Iris Energy’s Dan Roberts says ‘we didn’t default’ as bitcoin miner shrugs off 95pc shareholder loss
“We shouldn’t use the word default,” Roberts said, “because ultimately we didn’t default—it was the SPVs, the special purpose vehicles that couldn’t service their own obligations. We happen to own the shares in those SPVs. The only proactive the decision we made as a business was not to use shareholder money to bail out a lender that was underwater.”
Roberts told investors that he believes the risk, return on the underlying cash flow is still “super attractive” and that cycles in bitcoin prices where the digital currency rises 10 to 20 times in value before plunging 80 percent in value are not unusual.
The Bitcoin apostle also dismissed a question about global bitcoin miners currently trading at liquidation values.
“In terms of a liquidation value of the business, I’m not thinking about that, we’re not liquidating the business, we’re here for the long term to generate some pretty good profits out of this infrastructure and continue to grow,” he said.
At its core, Iris Energy has built out a series of green energy-powered data centers, and analysts questioned why the company had stuck to mining bitcoin instead of leasing its servers to companies that are moving their business to the cloud and boosting revenue.
“We can fill up our data centers with hosting if we want to, but I’m not sure we want to,” Roberts said.
“Our data centers are ready, anyone can come in with a computer, plug it in, pay us a margin and life goes on. We thought about doing that a few weeks ago, but it feels like a bit of a cop-out and feels like we’d be giving up a lot of bitcoin upside by just defaulting on that position.”
Under pressure
Iris shares closed down 6.2 percent at $1.51 on Nasdaq on Tuesday, after raising $232 million by issuing 8.3 million shares in its initial public offering in November 2021 at $28 a share.
The subsequent wipeout of the US$220 million valuation is likely to have hurt high-profile Australian investors known to have been on the register, including Phil King’s Regal Asset Management, Platinum Asset Management, Alex Waislitz’s Thorney Opportunities, Mike Cannon-Brookes’ Grok Ventures.
Wilson Asset Management was a pre-IPO investor, but sold the bulk of its holdings in May this year.
Regal Asset Management declined to respond to questions about potential exposure.
Roberts said Iris has no debt and $47 million in cash on hand with upcoming investment commitments of about $21 million for renewable energy infrastructure in British Columbia, Canada and Texas.
The business also has a potential $100 million equity facility agreed with US investor B Riley and $75 million in upfront payments outstanding to Chinese bitcoin hardware giant Bitmain under a previous contract to acquire mining equipment.
For the fiscal year ending June 30, Iris reported adjusted EBITDA (adjusting certain costs) of $16 million on bitcoin mining revenue of $59 million. Bitcoin fetched $17,018 per coin on Wednesday morning.
