With Bitcoin’s highly anticipated “halving” event only 6 months away, Canada-based Bitcoin mining firm Iris Energy has announced another major expansion to its computer fleet.
On Friday, the company confirmed that its total hashrate has increased by 25% from 5.6 exahashes per second (EH/s) to 7.0 EH/s, by adding 7,000 of Bitmain’s newest S21 miners to its fleet. The addition cost the company $19.6 million.
“The purchase is expected to be funded from existing capital sources, including cash in bank (~$64 million, no debt), operating cash flow and other recently disclosed funding programs,” the company said in a press release.
“Hashrate” refers to the number of hashes—or guesses—that miners can generate to solve a complex mathematical problem required to create Bitcoin’s next block. An exahash is equivalent to one quintillion hashes.
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The first miners to build each block are rewarded with freshly minted BTC. The faster miners can produce hashes, the more BTC they earn, and the more revenue they generate. So increasing hashrate ups the chances that a company will win that race each time there’s a new block on the network.
"Our expectations are that the halving might place near-term pressure on miners with less efficient fleets, high operating costs, or debt burdens, and you will note that we have positioned ourselves to ensure we are one of the most efficient and competitive businesses in the industry," Iris Energy co-founder and co-CEO Daniel Roberts told Decrypt. “We all know what has happened to the price of Bitcoin after previously halving events, so equally are positioning ourselves for that potential upside.”
Following the announcement, shares of Iris—which trade on the NASDAQ under the IREN ticker—popped 9.5%.
Back in June, Iris revealed plans to expand its capacity to 9.1 EH/s by early 2024. That target has now been bumped to 9.4 EH/s, while the firm “continues to monitor the market for additional hardware acquisition opportunities.”
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After the machines ship in early 2024, miner economics are expected to drastically change in light of the April 2024 halving. The halving is a regularly scheduled event that will reduce miners’ guaranteed BTC rewards per block from 6.25 BTC to 3.125 BTC.
On one hand, this may make mining a less sustainable business, meaning only the most cost-efficient firms will be able to compete in the industry. On the other, many view the halving as a catalyst for Bitcoin bull markets, which may ultimately make the industry more profitable in dollar-denominated terms.
Other major mining firms including Blockstream, Riot, CleanSpark, and others have announced major expansion plans this year, often with explicit reference to the Bitcoin halving.
“We are optimistic about halving and hold to the view that as the supply of Bitcoin decreases, its price will increase—this is one reason why we have dramatically increased our HODL balance over the last few months." Cleanspark chief communications officer Isaac Holyoak tells Decrypt. "We are also operational realists and are thus preparing for a variety of scenarios."
In terms of miner economics, he acknowledged that the halving could threaten profitability for many operators.
"Only those with the lowest-cost power and most efficient machinery will survive," Holyoke said. "We are preparing for that scenario by building one of the most efficient fleets that we know of, clearly outpacing average network efficiency."
"If Bitcoin’s price action gets grumpy, we’ll be just fine," he added.
