Bitcoin Miner Iris Energy Says Some Machines Aren't Covering Financing Costs
The company's shares fell almost 9% in early trading.
:format(jpg)/cloudfront-us-east-1.images.arcpublishing.com/coindesk/25WOFE5F7VAFXOBKE5BBZ5UWUI.jpg)
Bitcoin mining machines (Shutterstock)
Bitcoin miner Iris Energy (IREN) said some of its mining equipment, owned by special-purpose vehicles, aren't producing enough cash to meet its financing obligations.
The firm also said Wednesday that the equipment has a market value "well below the principal amount of the relevant loans" and that it is in talks with the lender.
The company has three special-purpose vehicles specifically for financing the purchase of mining equipment. Together the three have $104 million of debt outstanding. That's secured against 3.8 exahash per second (EH/s) of mining rigs. The special-purpose vehicles aren't guaranteed by the parent company, and the lenders have no recourse to the company or any of its assets, Iris Energy said.
Iris and its subsidiaries had $53 million of cash at of the end of October, according to the company.
In September, Iris signed a deal to sell up to $100 million in equity to investment bank B. Riley over the next two years, which would give the bank a stake of up to 31% in the miner.
The firm also said it is exploring opportunities to use data-center capacity that may become available, and has used an added portion of its prepayments to mining rig maker Bitmain, reducing the size of those unused prepayments to $75 million from $83 million.
Bitcoin miners have been plagued by tumbling stock prices in recent months, as they have been squeezed by depressed crypto prices and soaring energy costs.
Iris' shares fell almost 9% to $3.09 in early U.S. trading.
UPDATE (Nov. 2 13:22 UTC): Adds additional info on Iris’ situation and background on mining industry.
UPDATE (Nov. 2, 13:45 UTC): Adds details of special purpose vehicles in third paragraph; updates share trading.
DISCLOSURE
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.