Why Dan Roberts, Iris Energy Co-Founder and Bitcoin Miner, Welcomes “Creative Destruction” in Cryptocurrency

But Iris is at the beginning of what is planned to be a rapid increase in computing power, which in the bitcoin world is expressed as exahashes (EH/s) per second. In the March quarter, Iris had 0.8 EH/s, but plans to reach 10 EH/s early next calendar year before reaching its ultimate goal of 15 EH/s later in the same year.

Will there be a trip to safety as crypto assets plummet? Illustration: David Rowe

To get there, Iris owns or will set up four data centers (three in the Canadian province of British Columbia and one in Texas) powered by renewable energy. With a bitcoin price of $40,000, Eris believes it can generate $505 million in profits with 10 EH/s and $761 million in earnings at a rate of 15 EH/s.

Roberts is thrilled with the progress that Iris’ team of infrastructure veterans is making. But the decline in the price of Bitcoin cannot be easily ignored. Will Eris’ economies continue to pile up?

‘We can ride the swings’

Roberts is confident. First, the cost of producing Iris per bitcoin over the past few months has been between $8000 and $8,500, so in theory bitcoin could drop quite a bit before its profitability is threatened.

Second, the data center you’re building in Texas, which will make up 63 percent of its computing power, will have 30 percent to 40 percent lower energy costs than its other locations, lowering the cost of production.

Third, the bitcoin price drop is likely to force other bitcoin miners with higher energy costs out of the market; Having fewer miners in the market means that Iris will have a larger share of bitcoins mined every 10 minutes.

“We are looking at the profitability of our operations, the operating leverage that we can withdraw if bitcoin has a prolonged withdrawal,” Roberts says. “We are a company with real assets, we make big money, we can weather volatility and be here when the good times swing by.”

Roberts argues that it is important to separate the crash in stablecoins that has rattled the cryptocurrency markets in recent days from bitcoin. He says stablecoins are early-stage experiments that need to be treated as such. On the other hand, Bitcoin “has been an end product for a decade” and offers much more protection in terms of its security levels, and the fact that only 21 million coins will be mined.

Roberts says that a period of “creative destruction” in cryptocurrencies can be healthy in the long run, just as it once was for economies.

“It’s a very effective innovation environment, and arguably when you have these moments of discovery about asset values ​​and those innovations, and you make a dip, it’s really good for the sector because you’re resetting. People are again evaluating things that have value, why they have value, and you can build sustainably again.”

For now, that seems like a very optimistic view. Roberts may be able to distinguish between the more speculative parts of the cryptocurrency world and Bitcoin, but how many other investors would be willing to do the same?

The big question that the crash in the stablecoin raises is how far the contagion will spread. The losses that investors are taking in their stable cash portfolios have already spilled over into bitcoin and other more established digital assets. Will cryptocurrency losses also carry over to stocks?

Retail cryptocurrency investors are likely to be the hardest hit. But it’s hard to see institutional investors stepping into a crypto-asset rescue the way they would to buy battered stocks – most professional investors have enough volatility in their stock portfolios and won’t want to add more.

Roberts and Iris may eventually provide a test of the sector’s institutional appetite. Iris has secured $750 million of the $1 billion capital it needs to reach 15 EH/s, but will need to tap into the debt markets to get more funds.

Roberts is confident that a debt-free balance sheet, strong free cash flow and a record of increasing equity will help Iris convince true believers to support the company’s growth. “It’s a challenging college environment, and we respect that. But in return, I think we’ve put ourselves in a really good position.”

Will the market realize this? The speed with which turmoil is spreading across cryptocurrencies at the moment makes this question impossible to answer.

Leave a Comment

Your email address will not be published.