Iris Energy Ltd. received a downbeat reception on Wall Street on Wednesday, as the Australia-based bitcoin miner’s stock opened even with its initial public offering price, then quickly fell below it.
The company had appeared to set up for a good start, after saying overnight that its IPO priced at $28 a share, above the expected range of between $25 and $27 a share. And early indications suggested an open for the stock in the $29 to $30 range, but that started to slip ahead of the open.
The stock’s IREN, -12.68% first trade on the Nasdaq was at $28.00 at 11:44 a.m. Eastern for 882,136 shares, but it didn’t hold the IPO price for long. After falling as much as 23% in the afternoon, shares closed at $24.45, down nearly 13% on the day, before dropping another 3% in after-hours trading.
The disappointing open came on a relatively tough day for IPOs, as the Renaissance IPO exchange-traded fund IPO, -1.35% dropped 1.2% in afternoon trading while the S&P 500 index SPX, -0.26% slipped just 0.2%. Meanwhile, bitcoin BTCUSD, +0.39% eased 0.2%.
Iris Energy raised $231.5 million, as it sold 8.27 million shares in the IPO. With about 55.45 million shares outstanding expected after the IPO, the current stock price valued the company at about $1.37 billion, down from $1.55 billion at the IPO price.
The company is a bitcoin miner, but not a holder.
“We have been mining bitcoin since 2019,” the company said in a filing with the Securities and Exchange Commission. “We liquidate all the bitcoin we have mined and therefore do not have any bitcoin held on our balance sheet as of September 30, 2021.”
The company estimates the market for bitcoin mining BTCUSD is approximately $16 billion in 2021.
As of Sept. 30, Iris said a successful bitcoin miner earns a block reward of 6.25 bitcoins plus transaction fees for each block added to the blockchain, which occurs about every 10 minutes. That equates to 52,560 blocks, or 328.500 bitcoins per year, excluding transaction fees.
Iris said the block reward is programmed to halve to 3.125 bitcoin by approximately mid-2024.
Iris reported a net loss of A$79.7 million ($57.6 million) on bitcoin mining revenue of A$10.4 million ($7.5 million) in the year ended June 30, after a loss of A$3.4 million on revenue of A$3.3 million in the same period a year ago.
The company had A$118.6 million ($85.7 million) in cash and cash equivalents as of Sept. 30. the
The company listed nine underwriters of the IPO, with J.P. Morgan, Canaccord Genuity and Citigroup the lead book runners.