First, they damage the RBC membrane, resulting in intramedullary hemolysis, or RBC breakdown in the bone marrow; or extravascular hemolysis, when RBCs are destroyed by macrophages in the spleen.
The most important one, and the one that most researchers agree upon, involves dysregulation of iron homeostasis and the signals that control RBC production.
And a consequence of hypoxia is that it signals the bone marrow, as well as extramedullary tissues like the liver and spleen, to increase production of RBCs.