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With the tough conditions that faced Bitcoin miners last year, Iris’ co-founder said the purchase was a “significant milestone” for the company.
Australia-based Bitcoin (BTC) mining company, Iris Energy, revealed it will nearly triple its mining capacity with the addition of thousands of mining rigs.
On Feb. 13 the firm said it purchased an additional 4.4 Exa Hashes per second (EH/s) worth of Bitmain Antminer S19j Pro ASIC miners bringing its self-mining capacity to 5.5 EH/s from 2.0 EH/s.
Based on the S19j Pro’s maximum hashrate of 100 Tera Hashes per second (TH/s), the purchase adds an estimated 44,000 miners to its fleet, according to Cointelegraph’s calculations.
Daniel Roberts, Iris’ co-founder and Co-CEO said the purchase “is a significant milestone” for the company and added its been a “challenging period for both the industry and markets more generally.”
Iris said the new miners will be installed in the company’s centers but did not mention in which locations. The firm operates three facilities in various locations in British Columbia, Canada and one in Texas in the United States.
The company used $67 million of remaining prepayments to ASIC miner manufacturer Bitmain to fund the purchase of the rigs “without any additional cash outlay.”
Iris had a 10 EH/s contract with Bitmain which it says “have been fully resolved, with no remaining commitments.” It stated it remains debt free.
The firm said it’s also considering options to sell surplus miners above its 5.5 EH/s of mining capacity to re-invest.
Related: Core Scientific to hand over 27K rigs to pay $38M debt
In November last year the company was forced to unplug miners used as collateral on a $107.8 million loan as the units were producing “insufficient cash flow to service their respective debt financing obligations.”
Over the past few months cryptocurrency miners have faced a squeeze from multiple directions, having to confront low Bitcoin prices amid high hash rates, high mining difficulty and high energy prices.
The pressure caused publicly listed Bitcoin mining companies to sell off almost all of the BTC mined throughout 2022 with data from blockchain research firm Messari showing Iris sold around 100% of the nearly 2,500 BTC it mined that year.
A Febuary analysis from Hashrate Index shows publicly listed miners increased their production in January with better weather and stable electricity prices helping the production surge. Iris’ January production resulted in 172 BTC compared to 123 BTC in December.
After a bullish 2021 crypto miners sought out loans to allow them to expand, a move which has since backfired following difficult market conditions in 2022.
The holding company for the crypto-friendly bank, BankProv, has revealed it’s no longer providing loans secured by cryptocurrency mining rigs after writing off $47.9 million in loans primarily secured by them throughout 2022.
According to a Jan. 31 filing with the United States Securities and Exchange Commission (SEC), BankProv has already nearly halved the proportion of its digital asset portfolio consisting of rig-collateralized debt since the quarter ending Sep. 30, 2022.
The bank held $41.2 million in digital asset-related loans as of Dec. 30 last year consisting of $26.7 million worth of loans collateralized by crypto mining rigs which “will continue to decline as the Bank is no longer originating this type of loan”.
The crypto mining industry has taken on huge amounts of debt during the 2021 bull market, often offering up mining rigs they own as collateral in order to lower their interest rates.
The subsequent bear market starting in 2022 resulted in tough conditions for miners, however, and many were forced to sell the Bitcoin (BTC) mining rigs they own in order to cover operating costs, causing mining hardware prices to plummet.
Related: Bitcoin miner Greenidge cuts NYDIG debt from $72M to $17M
Despite the falling prices, some banks who had issued mining rig-collateralized debt were forced to repossess some of the miners used as collateral.
According to a previous SEC filing, BankProv repossessed mining rigs in exchange for the forgiveness of $27.4 million in loans on Sep. 30, 2022, which resulted in an $11.3 million write-off for the firm.
The losses likely contributed heavily to its decision to stop issuing these types of loans, with Carol Houle, the CFO of its holding company Provident Bancorp, noting:
“As we reflect on 2022, we are eager to take its lessons and emerge a better, stronger bank. Despite our 2022 losses, we enter 2023 well capitalized and well diversified.”