Iris Energy Slashes Bitcoin Mining Capacity Due to a Requested Loan
Iris Energy – an Australian crypto mining company whose main purview is the operation of BTC mining sites in Canada running on renewable energy exclusively – has recently ceased mining in two subsidiaries.
Nevertheless, the firm still maintains that its business continues to be profitable.
Immediate Repayment of Loan Demanded
The subsidiaries operating as Special Purpose Vehicles (SPVs) used Bitmain mining rigs financed by a $107.8 million loan from the New York Digital Investment Group (NYDIG), reads the company’s statement. Unfortunately, the crypto winter has shattered the faith many investors had in cryptocurrencies, leading to a demand for immediate repayment of the loan.
Due to a combination of adverse market conditions, an increase in mining difficulty as well as in the price of electricity, and the value of BTC itself dropping, the crypto miners in question saw a far smaller return on investment than previously expected.
Fortunately for Iris Energy, the machines purchased with the loan were also written down as collateral – meaning the debt will be cleared simply by turning them over to NYDIG.
Business Still Profitable Despite Drop in Share Price
Iris Energy – a company, headed by Daniel and Will Roberts – recently suffered a wipeout of $220 million in market value due to a 94.5% drop in their stock prices, IREN. Nevertheless, the brothers have stated that they are still optimistic about the cryptocurrency sector.
They also reiterated that their business model remains profitable, despite needing some adjustments. Currently, each bitcoin mined in their facilities returns around $6k in profit.
Although this is enough to keep the business chugging along, it is suboptimal when taking into account the operational costs planned during better days.
“At a gross profit level, it’s clearly still profitable. We just need to work out what level of overhead the business can support. (…) We’re dealt the cards we are and all we can do is pre-empt future issues, which we did around the [SPV] debt facilities by ringfencing them. We’re still super excited about the business and the industry.”
Due to the closure of the 2 SPVs, Iris’s mining capacity has been slashed by more than half – 3.6 EH/s (exahashes per second) have been lost.
This puts Iris’s total remaining mining capacity at 2.4 E/Hs. Fortunately, there is a silver lining for the firm already. $75 million have already been paid to Bitmain to subcontract even more mining rigs. Iris is currently in talks with Bitmain regarding the operation of these miners, which could bring Iris’s mining power up by a whopping 7.5 E/Hs.
Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to receive up to $7,000 on your deposits.