mining rigs

Iris Energy to nearly triple hash rate with estimated 44,000 new BTC miners

With the tough conditions that faced Bitcoin miners last year, Iris’ co-founder said the purchase was a “significant milestone” for the company.

Australia-based Bitcoin (BTC) mining company Iris Energy has revealed it will nearly triple its mining capacity with the addition of thousands of mining rigs.

On Feb. 13 the firm said it purchased an additional 4.4 exahashes per second (EH/s) worth of Bitmain Antminer S19j Pro ASIC miners, bringing its self-mining capacity to 5.5 EH/s from 2.0 EH/s.

Based on the S19j Pro’s maximum hash rate of 100 terahashes per second (TH/s), the purchase adds an estimated 44,000 miners to its fleet, according to Cointelegraph’s calculations.

Daniel Roberts, Iris’ co-founder and co-CEO, said the purchase “is a significant milestone” for the company, adding it has been a “challenging period for both the industry and markets more generally.”

Iris said the new miners will be installed in the company’s centers but did not mention in which locations. The firm operates three facilities in various locations in British Columbia, Canada and one in Texas in the United States.

*Iris’ flagship site in Mackenzie, British Columbia. Source:* *Iris Energy*

The company used $67 million of remaining prepayments to ASIC miner manufacturer Bitmain to fund the purchase of the rigs “without any additional cash outlay.”

Iris had a 10 EH/s contract with Bitmain which it says “have been fully resolved, with no remaining commitments.” It stated it remains debt free.

The firm said it’s also considering options to sell surplus miners above its 5.5 EH/s of mining capacity to re-invest the funds.

Last November the company was forced to unplug miners used as collateral on a $107.8 million loan, as the units were producing “insufficient cash flow to service their respective debt financing obligations.”

Over the past few months, cryptocurrency miners have been squeezed from multiple directions, having to confront low Bitcoin prices amid high hash rates, high mining difficulty and high energy prices.

The pressure caused publicly listed Bitcoin mining companies to sell off almost all of the BTC mined throughout 2022 with data from blockchain research firm Messari showing Iris sold around 100% of the nearly 2,500 BTC it mined that year.

A February analysis from Hashrate Index shows that publicly listed miners increased their production in January with better weather and stable electricity prices helping the production surge. Iris’ January production resulted in 172 BTC, compared to 123 BTC in December.

Crypto-friendly bank ends loans backed by crypto mining rigs

After a bullish 2021, crypto miners sought loans to expand, which backfired following difficult market conditions in 2022.

The holding company for the crypto-friendly bank, BankProv, has revealed it is no longer providing loans secured by cryptocurrency mining rigs after writing off $47.9 million in loans primarily secured by them throughout 2022.

According to a Jan. 31 filing with the United States Securities and Exchange Commission (SEC), BankProv has nearly halved the proportion of its digital asset portfolio consisting of rig-collateralized debt since Sep. 30, 2022.

The bank held $41.2 million in digital asset-related loans as of Dec. 30 last year, consisting of $26.7 million worth of loans collateralized by crypto mining rigs, which “will continue to decline as the Bank is no longer originating this type of loan.”

The crypto mining industry has taken on huge amounts of debt during the 2021 bull market, often offering up mining rigs they own as collateral in order to lower their interest rates.

*Liabilities of the top ten publicly listed crypto mining firms according to recent financial statements. Source:* *Luxor Technologies*

The subsequent bear market starting in 2022 resulted in tough conditions for miners, and many were forced to sell the Bitcoin (BTC) mining rigs they owned to cover operating costs, causing mining hardware prices to plummet.

Despite the falling prices, some banks that had issued mining rig-collateralized debt were forced to repossess some of the miners used as collateral.

According to a previous SEC filing, BankProv repossessed mining rigs in exchange for the forgiveness of $27.4 million in loans on Sep. 30, 2022, which resulted in an $11.3 million write-off for the firm.

The losses likely contributed heavily to its decision to stop issuing these types of loans, with Carol Houle, the chief financial officer of its holding company Provident Bancorp, noting:

“As we reflect on 2022, we are eager to take its lessons and emerge a better, stronger bank. Despite our 2022 losses, we enter 2023 well capitalized and well diversified.”

Largest Ether mining pool Ethermine opens new ETH staking service

The new service offers Ethermine members a chance to collectively stake their ETH and earn 4.43% interest annually on top of their ETH deposits. As little as 0.1 ETH ($159) required to enter.

Ahead of the rapidly approaching Ethereum Merge on Sept. 15, Ethermine, the world’s largest Ether (ETH) mining pool has unveiled a new staking pool for users. Notably, however, it is not available to United States miners

The new service, offered via Bitfly, enables Ethermine members to collectively stake their ETH and earn interest on top of their deposits. As little as 0.1 ETH, or $159 at the time of writing, is required to enter. However, the smaller the holding, the greater the fee. The platform is currently offering stakers an annual ETH interest rate of 4.43%.

At the time of writing, 393 ETH, worth roughly $626,000 at current prices, has been invested into Ethermine’s new pool.

Staking pools such as these hold significance, as they offer competitive interest rates and lower barriers of entry than solo staking as node operators, which requires at least 32 ETH, or around $51,000, to operate a node. In comparison to Ethermine’s interest rate, staking via the Ethpool on Bitfly as a node operator garners an annual interest rate of 4.6%.

The switch to offer to stake is something of a pivot for Ethermine which currently operates as a multi-currency mining pool, allowing users to mine ETH, Zcash (ZEC), Ethereum Classic (ETC), Beam (BEAM), Ravencoin (RVN) and Ergo (ERGO).

After the merge, ETH mining will be phased out as the network changes from a proof-of-work (PoW) mining model to a proof-of-stake (PoS) staking model.

At the time of writing, there are 222,657 active miners on Ethermine that account for a combined hash rate of 261.1 terra hashes per second (TH/s). After Sept. 15, the pool will only continue to support the PoW mining of ETC, RVN, ERGO and BEAM.

End of the mining era

Miner dashboards will have a Merge countdown clock and miners can keep mining ETH up until the timer hits zero.

ETH miners will soon be replaced with PoS validators, which could help cut the ETH network consumption by 99%.

However, some in the ETH miner community have pushed to keep the current PoW consensus mechanism because the shift will make their high powered and costly mining rigs redundant.

Other high-profile members of the crypto community have also been critical, arguing the changes will cause negative impacts beyond the loss of mining.

The current PoW system is an energy-intensive process where miners harness large amounts of computer power to solve complex puzzles, validate transactions and earn ETH rewards.

Under the PoS model, participants or validators lock up set amounts of cryptocurrency in a smart contract on the blockchain; their stake helps secure and decentralize the network.