$103 Million Loan Default for Bitcoin Miner Iris Energy is Likely

    TheMorningCrypto Desk
    TheMorningCrypto Desk
    Published on November 3, 2022 8:22 PM

    Updated on January 25, 2023 11:48 AM

    The principle debt of Iris is still due in the amount of $104 million.
    $103 Million Loan Default for Bitcoin Miner Iris Energy is Likely

    Iris Energy is a sustainable Bitcoin miner in charge of real estate and data centre infrastructure. According to the most recent report, Iris said that some of the Bitcoin miners owned by its special-purpose vehicles (SPVs) "generate inadequate income flow" to pay their obligation to the lender. There are presently negotiations with the lender about a restructuring. The company created three Non-Recourse SPVs with the express intent of funding some of its miners. Iris still owes $104 million in principle on all three of them.

    Iris was clear that this was the only debt the company had. The firm also disclosed that its monthly revenues needed to catch up to its commitment to pay interest, making it appear that it will be unable to pay off its debts by year's end. 

    Since peaking at little over $64,000 one year ago, Bitcoin's price has dropped 68%. At the time this article was written, Bitcoin was trading for $20,350.

    By mining Bitcoin, the Non-Recourse SPVs now generate a gross monthly profit of about $2 million, but they must also pay $7 million in interest payments every month. In addition, the mining assets controlled by the SPVs are only worth an estimated $65 million to $70 million, far less than the sum paid for them initially. Iris stated that it does not anticipate its second or third SPVs making their planned principal payments on November 8 to avoid a default.

    The shares of Iris Energy are down 15% so far now, which is another piece of information that has come to light.

    On the Network Impact

    Sources claim that Core Scientific indicated last month that the firm would file for bankruptcy and might run out of money before the end of the year. Prior to June, it had around 7000 Bitcoin, but as of June, it only had 24 on its financial sheet and $26 million in cash. Not to mention that since June, Bitcoin's overall hash rate has only risen while its price has remained constant at roughly $20,000—a deadly combination that makes profitable mining harder than it was last year. However, the resignation of a few important miners would make it much easier for rivals to survive.

    Iris's aggregate hash rate of 3.6 EH/s might be lost if Iris fails due to the return of the ASIC equipment they borrowed from NYDIG. In this situation, the Bitcoin network's overall hash rate is 1.5 percent.

    Additionally, a number of other well-known Bitcoin miners threaten bankruptcy this month due to debt accumulation that exceeds the capacity of the Bitcoin network.