Iris Energy Limited (NASDAQ:IREN), an operator of Bitcoin mining data centers powered by renewable energy, provided a comprehensive update on its financing arrangements, as well as a recent opportunity to utilize prepayments made to Bitmain Technologies Limited.
The Sydney, Australia-based sustainable bitcoin mining company noted that the group had $53 million in the bank on October 31, 2022, and no debt other than limited recourse equipment financing arrangements.
Iris has three wholly-owned special purpose vehicles, which were incorporated for the specific purpose of financing certain miners.
As of September 30, 2022, the Non-Recourse SPVs had the following principal amounts outstanding under their respective limited recourse equipment financing facilities:
- Non-Recourse SPV 1 – $1 million, secured againstan 0.2 EH/s of miners.
- Non-Recourse SPV 2 – $32 million, secured against 1.6 EH/s of miners.
- Non-Recourse SPV 3 – $71 million, secured against 2.0 EH/s of miners.
According to the company, the lender to each Non-Recourse SPV has “no recourse to, and no cross collateralization with respect to, assets of the company or any other group entity, including other Non-Recourse SPVs.”
Iris explained that the Non-Recourse SPVs and their limited recourse equipment financing arrangements were “intentionally structured for prudent risk management” to protect the underlying business and data center infrastructure the group has built.
In its financing and Bitmain prepayment update, Iris highlighted the following:
- Certain equipment owned by the special purpose vehicles currently produce insufficient cash flow to service their respective debt financing obligations and have a current market value well below the principal amount of the relevant loans. Restructuring discussions with the lender remain ongoing.
- 2.4 EH/s of miners and all the group’s data center capacity and development pipeline are unaffected by these financing arrangements.
- The group is exploring opportunities to utilize data center capacity that may become available, recognizing:
- Current scarcity of industry hosting data center capacity:
- Prospect of utilizing $75 million of prepayments already made to Bitmain in respect of an additional 7.5 EH/s of contracted miners for further self-mining.
Bitmain prepayments
On August 1, 2022, Iris announced it had bought an additional 1.7 EH/s of S19j Pro miners, reducing prepayments made to Bitmain from $130 million to $83 million.
In addition to the financing update, Iris revealed that it has utilized an additional portion of its prepayments with Bitmain, further reducing unutilized prepayments made to Bitmain from $83 million to $75 million.
The company simultaneously sold the same purchased miners to a third party, resulting in net cash proceeds of $8.6 million.
The remaining $75 million of prepayments Iris has made to Bitmain relate to an additional 7.5 EH/s of S19j Pro miners, which is separate and incremental to the company’s previously announced 6.0 EH/s of capacity.
In a statement, Iris Energy co-founder and co-CEO Daniel Roberts said: “We remain committed to exploring a way in which we may be able to allow the lender to recover its capital investment, however, we are also mindful of the current market and that these arrangements were deliberately structured to minimize any potential impact on the broader group during a protracted market downturn.”
“With respect to the latest utilization of the Bitmain deposits, this is a testament to the creativity and effort of our team. We look forward to working with Bitmain to secure further mutually beneficial outcomes for both parties on the remaining $75 million of prepayments we have previously paid to them.”
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive