Iris Energy warns that some bitcoin miners are not hedging debt financing obligations (NASDAQ:IREN)


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Eco-Bitcoin (BTC-USD) miner Iris Energy (NASDAQ:IREN) informed investors Wednesday that some of its cryptocurrency mining equipment, held by special purpose vehicles (SPVs), is generating insufficient cash flow to meet its debt financing obligations.

The stock fell 11.5% at $3.0 in early trading, from $24.45 a year ago.

Additionally, the market value of the equipment is “well below the principal amount of the affected loans”, the company said, adding that restructuring talks with the lender were continuing.

Irises (IREN) has three non-recourse SPVs for the purpose of funding some miners. As of September 30, they had $104 million in combined outstanding debt secured against 3.8 exahashes per second of miners.

The company and its subsidiaries had $53 million in cash as of October 31. By comparison, IREN had long-term debt of $46.6 million in the second quarter, according to its balance sheet.

“We remain committed to exploring a way to allow the lender to recover their capital investment, however, we are also aware of the current market and that these arrangements have been deliberately structured to minimize any potential impact on the whole group. during a prolonged market downturn,” said Iris Energy co-founder and co-CEO Daniel Roberts.

With bitcoins (BTC-USD) down around 70% from its peak in November 2021, coupled with higher energy prices, the profitability of BTC miners has been reduced. Over the past week, Core Scientific (CORZ) and Argo Blockchain (ARBK) (OTCQX:ARBKF) took center stage assembly liquidity problems.

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