But Iris is at the beginning of what is expected to be a rapid rise in computing power, which is expressed in the bitcoin world as exahashes (EH / s) per second. In the March quarter, Iris had 0.8 EH / s, but expects to reach 10 EH / s early next year before reaching its final target of 15 EH / s by the end of that year.
To get there, Iris has or will build four data centers (three in the Canadian province of British Columbia and one in Texas) that run on renewable energy. At a bitcoin price of $ 40,000, Iris believes it can generate $ 505 million in profits with 10 EH / s and $ 761 million at 15 EH / s.
Roberts is delighted with the progress the Iris Infrastructure Veterans team is making. But the fall in the price of bitcoin is not easily ignored. Will Iris’ economy continue to grow?
“We can overcome volatility”
Roberts is confident. First, the cost of producing Iris for bitcoin in recent months has been between $ 8000 and $ 8500, so theoretically bitcoin could fall much further before its profitability is threatened.
Second, the data center it is building in Texas, which will account for 63 percent of its computing power, will have 30 to 40 percent lower energy costs than its other sites, further reducing its production cost.
Third, the fall in the price of bitcoin is likely to force other bitcoins miners with higher energy costs to exit the market; fewer miners on the market means Iris will get most of the bitcoins mined every 10 minutes.
“We look at the profitability of our operations, the operating levers we can pull off if bitcoin has a prolonged downturn,” says Roberts. “We are a real asset business, we are very profitable, we can withstand volatility and be here when the good times are over.”
Roberts argues that it is important to separate the fall of stable currencies that have panicked in the cryptocurrency markets in the last days of bitcoin. Stable coins, he says, are early-stage experiments that should be treated as such. Bitcoin, on the other hand, “has been a finished product for decades” and offers much greater protection in terms of its security levels and the fact that only 21 million coins will be mined.
Roberts says a period of “creative destruction” in cryptography could be healthy in the long run, just as it used to be for economies.
“It’s a very efficient innovation environment, and no doubt when you have these moments of discovery about asset values and those innovations, and you have a downturn, that wash is really beneficial to the industry because you restart. People take stock again. of what it has value, why it has value, and you can rebuild it sustainably. “
Right now, it looks like a very optimistic outlook. Roberts can distinguish between the more speculative parts of the crypto world and bitcoin, but how many other investors will be willing to do the same?
The big question for stable currencies is how far the contagion is spreading. Losses on investments in their stable currency portfolios have already spilled over into more established bitcoins and other digital assets. Do cryptographic losses also spill over into stocks?
Retail cryptocurrencies are likely to be the hardest hit. But it’s hard to see institutional investors delving into the rescue of cryptocurrencies the way they could intervene to buy overdue stocks – most professional investors have more than enough volatility in their stock portfolios and won’t want to add more.
Roberts and Iris could eventually offer a testament to the institutional appetite for the industry. Iris has secured $ 750 million of the $ 1 billion in capital it needs to reach 15 EH / s, but will have to take advantage of debt markets to raise more funds.
Roberts is confident that a debt-free balance sheet, a solid free cash flow and a record capital increase will help Iris convince true believers to support the company’s growth. “It’s a challenging macro environment, and we respect that. But still, I think we’ve put ourselves in a very good position.”
Will the market recognize it? The speed with which turbulence is spreading through cryptography right now makes this impossible to answer.