Yosemite keeps restarting or going into grey screen

I have an iMac from 2011 and I have installed Yosemite as soon as it was released, without any issues before this one.

Here is what happened: it has suddenly shut itself off, after turning it on, it goes into the loading screen, loads to about half of the loading bar and restarts itself, this happens in a loop. I have tried internet recovery. After choosing the network, connecting, and going through the loading screen, the screen becomes grey. Same thing when I try recovery mode or when I boot from external usb device. I am able to enter the verbose mode and I was able to do system check, which did not find any issues.

Not sure what to do and whether this is a hardware or a software problem.