• The holding company for the crypto-friendly bank, BankProv, revealed it is no longer providing loans secured by cryptocurrency mining rigs after writing off $47.9 million in loans primarily secured by them throughout 2022.
• BankProv held $41.2 million in digital asset-related loans as of Dec. 30 last year, consisting of $26.7 million worth of loans collateralized by crypto mining rigs.
• Crypto miners sought loans to expand during the 2021 bull market, often offering up mining rigs they own as collateral in order to lower their interest rates.
The holding company for the crypto-friendly bank, BankProv, has revealed that it will no longer provide loans secured by cryptocurrency mining rigs. This comes after the bank wrote off $47.9 million in loans primarily secured by them throughout 2022.
BankProv’s decision to end this type of loan follows a period of bullishness in the crypto market in 2021. During this time, crypto miners sought to expand their operations by taking out loans, many of which were backed by mining rigs they owned. This was done in order to lower their interest rates.
However, market conditions in 2022 proved difficult and the bank wrote off $47.9 million in loans primarily secured by crypto mining rigs. As a result, BankProv has nearly halved the proportion of its digital asset portfolio consisting of rig-collateralized debt since Sep. 30, 2022.
As of Dec. 30 last year, BankProv held $41.2 million in digital asset-related loans, consisting of $26.7 million worth of loans collateralized by crypto mining rigs. Going forward, the bank will no longer originate this type of loan and the amount of debt collateralized by rigs will continue to decrease.
The top ten publicly listed crypto mining firms have also taken on huge amounts of debt in recent times. According to financial statements, the liabilities of these firms have been increasing significantly, highlighting the challenges that the industry has faced in recent years.
It remains to be seen if BankProv’s decision to end loans secured by crypto mining rigs will have a positive or negative impact on the industry. However, it is clear that the bank is no longer willing to take the risk associated with these types of loans and has chosen to focus on other areas instead.