Crypto Mining Firm, Iris Energy, Set to Shut Down BTC Mining Capacity

Sydney-based miner Iris Energy said it is prepared to default on a loan that will see it shut down 3.6 EH/s of mining capacity. The company will instead look to buy new miners and may allow third parties to use the newly-vacated data center capacity.

Iris Energy, an Australian Bitcoin miner, would lose 3.6 EH/s of mining capacity as a result of defaulting on a $108 million loan. Iris Energy has decided to expand its other business activities rather than repay debts secured by equipment used by two of the company’s wholly-owned vehicles.

The Nasdaq-listed miner claims that because other subsidiaries that were using the equipment backed out of hosting agreements, the two firms do not generate enough cash flow to pay off the credit lines. Iris Energy will cease operations at these two sites under a collateral arrangement with the creditor.

As a result, Iris Energy plans to buy mining equipment from Bitmain so that it can start mining independently. It may also rent out space in its data center to other hosting companies. Aside from the mining machines used as collateral, Iris Energy operates 1.1 EH/s of mining power and expects to deploy a further 1.3 EH/s.

Iris Energy Amongst Other Mining Firms Fighting to Stay Profitable

Mining, which was formerly the domain of enthusiasts, has mostly moved into the domain of big businesses that run specialized data centers. While these businesses benefit from economies of scale, rising energy costs brought on by the conflict in Ukraine and a drop in the price of bitcoin have made it difficult for some miners to pay off debt.

The Production Cost Floor has also been growing, making it harder for miners to continue making a profit. Crypto market researcher Charles Edwards believes that many miners would lose money and be unable to pay back loans if the price of Bitcoin drops below the production cost floor.

According to reports from Argo Blockchain, it only mined 204 BTC in October 2022, leaving it unable to repay creditors. The amount of coins the firm will mine in November 2022, together with the 579 BTC it sold with 138 BTC remaining, may not be enough to meet operating expenses. On October 31, 2022, it also sold about 4,000 mining machines to CleanSpark, another mining business.

Fears of bankruptcy were raised when Core Scientific, another significant competitor, informed the U.S. Securities and Exchange Commission that it would not be able to pay its debts by the end of November 2022.