Top Wealth Management Firms Suffer $220,000,000 in Losses on Bitcoin (BTC) Mining Investments: Report
A new report claims that investors in Bitcoin (BTC) miner Iris Energy are seeing their holdings lose millions of dollars in value a year after the public listing.
Shares in NASDAQ-listed Iris Energy have fallen 94.5% since its IPO in November 2021, according to an Australian Financial Review.
According to the Australian Financial Review, top investors who have suffered huge setbacks on their investments in Iris Energy include Regal Asset Management, Platinum Asset Management, Thorney Opportunities, Grok Ventures, Wilson Asset Management and OC Funds Management.
On November 17, 2021, Iris Energy listed 8.3 million shares at a price of $28 per unit. Shares hit an all-time high of $28.25 the same day before the start of the descent. Bitcoin had hit a record high of just over $69,000 seven days before Iris Energy listed.
The sharp fall in Iris Energy’s share price coincides with the bitcoin miner’s disclosure that its U.S. creditors are demanding repayment of $107.8 million on a loan taken out to purchase crypto mining equipment.
The Australian Financial Review further quotes Iris Energy’s co-CEO Daniel Roberts as saying that it is Iris Energy’s wholly owned subsidiaries structured as special purpose vehicles (SPVs) owned by New York Digital Investment Group (NYDIG) 107 .8 million dollars owed and that they will default on the loans.
“The companies [structured as SPVs] owe it to them [NYDIG] the money, do not have the ability to repay them.
The value of these machines is now well below the value of the outstanding debt, and the cash flow generated by these machines is insufficient to service their debt financing obligations.
As a result, the group made the decision not to provide financial support and the lender is now authorized to collect these machines themselves.”
The report further quotes Roberts as saying that Iris Energy’s borrowing subsidiaries, rather than the parent company, are serving the business well for the time being.
“We’re being dealt the cards we have and all we can do is prevent future problems, which is what we’ve been doing around the world [SPV] debt facilities by shielding them. We are still very excited about the business and the industry.”
Iris Energy also owes $75 million in upfront payments to crypto mining equipment maker Bitmain. The report states that earlier this month, Iris Energy said it failed to make some recent payments to Bitmain and did not make expected pending payments under the same contract.
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