IREN Ltd (NASDAQ:IREN), a crypto-linked company, is facing a severe pre-market plunge of 8.60% on Friday, extending its losses from the previous day's 5.39% decline. The stock's sharp downturn is primarily attributed to a broader cryptocurrency market slump and recent criticism from a prominent short-seller.

The cryptocurrency market's ongoing weakness continues to weigh heavily on IREN's stock. Bitcoin, the leading digital currency, has recently experienced a significant pullback, trading around $108,500, down from its recent record high of over $126,000. This downturn in the crypto market is largely due to escalating U.S.-China trade tensions, with both nations implementing new port fees on shipping companies. As IREN relies on its Bitcoin gains to fund its AI infrastructure pivot, the crypto market's volatility directly impacts its stock performance.

Adding to IREN's woes, renowned short-seller Jim Chanos publicly challenged the company's bullish outlook earlier this week. Chanos criticized a recent Cantor Fitzgerald research report, questioning its projections of 80% EBITDA margins for IREN's AI data center operations. He also raised concerns about the depreciation assumptions for IREN's planned $2.9 billion equipment purchases, suggesting an unrealistic nine-year lifespan for rapidly obsolescing GPU hardware. This criticism has likely contributed to investor uncertainty and the subsequent sell-off in IREN's stock, further exacerbating its pre-market plunge.