As the raging price of Bitcoin seemingly has no upside limit, an increasing number of people who ruefully stood by on the sidelines are now becoming captivated with cryptocurrencies. Defying logical expectations, robust increases in valuation only appear to attract further speculation. That’s why ardent crypto bulls are shrugging off the latest volatility in BTC prices, convinced that the crimson tide is only setting up a much larger rally.
But is that truly the case? While double-digit losses over a short span are nothing new to Bitcoin, incurring such pain is not a desired outcome. Further, myriad risk factors that have dogged the crypto narrative simply don’t exist in the traditional equities market. For instance, lost passwords represent a stomach-churning way of losing capital.
Decentralization, as it turns out, is a seductive temptress, enticing investors with its confidentiality but weaponizing such discretion with no stronger a catalyst than an innocent memory lapse.
Understandably, many investors are not ready to venture into the unique administrative risks that cryptos present. For these folks, the concept of engaging crypto-mining firms like Iris Energy Limited makes much more sense. With its upcoming initial public offering (IPO), the crypto curious have more avenues to participate.
When Is the Iris Energy Limited IPO Date?
Although Iris Energy doesn’t command dollar-wise the biggest public market debut for the week beginning Nov. 15, it may be attracting the most eyeballs. Prior to the recent fallout in Bitcoin, the original crypto that started it all was on the cusp of breaking the $70,000 threshold. As BTC nimbly scales ever larger walls of worry, fewer people have reservations.
Of course, that’s exactly when astute investors should be concerned. As legendary investor Warren Buffett pointed out, one should be fearful when others are greedy and greedy when others are fearful. Further, research from the University of Wisconsin, Madison notes 2 disturbing findings: many investors are financially illiterate, and speculative dynamics can temporarily drive a wedge between price and fundamental value.
Therefore, with Iris Energy about to make its mark on the IPO calendar on Nov. 17, it’s 100% crucial to separate the buzz surrounding crypto-related investments with sound, financially strategic principles.
Still, for the risk-tolerant trader, Iris may offer a profitable opportunity. Initially, management disclosed the terms of the IPO, with intentions to distribute 8.27 million shares at a price range between $25 and $27. However, on Nov. 16, the company finalized the initial offering price at $28, thus setting the stage for a near $232 million raise.
Again, while Iris doesn’t command the biggest deal relative to other public market debutantes, it is one of the largest IPOs among crypto-mining firms. Financial powerhouses JPMorgan Chase & Co. (NYSE: JPM), Canaccord Genuity Group Inc. (PINK: CCORF), Citigroup Inc. (NYSE: C), Macquarie Capital Ltd (PINK: MQBKY) and Cowen Inc. (NASDAQ: COWN) represent the deal’s joint bookrunners. Shares will trade on the Nasdaq exchange under the ticker symbol IREN.
In terms of timing, IREN stock will make its entrance in the public arena at an intriguing juncture. As Reuters pointed out earlier this year near the halfway mark, IPOs were already charging on a record pace. More recent data suggests that these fresh-faced public entities will ultimately smash attendance records, so to speak.
While the dynamic bodes well for IREN stock on some levels, the wave of new opportunities mathematically means that — due to the scarcity principle — several companies will fail to attract sustained investor capital. Further, Bitcoin’s volatility couldn’t have come at a worse time as it may have induced sobriety among previously ramped-up speculators.
Iris Energy Financial History
As Benzinga contributor Johnny Rice mentioned recently, crypto-industry experts estimate that to mine 1 Bitcoin requires 1,500 kilowatt-hours (kWh) of electricity. That, according to Rice, “is more than the average U.S. home uses in 53 days.”
Over a 1-year period, the global Bitcoin network “consumes 100 terawatt-hours (TWh) of electricity a year,” equivalent to what Sweden consumes during the same span. Naturally, as crypto valuations and engagement rises exponentially, the topic of environmental sustainability must take center stage.
Sure enough, this ethos of responsibility is the driving force behind IREN stock. Founded in 2018, the Sydney, Australia-based Iris Energy offers a 3-fold commitment to ethical Bitcoin mining, supporting local communities where its data centers are located, incorporating a renewable-energy-dominant mix for its operations and instilling a culture of principled governance.
On paper, IREN stock appears to be a win-win, facilitating exposure to one of the hottest sectors on Wall Street while minimizing social and environmental impact. Nevertheless, it’s too early to grant Iris Energy or any other crypto miner environmental, social and governance (ESG) status.
As The New York Times points out, the rapid development within the underlying blockchain arena — or the decentralized network architectures from which cryptos originate — quickly obsolesces highly specialized mining equipment. Unfortunately, this circumstance translates to burgeoning IT equipment waste, which also contain toxic materials. No renewable energy platform has a solution for this consequence.
To be fair, the benefit to buying IREN stock is that you’re acquiring equity in an actual enterprise. In contrast, a cryptocurrency is a unit of account of its underlying blockchain network. Moreover, you don’t own a crypto coin in the traditional, intuitive sense. Rather, you own access to it, which is why protecting your private keys is vital.
On the flipside, IREN stock is an equity unit, and human institutions — to which you have recourse — recognize your ownership. But is IREN specifically a worthwhile investment?
Over the trailing 12 months ending Sept. 30, 2021, Iris generated $17 million in revenue. With what IREN stock is commanding in value, many investors may argue that this is a rich premium. Further, the company’s prospectus filed with the U.S. Securities and Exchange Commission (SEC) reveals hefty net losses in the year ending June 30, 2021.
Iris Energy Potential
Both the potential and the pitfall of IREN stock points to a single controversial concept: the intrinsic value of cryptocurrencies. Unlike a coffee bean, which intrinsically offers caffeine — the world’s most popular psychoactive substance — as its calling card, a crypto coin in and of itself has no value.
Of course, this lends Bitcoin and its ilk to extreme bouts of volatility. However, volatility is a necessity for speculators who desire outlandish gains that are virtually impossible to accrue trading the traditional equities market. As the University of Wisconsin, Madison paper demonstrated, perhaps no more powerful market catalyst exists than unbridled human emotion.
But will Bitcoin’s trajectory support IREN’s lofty premium? Independent research indicates that, on an average annual basis, Bitcoin’s long-term trend line resembles an asymptotic exponential equation; that is, as BTC rises in price, the ability for bullish investors to spark the sizable returns of the past diminishes exponentially. Therefore, entering the Bitcoin market at this stage of the game presents an unfavorable profile of higher risk and lower potential of reward.
Should Bitcoin correct — and that is the chief concern as BTC has frequently touched below the $60,000 level — Iris Energy’s business model could take a severe, possibly crippling beating. Like any enterprise, if the cost of doing business consistently exceeds revenues generated, most investors will not stick around for the finale.
How to Buy Iris Energy IPO (IREN) Stock
With IREN stock ready to launch soon, interested investors must acquire shares at the open. If you don’t know how to buy stocks, follow these steps.
Step 1: Pick a brokerage.
Modern brokerages offer similar cost incentives, so narrow the list of best brokers to those that ideally suit your needs.
- Best For:Active and Global TradersSecurely through Interactive Brokers’ website
- Best For:Beginnerssecurely through Robinhood's website
- Best For:Futures Tradingsecurely through TradeStation's website
- Best For:Experienced Traderssecurely through Freedom Finance's website
Step 2: Decide how many shares you want.
All IPOs are risky, particularly crypto-related ones. Mitigate potential downside by trading with a balanced share count.
Step 3: Choose your order type.
Before trading, learn these market concepts.
- Bid: The buyer’s best offer for a stock.
- Ask: The seller’s lowest acceptable price.
- Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers.
- Limit order: Buy or sell requests at a predetermined price, limit orders provide transparency but no execution guarantees.
- Market order: Market orders guarantee fulfillment but only at the current rate.
- Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders only leave positions at a specified price, but they also carry non-fulfillment risks.
Step 4: Execute your trade.
Follow these steps to execute a market order:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
IREN Restrictions for Retail Investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating. Don’t trade stocks in which you have privileged (non-public) information.
Open an account with ClickIPO to gain access to select pre-IPO shares or new issues at their initial offering price.
Think Before You Decentralize
Given the many factors that can go wrong with direct crypto ownership, IREN stock offers an attractive alternative. Rather than trading on the whims of collective emotions, you can acquire equity in a real enterprise. Still, the crypto complex’s volatile nature is rearing its ugly head right now, posing concerns for Iris Energy.
Disclosure: The author holds a long position in Bitcoin.
About Joshua Enomoto
His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.