The energy spreading transform (EST) has recently been proposed as a technique for the multiple input and multiple output (MIMO) fading channels, ending up with an EST-based iterative detection scheme for MIMO systems. In this paper, we develop a novel concept of capacity with iterative detection, which enables us to evaluate the contribution of the iterative data processing employed in this MIMO scheme to the achievable rate region. We then discuss the diversity gain of the EST-based MIMO system. In particular, we address the case where a technique of data rate adaption to signal-to-noise ratio (SNR) is employed, given that the achievable rate increases with the increment of SNR. Some simulation results are also given to demonstrate the theoretical results obtained in this paper.