2,200 acres)
GPU target by end of 2026	150,000
Maximum GPU capacity (Sweetwater)	700,000+
Q3 AI cloud revenue	$33.6M
Q3 bitcoin mining revenue	$111.2M
Sweetwater 1 substation energized	May 1, 2026
Childress ramp start	Early 2027
Sweetwater data center ramp	2028

For scale, Meta signed a 6 GW AI infrastructure deal involving AMD and NVIDIA chips earlier this year. At 5 GW, the IREN partnership is in the same order of magnitude - but oriented around NVIDIA's own consumption and capital deployment rather than a cloud customer's procurement.

Where It Falls Short

The warrant gives NVIDIA optionality, not a guaranteed stake. If IREN's stock stays below $70, NVIDIA exercises nothing. The $2.1 billion headline is a ceiling.

More concretely, the 5 GW target is aspirational across an unspecified timeline. The 2 GW Sweetwater campus won't produce AI cloud revenue until 2028. The Childress deployment where the $3.4B cloud contract actually runs covers 60 MW - a fraction of the 5 GW framing. NVIDIA is buying into a buildout story, not an operating asset.

IREN's dual revenue model also creates operational complexity that pure-play data center operators avoid. Bitcoin mining equipment and high-density GPU clusters have different power profiles, cooling requirements, and maintenance cycles. Running both inside the same infrastructure pipeline introduces cost allocation decisions that don't appear in the press release.

The Vera Rubin NVL72 underpinning the whole DSX architecture doesn't ship until H2 2026, and its chips are still in validation. Fully DSX-aligned deployments at Sweetwater are at minimum a 2028 story. The $5.5 billion in combined deal value is real, but the gigawatts are still mostly on paper.

Jensen Huang described the partnership's intent directly: "AI factories are becoming foundational infrastructure for the global economy," requiring "deep integration across the full stack - compute, networking, software, power and operations." IREN's management echoed the supply-side argument: "The world is structurally short compute, and the bottleneck is delivered data center and GPU capacity." Both statements are accurate. Whether 5 GW of IREN sites can be energized, built out, and filled with Rubin GPUs on the timelines implied by a 2026 announcement is a separate question that only 2028 will answer.

Sources: