Crypto-friendly financial institution ends loans backed by crypto mining rigs

The holding firm for the crypto-friendly financial institution, BankProv, has revealed it’s not offering loans secured by cryptocurrency mining rigs after writing off $47.9 million in loans primarily secured by them all through 2022.

Based on a Jan. 31 submitting with the US Securities and Alternate Fee (SEC), BankProv has already practically halved the proportion of its digital asset portfolio consisting of rig-collateralized debt because the quarter ending Sep. 30, 2022.

The financial institution held $41.2 million in digital asset-related loans as of Dec. 30 final yr consisting of $26.7 million price of loans collateralized by crypto mining rigs which “will proceed to say no because the Financial institution is not originating this sort of mortgage”.

The crypto mining business has taken on large quantities of debt through the 2021 bull market, usually providing up mining rigs they personal as collateral with a view to decrease their rates of interest.

Liabilities of the highest ten publicly listed crypto mining companies in accordance with current monetary statements. Supply: Luxor Applied sciences

The following bear market beginning in 2022 resulted in robust situations for miners, nonetheless, and lots of have been compelled to promote the Bitcoin (BTC) mining rigs they personal with a view to cowl working prices, inflicting mining {hardware} costs to plummet.

Associated: Bitcoin miner Greenidge cuts NYDIG debt from $72M to $17M

Regardless of the falling costs, some banks who had issued mining rig-collateralized debt have been compelled to repossess a few of the miners used as collateral.

Based on a earlier SEC submitting, BankProv repossessed mining rigs in change for the forgiveness of $27.four million in loans on Sep. 30, 2022, which resulted in an $11.three million write-off for the agency.

The losses probably contributed closely to its determination to cease issuing some of these loans, with Carol Houle, the CFO of its holding firm Provident Bancorp, noting:

“As we replicate on 2022, we’re desperate to take its classes and emerge a greater, stronger financial institution. Regardless of our 2022 losses, we enter 2023 effectively capitalized and effectively diversified.”

You May Also Like

Leave a Reply

Your email address will not be published. Required fields are marked *