Iris Energy cuts Bitcoin mining capacity due to requested loan

Iris Energy – an Australian crypto mining company whose primary mission is the operation of BTC mining facilities in Canada that run exclusively on renewable energy – has recently ceased mining operations in two subsidiaries.

Nevertheless, the firm still maintains that the business continues to be profitable.

Immediate repayment of required loan

The subsidiaries operating as Special Purpose Vehicles (SPVs) used Bitmain mining rigs funded by a $107.8 million loan from New York Digital Investment Group (NYDIG), the company’s statement said. 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 unfavorable market conditions, an increase in mining difficulties as well as in the price of electricity, and the value of BTC itself decreasing, 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 wiped out simply by handing them over to NYDIG.

The business remains profitable despite the fall in the share price

Iris Energy – a company led by Daniel and Will Roberts – recently suffered a $220 million wipeout in market capitalization due to a 94.5% drop in their share prices, IREN. Still, the brothers have stated that they remain optimistic about the cryptocurrency sector.

They also reiterated that their business model remains profitable, despite needing some adjustments. Currently, each bitcoin mined in their facility yields around $6ki profit.

Although this is enough to keep the business going, it is sub-optimal when you take into account the operating costs that are planned for better days.

“On a gross profit level, it is clearly still profitable. We just need to figure out what level of overhead the business can support. (…) We have been dealt the cards we have, and all we can do is anticipate future problems, which we did around [SPV] debt facilities by capping them. We are still very excited about the business and the industry.”

Due to the closure of the 2 SPVs, Iris’ mining capacity has been reduced by more than half – 3.6 EH/s (exahashes per second) have been lost.

This puts Iris’ total remaining mining capacity at 2.4 E/Hs. Fortunately, there is a silver lining for the company already. $75 million has already been paid to Bitmain to lay out even more mining rigs. Iris is currently in talks with Bitmain regarding the operation of these miners, which could increase Iris’ mining power by as much as 7.5 E/Hs.