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.
In accordance with a Jan. 31 submitting with the US Securities and Alternate Fee (SEC), BankProv has already almost halved the proportion of its digital asset portfolio consisting of rig-collateralized debt for the reason that 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 value of loans collateralized by crypto mining rigs which “will proceed to say no because the Financial institution is not originating any such mortgage”.
The crypto mining trade has taken on big quantities of debt through the 2021 bull market, typically providing up mining rigs they personal as collateral as a way to decrease their rates of interest.
The next bear market beginning in 2022 resulted in robust circumstances for miners, nevertheless, and lots of have been pressured to promote the Bitcoin (BTC) mining rigs they personal as a way 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 pressured to repossess among the miners used as collateral.
In accordance with 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 determination to cease issuing some of these loans, with Carol Houle, the CFO of its holding firm Provident Bancorp, noting:
“As we mirror on 2022, we’re desperate to take its classes and emerge a greater, stronger financial institution. Regardless of our 2022 losses, we enter 2023 nicely capitalized and nicely diversified.”
