BankProv, a crypto-friendly banking 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 is already nearly halved Percentage of digital asset portfolio comprised of rig-backed debt since the quarter ended 30 September 2022.
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. are not making this type of loan and will continue to decline.”
The crypto mining industry huge amount of debt In the 2021 bull market, people often pledge their mining rigs as collateral to lower interest rates.
However, the ensuing bear market that began in 2022 created a tough situation for miners, and many were forced to sell Bitcoin (Bitcoin) mining rigs owned to cover operating costs, Why mining hardware prices are plummeting.
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Despite the drop in prices, some banks that issued debt backed by mining rigs were forced to remand some of the miners used as collateral.
According to previous SEC filings, BankProv reclaimed It offered mining rigs 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 use the lessons learned to become a better, stronger bank. Then we enter 2023.”