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.
According to a Jan. 31 submitting with the USA Securities and Alternate Fee (SEC), BankProv has almost halved the proportion of its digital asset portfolio consisting of rig-collateralized debt since Sep. 30, 2022.
The financial institution held $41.2 million in digital asset-related loans as of Dec. 30 final 12 months, consisting of $26.7 million value of loans collateralized by crypto mining rigs, which “will proceed to say no because the Financial institution is not originating this kind of mortgage.”
The crypto mining trade has taken on large quantities of debt throughout the 2021 bull market, typically providing up mining rigs they personal as collateral as a way to decrease their rates of interest.
The following bear market beginning in 2022 resulted in powerful situations for miners, and plenty of have been compelled to promote the Bitcoin (BTC) mining rigs they owned to cowl working prices, inflicting mining {hardware} costs to plummet.
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Regardless of the falling costs, some banks that had issued mining rig-collateralized debt have been compelled to repossess a number of the miners used as collateral.
According to a earlier SEC submitting, BankProv repossessed mining rigs in alternate for the forgiveness of $27.4 million in loans on Sep. 30, 2022, which resulted in an $11.3 million write-off for the agency.
The losses seemingly contributed closely to its choice to cease issuing all these loans, with Carol Houle, the chief monetary officer of its holding firm Provident Bancorp, noting:
“As we mirror on 2022, we’re desirous to take its classes and emerge a greater, stronger financial institution. Regardless of our 2022 losses, we enter 2023 effectively capitalized and effectively diversified.”