Iris Energy unplugs hardware collateralizing $100 million loan

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Bitcoin
Iris Energy unplugs hardware collateralizing $100 million loan

SEC filing shows that Iris Energy has responded to a default notice by unplugging hardware to collateralize the loan.

Bitcoin miner defaults on loan

Bitcoin miner Iris Energy has unplugged most of its miners in response to a default notice on about $107.8 million in loans they were securing. This was made public via a Monday, 21 November 2022, United States Security and Exchange Commission (SEC) filing.

However, the company said its data center capacity and development pipeline would be “unaffected” by the move. It freed up about 90 megawatts of capacity at a time when machine prices have fallen steeply.

“The group continues to explore opportunities to utilize its available data center capacity, recognizing the current scarcity of industry hosting data center capacity, and the prospect of utilizing $75 million of prepayments already made to Bitmain in respect of an additional 7.5 EH/s of contracted miners for further self-mining,” Iris said in a statement.

Iris Energy cuts operations to mitigate risk

The company had previously stated that given the current mining economics, the machines weren’t making enough money to pay for loans, generating around $2 million in BTC per month in gross profit versus the $7 million in debt obligations.

Earlier this month, Iris was served with a default notice from its lender and expects it to call back the machines.

Having turned off about 3.6 EH/s worth of machines, the company said its computing capacity is roughly 2.4 EH/s when accounting for 1.3 EH/s of miners in transit or pending deployment and 1.1 EH/s of machines in operation.

“The Facilities were intentionally structured for prudent risk management to protect the underlying business and data center infrastructure the Group has built (i.e., without a parent company guarantee and without recourse to any other Group entities),”

The company also said, adding that it has no other outstanding debt facilities. As of Oct. 31, Iris had $53 million of cash and cash equivalents. 

Iris Energy facing downtime

Headquartered in Australia, Iris Energy is known for operating mainly Canadian Bitcoin mining centers that fully utilize renewable energy. In October, the company had an average mining hash rate of 3.9 EH/s, representing approximately 1.5% of the Bitcoin network’s mining capacity.

Sequel to this move by Iris Energy, tOn Nov. 7, the Bitcoin miner Iris Energy said it had received a default notice from mining rig manufacturer Bitmain Technologies.

The notice alleged that Iris Energy failed to “engage in good faith restructuring discussions” for certain principal payments due on Nov. 8. Additionally, Iris Energy received a separate notice last week from creditors alleging that it “failed to maintain sufficient insurance” and would constitute a default if not remedied within 10 days.