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Iris Energy has $103 million outstanding debt adding that its mining equipment isn’t making enough revenue to cover costs relating to its debt-financing obligations.
Bitcoin Miner Iris Energy Losing Revenue
In a statement on Wednesday, November 2, the Sydney-based green crypto miner said that its mining equipment isn’t making enough revenue to cover costs relating to its debt-financing obligations. Iris said that its Bitcoin miners generate roughly $2 million per month. This is insufficient to offset the $7 million monthly financing payment leaving a deficit of $5 million.
The crypto miner has a $103 million outstanding debt secured against its rig purchases through several wholly-owned special-purpose vehicles. Amid the lack of a refinancing agreement, Iris Energy is not in a position to provide financial support for the vehicles.
The default on its loans looms just five days from now on November 8, when Iris Energy is likely to miss a scheduled payment. The Bitcoin price has tanked nearly 70% from its all-time high of November 2021.
The Bitcoin miners have been facing profit squeeze and declining margins from all ends. First is the drop in the price of Bitcoin which has severely impacted their profitability. The second is the rising hashrate as well as the rising energy costs. Beyond all this, the monetary tightening measures by the Fed and the rising interest rates have also impacted the ability to repay loans on the debt.
Key Measures by Bitcoin Miners
As a result of this latest market crunch, Bitcoin miners have been forced to initiate unprecedented measures. Some of the top Bitcoin miners like Iris Energy, Argo Blockchain Plc and Core Scientific Inc have also considered diluting their equity to raise funds.
Iris energy said that they are undergoing restructuring discussions with the lender for the special-purpose vehicles. It said that the reason behind setting up these vehicles was to achieve “prudent risk management to protect the underlying business and data center infrastructure”.
Iris Energy said that it is currently holding more than $57 million in cash. Soon after the news on Wednesday, the stock of Iris Energy (NASDAQ: IREN) plummeted by 15% wending the trading session at $2.88. The IREN stock price is already down by more than 90% since its listing last year.
This year has been brutal, especially for all public-listed Bitcoin miners. The world’s largest Bitcoin mining giant Core Scientific recently said that it is on the very of bankruptcy as it runs out of cash to pay for its debt obligation. The stock of Core Scientific (NASDAQ: CORZ) has plummeted 99% over the last year.