AI is becoming the ‘new coal’, says Iren co-founder Dan Roberts

China’s low-cost model DeepSeek is triggering a similar phenomenon to the one that ushered in the industrial revolution, says Macquarie banker turned bitcoin miner Dan Roberts.

Iren’s Roberts brothers, Dan, left, and Will are bullish on the AI boom. Picture: Tim Hunter

Artificial intelligence has become the new coal, according to Macquarie banker turned bitcoin miner Dan Roberts.

The commoditisation of AI that China sparked with its ultra low-cost model DeepSeek is triggering a similar phenomenon to the one that ushered in the industrial revolution 200 years ago, Mr Roberts said.

This is while he believes the share sell-off that hit Nvidia, which lost about $1 trillion in a single day following DeepSeek’s launch late last month, is overblown.

“This is what’s wrong with the world,” said Mr Roberts, who co-founded Nasdaq-listed data centre operator Iren seven years ago.

“Everyone has a short-time preference. Zoom out. Five years ago, Nvidia’s stock was $US5.”

The tech giant’s shares are now trading at more than $US130 apiece, valuing the company at $US3.21 trillion.

Mr Roberts was speaking as Iren posted a 129 per cent increase in bitcoin mining revenue to $US113.5m in the second quarter of this year. It also swung from a loss of $US51.7m to a net profit of $US18.9m.

Mr Roberts believes demand for data centres and high-powered Nvidia chips will continue, citing what is known as Jevon’s paradox – a term English economist William Jevons used to describe the role of coal in the industrial revolution.

“Back in the 19th century, the steam engine made coal use more efficient. However, instead of reducing coal consumption, demand surged, ushering in the industrial revolution,” Mr Roberts said.

“Fast forward to today, and we’re seeing history repeat itself — but this time, with AI and compute. As AI becomes more efficient and cheaper to run, demand for computing power is increasing, not decreasing.

“We’ve reached a point where AI and demand for compute is scaling rapidly — sparking major demand for data centres, energy, and infrastructure. Efficiency fuels adoption, and adoption requires more and more compute.”

Nvidia CEO Jensen Huang holds a Grace Blackwell NVLink72 as he delivers a keynote address at the Consumer Electronics Show (CES) in Las Vegas. Picture: AFP

Microsoft chief executive Satya Nadella and Meta founder Mark Zuckerberg agree. Mr Nadella said DeepSeek has created a more cost-efficient model that will lead to the creation of more apps, while Mr Zuckerberg is building a data centre that is so large it will cover an area almost the size of Manhattan.

“I just found the whole thing quite bizarre, because what you’ve got, you’ve got all these trillion dollar tech companies all saying that AI is an existential type risk/opportunity for our business. DeepSeek comes along and claims that they’ve hacked and found a way to do it for a fraction of the cost,” Mr Roberts said.

“Now, whether you believe that or not, the argument against this continued expansion of data centres then goes something along the following: We’re going to take a bet on that existential research opportunity, that the pathway to AI supremacy is through efficiency, not by building out more brute force and more capability.

“It’s just it’s totally upside down, as compared to a scenario where they say, ‘hang on, the competition is real, we need to double down here, and we’re not going to bet on efficiency versus brute force. We’re going to double down on all of it, given how important it is’.”

For Iren, it’s about investing in land, power and infrastructure.

DeepSeek’s launch shocked the world.

“The world’s just moving so quickly. I think everyone’s trying to work it out, but at the centre of it is just the insatiable appetite for power and land. I know I sound like a broken record, but it’s just so hard to get it. It’s incredibly difficult.”

Iren has announced Horizon 1, a 75MW liquid-cooled data centre that is designed to support Nvidia’s latest Blackwell chips. It is set to be completed in the second half of this year. It is also building a 2GB hub called Sweetwater.

“It’s not just about building smarter AI models. The real challenge now lies in having the infrastructure to support it. And that’s where things get interesting.

“Owning the land, data centres, and access to energy is becoming the new competitive edge. Just like coal mines were essential to power factories. With AI, the cheaper and more powerful it gets, the more industries pile on, and the more compute we need.”

The Horizon 1 and Sweetwater projects are designed to expand its bitcoin mining operations and pivot to AI – although Mr Roberts says Iren has been on this part for some time.

He said the company highlighted the AI opportunity as early as 2020 when it said it was “bootstrapping with bitcoin mining, leveraging the portfolio into the unprecedented growth in demand for energy intensive, sustainable supercomputing”.

“We mentioned AI, we mentioned machine learning – the same facilities we started building all the way back in British Columbia are basically the same facilities we’re building today. They house bitcoin mining asics (chips) right next to the latest generation Nvidia GPUs. It’s the same data centre.”

Originally published as AI is becoming the ‘new coal’, says Iren co-founder Dan Roberts