“We shouldn’t use the word default,” Mr Roberts said, “Because, at the end of the day, we didn’t default – it was the SPVs the special purpose vehicles that couldn’t service their own obligations. We just happen to own the shares in those SPVs. The only proactive decision we made as a business was not to use shareholder money to bail out a lender that was underwater.”
Mr Roberts told investors he believes the risk, return on the underlying cashflow is still “super attractive” and that cycles in bitcoin prices where the digital currency rises 10 to 20 times in value before plunging 80 per cent in value are nothing unusual.
The bitcoin apostle also brushed off a question about global bitcoin miners currently trading at liquidation values.
“In terms of a liquidation value of the business, I don’t think about that, we’re not liquidating the business, we’re here for the long term to generate some pretty good profits out of this infrastructure and keep growing,” he said.
At its core, Iris Energy has built out a series of green energy-powered data centres, and analysts queried why the company had stuck to mining bitcoin rather than renting out its servers to companies moving their operations to the cloud and boost revenues.
“We can fill up our data centres with hosting if we want to, but I’m not sure that we want to,” Mr Roberts said.
“Our data centres are ready, anyone can come in with a computer, plug it in, pay us a margin and life goes on. We were thinking about doing that a few weeks ago, but that feels like a bit of a cop out and feels like we’d be giving up a lot of the bitcoin upside by just defaulting to that position.”
Under pressure
Iris shares closed down 6.2 per cent to $US1.51 on the Nasdaq on Tuesday, after it raised $US232 million by issuing 8.3 million shares at its November 2021 initial public offer at $US28 per share.
The subsequent $US220 million valuation wipeout is likely to have hurt high-profile Australian investors known to have been on the register, including Phil King’s Regal Asset Management, Platinum Asset Management, Alex Waislitz’s Thorney Opportunities, Mike Cannon-Brookes’ Grok Ventures, and Wilson Asset Management.
Regal Asset Management declined to respond to questions about its potential exposure.
Mr Roberts said Iris has no debt and $US47 million cash on hand with upcoming capital expenditure obligations of around $US21 million for renewable energy infrastructure in British Columbia in Canada, and Texas.
The business also has a potential $US100 million equity facility agreed with US investor B Riley and $US75 million in prepayments outstanding to Chinese bitcoin hardware giant Bitmain under a previous contract to acquire mining equipment.
For the financial year ending June 30, Iris reported adjusted EBITDA (backing out certain costs) of $US16 million on bitcoin mining revenue of $US59 million. Bitcoin fetched $US17,018 a coin on Wednesday morning.
