Iris Energy is shutting down 3.6 Exahashes/second of mining capacity after it defaulted on a loan of $108M.

Iris Energy (NASDAQ: IREN), the Australia-based bitcoin mining firm, said in a filing that it had taken down a large chunk of its mining capacity that had been used as collateral for a loan of $107.8 million. Iris defaulted on the said loan because the operation did not produce cash flow enough to service the loan obligations. The development is symptomatic of the financial stress prevalent in the digital assets market after a severe bear market led to the insolvencies of many key players including FTX, Voyager Digital, and Celsius. (Beincrypto)

Iris therefore intends to not pay off the loans and presumably, the mining hardware that has been decommissioned would be sold off. According to the agreement with the lender, the company will shutter the facilities housing the equipment.

However, Iris intends to continue to operate 1.1 EH/s of mining power that is unliened, and further, it will deploy an additional 1.3 EH/s of capacity. It may also utilize $75 million of prepayments made to Bitmain in respect of an additional 7.5 EH/s of contracted miners for further self-mining.

Furthermore, alongside the decline in the crypto market and the crash in bitcoin prices, mining firms are facing a perfect storm of other problems including rising costs of energy and hardening interest rates. In an uncomfortable trend, the Production Cost Floor of producing bitcoin has been rising steadily and if the price of BTC falls below this level, it will make no sense to continue mining operations.

This could precipitate more bankruptcies.

Capriole Fund founder Charles Edwards warned Monday that he was observing the most aggressive miner selling in almost 7 years, and that it was up 400% in just 3 weeks.

Many more miners would go belly-up unless crypto prices recover, Edwards said.

At the time of writing the price of bitcoin was $15,729.99, down nearly 73% over 12 months.

Iris Energy closed Monday at $1.55, down over 93% over 12 months.

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