For Iris Energy Limited (NASDAQ:IREN) co-founder and co-CEO Daniel Roberts, the decision to create and run a Bitcoin mining company powered by 100% renewable energy in partnership with his brother Will was simple.
“It’s a really unique dynamic where we have similar views on Bitcoin, life and business, but slightly different personalities,” Daniel told Proactive.
“The commonality between commercial decisions and business is there, but we complement each other very well in terms of how we actually use that commonality.”
Before Iris, the two brothers had previously worked together at Macquarie Bank. After becoming interested in Bitcoin, the pair saw an opportunity to combine their respective fields of expertise – renewable energy and traditional mining – in the emerging Bitcoin mining sector which resulted in the creation of Iris in 2019.
Focus on risk
Iris’ mission is simple: Bitcoin mining done right.
Daniel said that in practice this means that Iris has focused on risk and the downside of Bitcoin. To minimize risk, the company is vertically integrated and provides Iris with security and operational control over its assets. “We own the land, the data centers, the grid connection, the substation and the computers, and we run everything in-house,” he said.
Iris has also strategically positioned itself at the lower end of the Bitcoin mining cost curve to allow the company to benefit if the price of Bitcoin falls forcing other miners to cease operations and in turn allowing Iris to take a larger share of the Bitcoin block reward.
READ: Iris Energy to be ‘nicely profitable’ in next 12 months on operating basis as Bitcoin miner ramps up to 5-plus EH capacity, analysts say
He said the upside of Bitcoin was clear to Iris as a digital, exponential resource that he said was “Gold 2.0.”
“It’s actually better than gold because it’s more transferable, more divisible, more durable and more scarce,” Daniel said. “If Bitcoin were to one day catch up to the value of gold, that would equate to $600,000 per Bitcoin.”
Bitcoin mining with 100% renewable energy
Iris’ operating model has sustainability at its heart, with the company using low-cost, excess renewable energy to mine Bitcoin.
Its real asset platform consists of 180 MW of power capacity in operation and under construction, including a combined capacity of 160 MW at the Canal Flats, Mackenzie and Prince George facilities in British Columbia, Canada.
“Canal Flats was our flagship facility, which we started building a few years ago and which was commissioned last year, and this year we have added two new facilities at Mackenzie and Prince George for a total of 160 MW of data center capacity in BC,” said he.
The company has an additional 20 MW of capacity under construction at its Childress facility in the Texas Panhandle region, USA.
Rights to additional development sites across North America and Asia Pacific bring the company’s potential additional growth pipeline to more than 1 GW.
“We’re the highest efficiency miner when you look at the amount of Bitcoin we’re able to mine per unit of computing power, and that’s a testament to the quality of the data centers we’ve built,” Daniel added.
READ: Iris Energy expands capacity in 2Q despite ‘challenging year’ for digital assets
Daniel highlighted that the company’s environmental, social and governance (ESG) values extend beyond its commitment to mining Bitcoin using 100% renewable energy into the communities where it operates.
“Our focus is on supporting regional communities and co-locating close to the source of low-cost, excess renewable energy,” Daniel told Proactive.
He pointed out that the assets are located near underutilized grid infrastructure following the closure of factories and other industrial areas, allowing the company to provide employment and economic activity to communities that are facing challenges due to the decline in such operations.
“We’ve been able to use a lot of the existing electrical infrastructure and employ and retrain a number of the local workers, which has provided a good deal of community support,” he said. “This social license to operate is ingrained in everything we do.”
Ready for crypto winter
With no corporate debt, cash in the bank and its income-generating assets, Daniel said Iris is prepared for an extended bear market should this happen.
“But by the same token, we are well positioned to take advantage of any rise in Bitcoin,” he said. Should the price of Bitcoin rise, Iris believes the ability to mine it will come down to having access to real-world data center capacity, mining hardware, capital, electrical infrastructure and skilled workers, all of which this company has in place.
Commenting on the current cryptocurrency downturn that was exacerbated by the collapse of the FTX exchange, Daniel told Proactive that this was nothing the market hadn’t been through before.
“It’s going to continue this flywheel where the longer it survives, the lower the perceived risk, the bigger the marginal buyer, and since Bitcoin has a fixed supply, eventually the price goes up,” he said. “We’ve seen this cycle time and time again.”
READ: Iris Energy increases operating capacity across its Bitcoin mining facilities by more than 15% in January
He added that Bitcoin is actually one of the least volatile commodities, with a new block created every 10 minutes and the number of new Bitcoins created being predetermined by the original code released 13 years ago.
“The volatility comes from outside Bitcoin and is affected by thousands of other crypto projects, and when we see unregulated exchanges blow themselves up,” Daniel explained. “It has nothing to do with the Bitcoin asset, but it affects the price during different cycles.”
He further noted that Bitcoin has gone from one cent to a market cap of over $400 billion in 13 years. “Some may complain about volatility, but that sounds pretty good to me,” Daniel said.
Take advantage of the next Bitcoin cycle
Looking ahead, Iris is focused on building out institutional-quality infrastructure for decades, particularly around expansion opportunities available at its fourth site, in Childress, Texas. With a power capacity of 20 MW already under construction and expected to come online in 2023, the company plans to expand this site to 600 MW.
“Scaling beyond the original infrastructure will be much more efficient than getting the first 20 MW done,” commented Daniel.
In the coming months, the company is focused on filling up its available data center capacity to 5.5 EH/s and building on its experienced team.
“It’s more of the same of what we’ve been doing,” Daniel concluded. “We will wait out these challenging market conditions and be well positioned going into what’s next [Bitcoin] ride to take advantage of it.”
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