  Hyperhoneycomb iridate $\beta$-Li$_2$IrO$_3$ is a three-dimensional analogue
of two-dimensional honeycomb iridates, such as $\alpha$-Li$_2$IrO$_3$, which
recently appeared as another playground for the physics of Kitaev-type spin
liquid. $\beta$-Li$_2$IrO$_3$ shows a non-collinear spiral ordering of
spin-orbital-entangled $J_{\rm eff}$ = 1/2 moments at low temperature, which is
known to be suppressed under a pressure of $\sim$2 GPa. With further increase
of pressure, a structural transition is observed at $P_{\rm S}$ $\sim$ 4 GPa at
room temperature. Using the neutron powder diffraction technique, the crystal
structure in the high-pressure phase of $\beta$-Li$_2$IrO$_3$ above $P_{\rm S}$
was refined, which indicates the formation of Ir$_2$ dimers on the zig-zag
chains, with the Ir-Ir distance even shorter than that of metallic Ir. We argue
that the strong dimerization stabilizes the bonding molecular orbital state
comprising the two local $d_{zx}$-orbitals on the Ir-O$_2$-Ir bond plane, which
conflicts with the equal superposition of $d_{xy}$-, $d_{yz}$- and $d_{zx}$-
orbitals in the $J_{\rm eff}$ = 1/2 wave function produced by strong spin-orbit
coupling. The results of resonant inelastic x-ray scattering (RIXS)
measurements and the electronic structure calculations are fully consistent
with the collapse of the $J_{\rm eff}$ = 1/2 state. A subtle competition of
various electronic phases is universal in honeycomb-based Kitaev materials.
