Must read

Bankprov, a division of Provident Bancorp with offices in Amesbury, Massachusetts, has declared that it will no longer offer loans backed by cryptocurrency mining equipment. As a result of the company ceasing new loan originations secured by mining equipment, Bankprov claimed in a filing with the U.S. Securities and Exchange Commission (EX-99.1) that revenue from its digital asset loan portfolio will continue to decline.

Bankprov’s Portfolio of Cryptocurrency Collateralized Loans Decreased by 65%

Bankprov said that it currently holds about $41.2 million in loans using bitcoin collateral, with about $26.7 million of the loans being secured by cryptocurrency mining hardware. In 2021, collateralized loans backed by ASIC mining equipment gained popularity as an investment mechanism, but the crypto winter put a lot of strain on the sector. Ethan Vera, a Luxor executive, predicted that the $4 billion in loans backed by mining equipment would be in financial trouble by the end of June 2022.

Since then, a number of cryptocurrency mining businesses have either applied for bankruptcy protection or restructured tens of millions of dollars in debt. For instance, Compute North, a bitcoin mining company, filed for bankruptcy at the end of September 2022. Core Scientific also declared bankruptcy two months later. Other mining companies are making an effort to restructure their debt. The reorganisation of Greenidge Generation’s $11 million debt with B. Riley was disclosed on Tuesday.

According to Bankprov, it seized ASIC mining hardware from secretive crypto-mining activities in September. According to Bankprov’s statement, “our digital asset loan portfolio dropped by $79.3 million, or 65.8%, mostly owing to paydowns on unpaid lines of credit, the partial charge-off, and repossession of cryptocurrency mining rigs in exchange for forgiving a $27.4 million loan arrangement.”

The financial institution’s EX-99.1 earnings filing added:

The portfolio of loans secured by cryptocurrency mining rigs will continue to decline as the Bank is no longer originating this type of loan.

Metropolitan Commercial Bank, another cryptocurrency-friendly banking institution, declared during the second week of January 2023 that it intends to “leave its crypto-asset-related activity.” Metropolitan claimed to have no exposure to cryptocurrency assets, although it does have commercial ties to four clients that are heavily invested in cryptocurrencies. The bank stated that these connections and the cryptocurrency business would be phased out this year but did not provide a specific date.

More articles


Please enter your comment!
Please enter your name here

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Latest article