Due to tough market conditions, Bitcoin miner, Iris Energy, is facing a cash flow crisis. The firm is facing default claims from its lenders, alleging that Iris Energy has defaulted on $103 million of equipment loans.
In a new filing with the US Securities and Exchange Commission (SEC), its lenders issued a notice of default to the mining firm concerning its two wholly-owned special purpose vehicles of the Company (the “Non-Recourse SPVs”).
The notice alleges that Iris Energy failed to engage in good faith restructuring discussions for certain payments, extended to November 8.
As a result, the lenders believe such action is considered a payment default for the scheduled principal payments, initially due on October 25, and accrued and unpaid interest on the loan.
However, Iris Energy disagrees with the allegations in the Purported Acceleration Notice. As stated by the company, 3 Non-Recourse SPVs (facilities) are in debt. They are the $1 million, $32 million, and $71 million worth of equipment financing loans secured by 0.2 exahash per second (EH/s), 1.6 EH/s, and 2.0 EH/s of Bitcoin miners.
But, 2.4EH/s of miners and the Groups’ data center and capacity are not affected by the limited recourse equipment financing arrangements or the alleged notice.
The miner stated that the Non-Recourse SPVs would continue to engage with the lender to modify each facility's terms.
Recall that in a November 2 press release by Iris Energy, the firm stated,
“Unless a suitable agreement is reached with the lender on modified terms for both equipment financing arrangements, the Group does not intend to provide further financial support to Non-Recourse SPV 2 and Non-Recourse SPV 3.”
Several factors, such as high electricity costs, lower Bitcoin prices, and increasing network difficulty, have greatly affected Iris Energy. Although the firm has $53 million in cash and generates about $8.7 million a month, its monthly gross profit is only $2M. This is below the monthly principal and interest payments of $7M.
