By David Swan
Three years ago, Daniel Roberts broke a rib playing Australian rules football. It turned out to be the luckiest injury of his life.
The 38-year-old started urinating blood, leading doctors to discover a 7 centimetre tumour on his kidney. “I got a little knock in the ribs at football and then discovered I’ve got kidney cancer... Pretty wild,” he told this masthead. “They cut out a kidney and life goes on. It gives you good perspective on life, to be frank.”
While Roberts faced mortality in a Sydney hospital, the company he’d built with his younger brother Will was facing its own existential crisis. Shares in their Bitcoin mining venture had plummeted 96 per cent and the crypto winter showed no signs of thawing.
Iren co-founders Will Roberts (left) and Daniel Roberts.Credit: James Brickwood
On Tuesday, the Roberts brothers’ improbable comeback story hit a new pinnacle: Microsoft signed a roughly $14.8 billion deal to buy AI computing capacity from their company, Iren, in what represents one of the largest contracts ever awarded to an Australian technology firm.
The five-year agreement gives the tech giant access to cutting-edge Nvidia systems in Texas and includes a 20 per cent prepayment worth about $2 billion. It’s a staggering validation for a company that the ASX rejected when it tried to list in Australia just four years ago.
The backpacker bitcoin miners
The Roberts brothers’ journey began at Macquarie Group, where Daniel worked as a vice president after stints at PwC and infrastructure fund Palisade Investment Partners. Will, six years younger, followed a similar path through Macquarie’s ranks.
Both attended Sydney’s Saint Ignatius College and studied business at the University of Technology, Sydney. But by 2017, they’d become convinced that Bitcoin represented something far bigger than just another asset class.
Daniel Roberts.Credit: AFR
Their early bitcoin adventure proved instructive. “We invested first in bitcoin in 2013 on its run up to $1,000, and then it dropped to $500, and we shat ourselves, sold it all and thought, silly, magic internet money,” Daniel said.
But a few years later, he reconsidered. “I was reading about monetary history and gold, and I figured there’s only 21 million of these things. It feels like it’s going to continue going up in value, particularly if governments continue to print lots of money.”
So they quit their corporate jobs and founded Iren in 2018 with an ambitious thesis around the digitisation of society. “We love our sci-fi movies, like The Matrix, Ready Player One, Wreck it Ralph,” Daniel said. “And we quoted these movies when we were out raising our seed investment round, just to elicit visualisations for investors. As society is heading that way, directionally, it’s going to drive this insatiable appetite for compute.”
The brothers donned backpacks and started travelling the world looking for places that had built more renewable energy than they could use. They were adamant about a principle that would define their business: they’d only use electrons going to waste, never power that families needed.
“We looked in Europe. But the political sensitivity was high. We went to Iceland. We were looking through the lens of what problems could we solve? Taking baseload geothermal power in Iceland wasn’t solving a problem for that market,” Daniel said.
Their search took them through rural Canada and eventually to Childress County, Texas - 400 kilometres from the nearest city - where wind and solar farms had been built with government subsidies that far exceeded transmission capacity.
“So we came in and said, ‘Right, we’ll use up this power. We’ll pay your market price and put downward pressure on power prices’,” Roberts explained. They rehired laid-off mill workers and retrained them to run data centres.
Rejection and rock bottom
In November 2021, riding bitcoin’s pandemic-era surge, Iris Energy listed on the Nasdaq at $US28 a share, valuing the company at $US1.55 billion. The ASX had rejected their listing application.
“After the brown cardigans at the ASX rejected us due to their anti-technology stance, IREN - now ASX100 scale - was forced to list overseas,” Daniel wrote on LinkedIn at the time. “I know others haven’t even bothered trying locally as a result.”
Data centres are power hungry and the use of artificial intelligence is running up huge energy bills.Credit: iStock
When asked about the rejection now in an interview, Roberts is philosophical. “They make decisions they think are wise at the moment,” he said. “US capital markets have opened up an enormous opportunity for us, and maybe things happen for a reason, but we haven’t looked back.”
Days after listing on the Nasdaq, bitcoin crashed. Interest rates soared. The brothers watched helplessly as their share price entered freefall, bottoming at $US1.06 in December 2022.
It was during this crisis that Daniel’s kidney cancer was discovered. Since bottoming in 2022, Iren shares have surged more than 580 per cent this year alone. The company is now valued at $16.52 billion, larger than Qantas.
Each brother is currently worth about $1.06 billion, making 35-year-old Will one of the ten richest Australians under 40.
Wall Street validation
The $US9.7 billion ($14.8 billion) Microsoft contract, which will make the tech giant Iren’s biggest customer, has sent analysts scrambling to raise price targets. B. Riley Securities called the deal a “validation of Iren’s vertically integrated strategy,” expecting it to generate $US1.94 billion in annualised revenue with 85 per cent EBITDA margins. The firm raised its target price to $US74.
Roth Capital Partners revised its price target upward to $US94, noting that the Microsoft deal “brings a level of credibility we believe investors were looking for”. Cantor Fitzgerald was more bullish, lifting its target to $US142 and calling the deal “game-changing”, noting that Iren could replicate this deal “several times over” across its remaining capacity.
The common theme among analysts: Iren lacked a tier-1 anchor tenant before Monday. Now it has Microsoft, arguably the strongest possible validation.
What excites Roberts most is the scale of what lies ahead. “We’ve got 3,000 megawatts of power secured that we can offer to clients such as Microsoft,” he told this masthead. “This deal is 10 per cent of that. So in some respects, it’s back to work, continuing other conversations and making the most of the opportunity in front of us.”
Australia’s missed opportunity?
The Microsoft deal’s significance extends beyond the Roberts brothers’ personal fortunes or Iren’s share price. It highlights what many see as a missed opportunity for Australia’s technology sector.
Iren currently operates 810 megawatts of data centre capacity, with another 2.1 gigawatts under construction in North America. That’s roughly equivalent to Australia’s entire existing data centre capacity of 1.5 gigawatts, with another 1.6 gigawatts in the pipeline across the entire country.
Roberts is direct about Australia’s predicament. “We absolutely haven’t missed it, but we absolutely could miss it,” he said.
“We sit here today looking back over the multi-decade resource boom, and lament sending all these commodities offshore for other people to add value and monetise. We are sitting here with the exact same opportunity in front of us now for the fourth industrial revolution.
We’ve got an abundance of natural resources, the ability to produce enormous amounts of renewable energy, all we need to do is to monetise that into a more refined product, like compute, and export it. And it’s a huge opportunity.”
But Australia is making it unnecessarily hard. “Part of the reason we’re offshore is Australia is very slow and very hard to do things,” Daniel explained. “For some reason we think at times that we’re so far away from everyone else that maybe we don’t have to be as quick, nimble and as competitive as other countries do.”
Atlassian co-founder Scott Farquhar recently argued at the National Press Club that Australia has the land and renewable energy to become a regional AI computing hub if it can streamline approvals and address skilled labor shortages. Iren is currently hiring for 50 roles, but only one is based in its Sydney headquarters. The rest are in North America, where permits take months instead of years.
“In the US, a lot of that Federal power is decentralised among the states,” Daniel said. “What that does is create more competition at a state level... it’s much more of a meritocracy.”
Daniel says working alongside his brother has been critical to Iren’s success. “He’s definitely the better brother,” he said. “When I say two heads are better than one, and when you’ve got a lot of deep-seated alignment and passion, the ability to punch through problems together - we absolutely wouldn’t be where we are individually, that’s for sure.”
For now, the brothers are focused on executing their Microsoft contract. The GPUs will be deployed through 2026 at the company’s 750-megawatt Childress campus, generating approximately $1.94 billion in annual revenue.
It’s a stunning turnaround for a company that nearly went under, led by brothers who turned a broken rib and a brush with cancer into billion-dollar fortunes.
With Bloomberg
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.