B Riley to Take $100 Million Equity Stake in Publicly Listed Bitcoin Miner Iris Energy

Source: AdobeStock / phonlamaiphoto

 

Publicly traded sustainable Bitcoin (BTC) mining firm Iris Energy has signed a deal with investment bank B. Riley Financial per which the latter can buy up to $100 million in equity over the next two years.

According to the filing with the US Securities and Exchange Commission (SEC), B. Riley can buy up to 25 million Iris Energy shares over two years starting with September 23, stating that, 

“Such shares would represent approximately 31.3% of outstanding Ordinary shares as of September 1, 2022.”

The company expected to issue 198,174 shares to B. Riley “as consideration for its irrevocable commitment” to purchase more shares.

The agreement will automatically terminate after the 24-months period. 

The filing stated that,

We intend to use any proceeds from the Facility to fund our growth initiatives (including hardware purchases and acquisition and development of data center sites and facilities), and for working capital and general corporate purposes.

The company did warn of certain risks, though, stating that it is impossible to predict how many ordinary shares, “if any”, Iris Energy will sell under this agreement to B. Riley, or the actual gross proceeds resulting from those sales, it said. 

Furthermore, the price of shares may fall in the future, and there are risks associated with taxation, regulation, third parties, and the crypto market. 

Additionally, it noted, B. Riley may not necessarily agree with all decisions possibly made in the future, stating: 

“We may use proceeds from sales of our Ordinary shares made pursuant to the Purchase Agreement in ways with which you may not agree or in ways which may not yield a significant return.”

The move by the company would suggest that there is still an interest by certain traditional finance (TradFi) companies in bitcoin and the mining sector – despite the persistent bear market. And this is not B. Riley’s only investment in this particular sector either. 

In late July this year, Core Scientific, one of the largest publicly traded blockchain data center providers and miners of digital assets in North America, announced that it entered into a $100 million common stock purchase agreement with B. Riley.

It said that, under their agreement, “Core Scientific has the right, without obligation, to sell and issue up to $100 million of shares of its common stock to B. Riley, subject to certain limitations and satisfaction of certain conditions,” and that “purchase notices may be issued to B. Riley over a 24-month period.”

Meanwhile, Iris Energy (IREN) stock price dropped more than 9%, as seen today, to USD 3.67. At the same time, Core Scientific (COTZ) stock price is down nearly 5%, trading at USD 1.43. 

This is not anything new, given that the price of BTC has been down this year, and with it, the miner profits also fell.

The price of BTC at 10:00 UTC on Monday morning was $19,130, unchanged in a day and down nearly 2% in a week. Over the past month, it fell nearly 6%. 

BTC 30-day price chart. Source: coingecko.com

At the same time, the network’s hashrate – or computing power that goes into mining new coins – has been consistently climbing. Since the beginning of this year, it’s up almost 31%. 

Bitcoin hashrate, simple moving average, 7-day simple moving average, 1-year chart. Source: bitinfocharts.com 

Meanwhile, another player in this space,  Bitcoin mining hosting firm Compute North, filed for chapter 11 bankruptcy last week. 

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