Cryptocurrency data center and mining firm Iris Energy has defaulted on some of its debts related to securing mining equipment.
Earlier this month, the company reported that two of its fully fledged special purpose vehicles (SPVs), incorporated for the specific purpose of financing certain miners, were close to default due to the miners under those SPVs generating less cash than their repayment requirements.
In an SEC filing this week, the company said two of its subsidiaries had defaulted on their debt. Although the wider company remains intact.
“The Non-Recourse SPVs have received default and acceleration notices from the borrower in respect of the facilities, including a demand that each facility be repaid in full immediately,” the company said. “Although no assurance can be provided as to what action may be taken, the company expects that the borrower will take action to enforce the debt and its rights in the collateral enforcement that the Facilities of Non-Recourse SPV 2 and Non-Recourse SPV 3 assured. “
As a result of the notice, Iris said that certain other subsidiaries of the company terminated their respective hosting arrangements with Non-Recourse SPV 2 and Non-Recourse SPV 3, and none of the 3.6 EH/s of miners provided by the subsidiaries owned doesn’t work. .
Non-Recourse SPV 2 and SPV 3 combined have debt totaling more than $107 million. The two vehicles currently produce insufficient cash flow to meet their respective debt financing obligations; between them, Bitcoin mining generates about $2 million in monthly gross profit, compared to monthly payment obligations of $7 million.
Non-Recourse SPV 2 and Non-Recourse SPV 3 failed to make scheduled principal payments by the extended deadline on November 8, 2022, and consequently received a default notice from the lender the following week.
Excluding the Non-Recourse SPVs, the larger group had $53 million of cash and cash equivalents at October 31, 2022. Iris noted that the group’s data center capacity and development pipeline is unaffected by the news and continues to “explore opportunities to leverage its available data center capacity.”
However, the company admitted that it expects the foregoing to have “a material adverse effect” on the business and its financial condition, cash flows and results of operations.
“In addition, the foregoing could also have a material adverse effect on our ability to continue as a going concern,” the company said.
In other crypto news:
– A class action lawsuit is filed against Core Scientific. The law firm Bragar Eagel & Squire, PC, filed against the company in West Texas Austin court on behalf of all persons and entities that purchased or otherwise acquired Core Scientific securities between January 2022 and October 2022.
Core Scientific, which announced in October that it was facing bankruptcy before the end of the year, is accused of making “materially false and/or misleading statements” as well as failing to disclose material adverse facts about the publicize company’s business, operations and prospects. . Specifically, Bragar et al said the company did not disclose that the company was experiencing increasing power costs; that the Company’s largest customer, Gryphon, did not have the financial resources to purchase the necessary mining installations for Core Scientific to offer; that the Company does not provide hosting services to Celsius as required by their contract and has implemented an improper surcharge to pass on power costs to Celsius; that as a result of the foregoing alleged breaches of contract the company would reasonably likely incur liability to defend itself against Celsius.
– Australian crypto firm Arkon Energy has raised $28 million to expand its operations and acquired a European data center. The company acquired Norway’s Hydrokraft AS, which launched a 30MW data center in 2021 with the potential to reach 60MW. Arkon raised $2.6 million in pre-funding in February. Barkers Point Capital Advisors helped finance the latest transaction.