For Iris Energy Limited (NASDAQ:IREN) co-founder and co-CEO Daniel Roberts, the decision to create and run a Bitcoin mining company powered by 100% renewable energy in partnership with his brother Will was a simple one.
“It’s a really unique dynamic where we’ve got similar views on Bitcoin, life, and business, but slightly different personalities,” Daniel told Proactive.
“The commonality of commercial decision-making and business is there, but we complement each other really well in terms of how we actually use that commonality.”
Before Iris, the two brothers had worked together previously at Macquarie Bank. After gaining an interest in Bitcoin, the pair saw an opportunity to combine their respective fields of expertise — renewable energy and traditional mining — in the emerging Bitcoin mining sector which resulted in the creation of Iris in 2019.
Focus on risk
Iris’ mission is simple: Bitcoin mining done right.
Daniel said in practice this means Iris has focused on risk and the downside of Bitcoin. To minimize risk, the company is vertically integrated giving Iris security and operational control of its assets. “We own the land, data centers, grid connection, the substation, and computers and we operate it all internally,” he said.
Iris has also strategically positioned itself at the lower end of the Bitcoin mining cost curve to allow the company to benefit if the price of Bitcoin falls and forces other miners to suspend their operations and, in turn, allow Iris to capture a greater share of the Bitcoin block reward.
READ: Iris Energy to be ‘nicely profitable’ over next 12 months on operating basis as Bitcoin miner ramps up to 5-plus EH capacity, analysts say
He said that the upside of Bitcoin was clear to Iris as a digital, exponential asset which he said was "Gold 2.0."
“It’s actually better than gold because it is more transferable, more divisible, more durable, and more scarce,” Daniel said. “If Bitcoin one day was to catch up to the value of gold, that would equate to $600,000 per Bitcoin.”
Bitcoin mining using 100% renewable energy
Iris’ operating model has sustainability at its heart, with the company using low-cost, excess renewable energy to mine Bitcoin.
Its real assets platform consists of 180 MW of operating and under construction power capacity, including a combined 160 MW of capacity at its Canal Flats, Mackenzie and Prince George facilities located in British Columbia, Canada.
“Canal Flats was our flagship facility, which we started constructing a few years ago and was fully commissioned last year, then this year we’ve brought online two new facilities at Mackenzie and Prince George for a total of 160 MW of data center capacity in BC,” he said.
The company has a further 20 MW of capacity under construction at its Childress facility in the Texas Panhandle region, USA.
Rights to additional development sites across North America and the Asia Pacific bring the company’s potential additional growth pipeline to more than 1 GW.
“We are the highest efficiency miner when you look at the amount of Bitcoin we are able to mine per unit of computing power, and that’s a testament to the quality of the data centers that we’ve built,” Daniel added.
READ: Iris Energy expands capacity in 2Q despite 'challenging year' for digital assets
Daniel highlighted that the company’s environmental, social and governance (ESG) values extended beyond its commitment to mine Bitcoin using 100% renewable energy into the communities where it operates.
“Our focus is on supporting regional communities and co-locating close to the source of low-cost, excess renewable energy,” Daniel told Proactive.
He pointed out that its assets are located near underutilized grid infrastructure following the closure of mills and other industrial sites, allowing the company to offer employment and economic activity to communities facing challenges due to the decline of such operations.
“We’ve been able to utilize a lot of the existing electrical infrastructure and rehire and retrain a number of the local workers, which has brought a fair amount of local community support,” he said. “That social license to operate is ingrained in everything we do.”
Ready for crypto winter
With no corporate debt, cash in the bank and its revenue-generating assets, Daniel said Iris is prepared for an extended bear market should this occur.
“But equally, we’re well positioned to capitalize on any uptick in Bitcoin,” he said. Should the price of Bitcoin rise, Iris believes that the ability to mine it will come down to having access to real-world data center capacity, mining hardware, capital, electrical infrastructure and skilled employees, all of which the company has in place.
Commenting on the current cryptocurrency downturn exacerbated by the collapse of exchange FTX, Daniel told Proactive that this wasn’t anything the market hadn’t been through before.
“It’s going to continue this flywheel where the longer it survives, the lower the perceived risk, the greater the marginal buyer, and since Bitcoin has a fixed supply, the price eventually rises,” he said. “We’ve seen this cycle time and time again.”
READ: Iris Energy ups operating capacity across its Bitcoin mining facilities by more than 15% in January
He added that Bitcoin is actually one of the least volatile commodities, with a new block created every 10 minutes and the number of new Bitcoin being created is predetermined by the original code released 13 years ago.
“The volatility comes from outside Bitcoin and is influenced by thousands of other crypto projects and when we see unregulated exchanges blow themselves up,” Daniel explained. “That has nothing to do with Bitcoin the asset, but it does affect the price during different cycles.”
He further noted that Bitcoin has gone from a cent to an over $400 billion market capitalization in 13 years. “Some may complain about volatility but that sounds pretty good to me,” Daniel said.
Capitalizing on the next Bitcoin cycle
Looking ahead, Iris is focused on building out multi-decade, institutional-grade infrastructure, specifically around expansion opportunities available at its fourth site, in Childress, Texas. With 20 MW of power capacity already under construction and expected to come online in 2023, the company plans to eventually expand this site to 600 MW.
“Scaling beyond that initial infrastructure will be a lot more efficient than getting the first 20 MW done,” Daniel commented.
In the coming months, the company is focused on filling up its spare data center capacity to 5.5 EH/s and building on its experienced team.
“It’s more of the same of what we’ve been doing,” Daniel concluded. “We will wait out these challenging market conditions and be well positioned leading into the next [Bitcoin] cycle to capitalize on it.”
Contact the author at emily.jarvie@proactiveinvestors.com
Follow her on Twitter @emilyjjarvie