- Iris Energy a publicly traded company that mines Bitcoin in a sustainable way (IREN), has agreed to sell up to $100 million in equity to B. Riley Financial.
- The move shows that some traditional financial firms are still interested in Bitcoin even though it is facing clear headwinds.
- The price of B. Riley Mining (BRIX) has dropped by 85% in the last year.
Iris Energy, a publicly traded company that mines Bitcoin in a sustainable way (IREN), has agreed to sell up to $100 million in equity to investment bank B. Riley Financial over the next two years.
That’s B. Riley’s second big investment in the mining sector. In July, it signed a $100 million deal with Core Scientific, even though the crypto bear market has made the industry more competitive and cut profits. The move shows that some traditional financial firms are still interested in Bitcoin even though it is facing clear headwinds.
According to a filing with the SEC on Friday, B. Riley could buy up to 25 million IREN shares in the 24 months after September 23. This would give B. Riley a 31% stake in the company. Iris has already given the bank 191,174 of these ordinary shares as payment for its commitment.
“We intend to use any proceeds from the Facility to fund our growth initiatives (including hardware purchases and acquisition and development of data center sites and facilities), and for working capital and general corporate purposes,” Iris said in the filing.
Iris also said that she couldn’t use the money from the sale in a way that B. Riley wouldn’t like or that “may not yield a significant return.”
On Friday, the day the filing was made, Iris shares ended the day down 9%. The price of the stock has dropped by 35% in the last month and by more than 85% in the last year.
This year, many crypto companies have seen their share prices drop in this way. Core Scientific (CORZ), the other Bitcoin miner in which B. Riley has invested, has dropped about the same amount in the past year. The miner that was on the stock market had to sell off most of its Bitcoins in Q2.
Bitcoin miners make money because every time they mine a block, which keeps the network safe, they get a set number of Bitcoins.
Using a process called “proof of work” to mine these blocks uses a lot of energy, which is why many people think Bitcoin is bad for the environment. However, critics can no longer say that about the Ethereum network since it switched to “proof of stake.”
As the price of Bitcoin has gone down in 2022, so have miner profits. This caused a lot of people to sell Bitcoin and even caused some mining companies to go bankrupt. The problem is made worse by the fact that the network’s hash rate keeps going up, which means miners have to become more cost-effective to stay in the game.
Still, the big mining companies are making investments for the long term. Even though Core Scientific sold more coins in July, they put up another 14,000 ASIC servers that same month.
