Ex-Macquarie brothers raise $25m for green bitcoin miner

Tesla founder Elon Musk’s foray into Bitcoin this week comes after a lot of interest from established U.S. financial institutions like PayPal, Square, and Visa.

Iris mined Bitcoin for almost two years in a facility that houses computers with 9 megawatts of power. With the fresh capital, a further 21 megawatts can be built in two new data centers. Attempts are also being made to acquire additional Canadian locations.

Iris receives a regular income in Bitcoin for his mining, which uses raw data to find a solution for the SHA-256 algorithm that secures the Bitcoin network. The result is probabilistic: the amount of Bitcoin received is directly related to the amount of computing power. Approximately every 10 minutes, the miner is provided with 6.25 bitcoins that solve the problem and then provide security to the network, known as a “block reward”. Iris does not hold Bitcoin and immediately liquidates it in fiat currency.

“We sell bitcoin the day it is mined,” explained Dan Roberts. “We’ll keep it or not keep it. This and the focus on renewable energies and integration with energy markets is one of the reasons it is popular with institutions. “

Power shifts

Iris mining currently accounts for less than 0.5 percent of total Bitcoin mining activity, but Roberts said he hopes to increase the proportion after Iris invests in new application specific integrated circuits (ASIC) SHA-256 and Chinese manufacturers do one Part of it has lost competitive advantages that they once had in Bitcoin mining.

“With the commercialization of computing power, we are seeing a 180 degree shift over time from players with access to the latest technology to players who can develop and build large infrastructure projects for energy and data centers with access to institutional capital.” said Roberts. He left his leadership position at Palisade in 2018, but remains the second largest single shareholder.

Iris’s board of directors includes Canadians Brian Fehr, former owner and general manager of energy project construction company BID Group, and Brian Fry, co-founder of RackForce, Canada’s largest cloud hosting company.

Oscar Oberg, senior portfolio manager at Wilson Asset Management, who made a small investment in Iris from its micro-cap fund prior to going public, said, “These people are building data centers with the cheapest source of energy they can find renewable and they are going have lower production costs for Bitcoin mining compared to their competitors. “

“They have a very good board and management team – as Ex-Palisade and Macquarie they know what they’re doing – and we see it as an infrastructure game.”

WAM has invested in the NextDC and Megaport data centers and participated in the pre-IPO round for Sovereign Cloud, which was listed in December. Mr Oberg said the US’s growing institutional interest in Bitcoin and Tesla’s huge investment this week helped validate the investment.

“Interest [in bitcoin] and we wanted to be part of the first Bitcoin company listed on the ASX, ”he said.

According to Roberts, the institutes are interested in the asymmetrical returns that arise when miners who use expensive energy stop mining as the price of Bitcoin drops and mining revenues fall below their electricity costs. This results in them giving their share of the block rewards to cheaper miners. “Unlike traditional mining companies, Bitcoin is unique in that as the price of the underlying commodity goes down, so does the unit cost of production as we mine more Bitcoin at the same cost of ownership,” he said.

Should the price of Bitcoin drop sharply, making it uneconomical for Iris to mine mines, the company would offer high-performance computers from its data centers as it owns all land and grid connections. It could sell its green energy to the Canadian grid or use its data centers for artificial intelligence computing.

Right now, however, the focus is solely on Bitcoin, which was over $ 44,000 this week. Part of the interest has been driven by a narrative that Bitcoin could replace gold as an asset that can protect against the risk of inflation.

Mr Roberts said that if bitcoin reached 20 percent of gold’s market cap, compared to a few percent today, the energy required to maintain the network would rise to 70 gigawatts, ten times what bitcoin mining is today, or three times the amount of electricity used by all data centers World.

“The ability of the real world to keep up with the digital world is fundamentally challenged,” he said. “While global bitcoin mining capacity can respond quickly to a drop in bitcoin price when people turn off their computers, it is far more difficult for billions of dollars investing in energy and data center infrastructure to pace with the growth of a digital network to keep . These real, digital dynamics are the source of asymmetrical returns in the industry. “

Recent articles

Crypto exchanges struggle as El Salvador adopts Bitcoin

Today, Bitcoin is becoming an official currency in El Salvador, and the markets and crypto exchanges seem to be struggling. On...

Schools are back – and time to comply with the ICO’s Age Appropriate Design Code

As of September 2, 2021, the United Kingdom's Information Commissioner's Office ("ICO") expects organizations to use their Age Appropriate Design Code ("AADC"). The...

the ICO wants input on when personal data goes international

You don't have to be a data-focused IT service provider to realize that the UK was lucky enough to receive an adequacy decision from...