BankProv, a crypto-friendly bank holding company, has revealed that it will no longer offer loans secured by crypto mining rigs after writing off $47.9 million in loans secured primarily by them through 2022. bottom.
According to a Jan. 31 filing with the U.S. Securities and Exchange Commission (SEC), BankProv has already nearly halved the proportion of its digital asset portfolio consisting of rig-backed debt since the quarter ending Sept. 30, 2022. I’m here.
The bank had $41.2 million in digital asset-related loans as of December 30 last year, consisting of $26.7 million worth of loans secured by cryptocurrency mining equipment. have not initiated this type of loan and will continue to decline.”
The crypto mining industry is heavily indebted during the 2021 bull market, and they often pledge their mining rigs as collateral to keep interest rates down.
However, the ensuing bear market that began in 2022 created a tough situation for miners, with many forced to sell their bitcoin (BTC) mining rigs to cover operating costs, leading to a shortage of mining hardware. Prices plummeted.
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Despite the drop in prices, some banks that had issued mining rig collateral debt were forced to remand some of the miners used as collateral.
According to previous SEC filings, BankProv remanded the mining rig in exchange for a $27.4 million loan forgiveness on September 30, 2022, resulting in the company writing off $11.3 million.
The loss likely contributed significantly to the decision to stop issuing this type of loan, said Carol Hall, CFO of holding company Provident Bancorp.
“As we look back on 2022, we are eager to apply its lessons to become a better and stronger bank. Then we enter 2023.”