Iris Energy — an Australian crypto mining company primarily focused on operating BTC mining sites in Canada that run exclusively on renewable energy — recently shut down mining in two subsidiaries.
Nevertheless, the company still claims that its business remains profitable.
Immediate repayment of requested loan
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), the company statement reads. Unfortunately, the crypto winter has shattered the confidence of many investors in cryptocurrencies, leading to a demand for immediate loan repayment.
Due to a combination of adverse market conditions, an increase in the difficulty of mining, as well as the price of electricity, and the value of BTC itself falling, the crypto miners in question saw a much lower return on their investment than previously expected .
Luckily for Iris Energy, the machines purchased with the loan were also written off as collateral – meaning the debt is settled simply by handing them over to NYDIG.
Company still profitable despite share price decline
Iris Energy – a company led by Daniel and Will Roberts – recently suffered a $220 million drop in market value due to a 94.5% drop in their stock prices, IREN. Nevertheless, the brothers have indicated that they are still optimistic about the cryptocurrency sector.
They also reiterated that their business model remains profitable despite some adjustments. Currently, every bitcoin mined in their facilities brings in about $6k in profit.
While this is sufficient to keep the business running, it is sub-optimal when accounting for planned operational costs during better days.
“On a gross profit level, it’s obviously still profitable. We just need to figure out what level of overhead the company can bear. (…) We are dealt the cards that we are and all we can do is anticipate future problems, what we can do around the [SPV] debt facilities by foreclosure. We are still super excited about the company and the industry.”
The closure of the 2 SPVs has reduced Iris’s mining capacity by more than half – 3.6 EH/s (exahashes per second) have been lost.
This brings the total remaining mining capacity of Iris to 2.4 U/Hs. Fortunately, there is already a silver lining for the company. $75 million has already been paid to Bitmain to outsource even more mining rigs. Iris is currently in talks with Bitmain about how these miners work, which could increase Iris’s mining power by as much as 7.5 U/Hs.
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