Aussie bitcoin miner says Merge confirms bitcoin’s superiority

Over the past quarter, it has cost Iris Energy $7,900 to mine each bitcoin, which now earns around $19,305 after hitting a high of $67,000 last November.

The volatility in bitcoin prices prompted Roberts to secure a deal with investment bank B. Riley that gives the miner the right, but not the obligation, to sell up to $100 million in equity that could potentially give the broker a 31 percent stake. .

But Mr Roberts, who still owns 25 per cent of the business with his brother and co-founder Will Roberts and other management, said the deal gave Iris a quick way to access cash should fast-moving opportunities arise.

“We all know how fast bitcoin can run and move, so it’s very valuable to have that feature as an option that can sit in the background,” he said.

Prince George marks Iris’ third operating bitcoin mine, following the launch of one at Canal Flats and another up the road at Mackenzie in British Columbia. A third mine at Mackenzie is under construction along with one at Childress in Texas.

The plan is to bring six exahashes online in the next 12 months.

Ethereum is merging

While Iris Energy continues to pour resources into expanding its bitcoin mining operations, ethereum miners have been knocked out of the crypto-economy following a global change in the underlying security layer nicknamed “the Merge”.

Instead of relying on miners to decrypt and verify ethereum transaction blocks, ethereum is now maintained by a proof-of-stake method where holders of the cryptocurrency “pledge” their assets and verify transactions at the risk of losing their money if they counterfeit some records.

“I think that has finally put the nail in the coffin for anyone who would suggest that ethereum can compete with bitcoin,” Roberts said.

He points to the 21 million cap on possible bitcoins in circulation, adding that the ability to instantly send value around the world very cheaply without interference from any third parties as a core cryptographic value that ethereum has now undermined.

“If there is no real world cost, there is no real security,” he said.

“I think the whole argument around energy consumption is flawed because it is the consumption of energy that delivers the immutable properties of a blockchain.”

Roberts said that ethereum’s move to a proof-of-stake model, where those who own the coins verify and allow the transfer and ownership of other coins, increases the importance of cryptocurrency exchanges.

“Don’t just do it [proof-of-stake] sounds a bit like the current financial system, but suddenly the exchanges now control the blockchains and are subject to the regulatory capture and monitoring of the traditional financial system.

“I believe this move has moved ethereum back into the traditional financial system and cemented bitcoin as the decentralized cryptocurrency.”

Mr Roberts pushed back on the idea that ethereum’s base-layer smart contract functionality allowed the development and implementation of new technologies and networks, such as those promoted by decentralized finance or DeFi businesses.

“It’s certainly a narrative, but bitcoin also has those characteristics. It’s just been a slow and steady run,” he says.

“Protecting scarcity and immutability is not worth compromising. While many cryptocurrencies are trying to find the next edge use case and track that innovation, in my mind, if you don’t have a strong foundation, there’s no point in building it.”

While bitcoin mining is easily the most profitable venture for Iris Energy at the moment, Roberts is clear that he is ultimately in the business of delivering raw computing power.

Iris signed a memorandum of understanding 2½ years ago with Dell Computing with the aim of bringing customers and hardware into the Canal Flats site.

Traditional data center companies such as ASX-listed NextDC are established in major capital cities and are optimized for real-time cloud computing, shared drives, very low latency, high reliability and high security

“Obviously, that’s an important role, but we’re also seeing the emergence of all these other computing applications that don’t require all the bells and whistles,” Roberts said.

He sees a world with demand for computing power driving data analytics, machine learning, rendering for augmented reality, oil and gas reservoir analysis.

“We would cost a tenth of a hyperscale data center,” he said. “And they don’t need this high-spec, ultra-low latency. They just require raw computing power.”

But while the opportunity is great, Iris Energy can’t get past the attraction of mining bitcoin.

“It’s just too profitable.”