Compass Point Analyst Defends Bitcoin Miner Iris Energy
Chase White says Iris should be able to renegotiate the terms of its debt or return its mining rigs to the lenders and buy new ones at a cheaper price.
Nov 3, 2022 at 3:09 p.m. UTCBitcoin miner Iris Energy (IREN) may be able to continue operating without the burden of expensive debt, Compass Point analyst Chase White told clients in a research note Thursday.
White's comments come after Iris earlier this week said some of its mining equipment – owned by special-purpose vehicles – isn't producing enough cash to meet financing obligations. Additionally, Iris said 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.
White thinks negotiations may aid the company's financial position.
“Given the depressed pricing for mining rigs in the market (recent pricing has been in the $15/TH range for similar machines), we believe the smartest choice for the lenders is to voluntarily restructure the debt to reduce monthly debt service payments, for instance, by extending the maturity of the loans,” White wrote, referring to terahash, a measure of computing power.
“Otherwise, because there is no recourse to IREN, the company can just send the rigs back to the lenders and use its enhanced liquidity position to purchase new machines at a lower implied price, making the transaction net accretive,” he added.
Compass Point rates the stock at buy with a $8.50 price target. The shares were recently down 6% to $2.70.
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Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.
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