Massachusetts-Based Bankprov to End Loan Offerings Secured by Cryptocurrency Mining Rigs

Massachusetts-Based mostly Bankprov to Finish Mortgage Choices Secured by Cryptocurrency Mining Rigs

February 1, 2023 Off By lordanime37
Massachusetts-Based Bankprov to End Loan Offerings Secured by Cryptocurrency Mining Rigs

The Amesbury, Massachusetts-based Bankprov, a subsidiary of Provident Bancorp, has introduced that it’ll not present loans secured by cryptocurrency mining rigs. In a submitting with the U.S. Securities and Alternate Fee (EX-99.1), Bankprov said that income from its digital asset mortgage portfolio will proceed to lower as the corporate has discontinued new mortgage originations backed by mining gear.

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

Bankprov disclosed that it holds roughly $41.2 million in cryptocurrency-collateralized loans, with about $26.7 million of the debt backed by crypto-mining gear. Collateralized loans secured by application-specific built-in circuit (ASIC) mining rigs grew to become a preferred funding car in 2021, however the crypto winter resulted in vital stress on the business. By the tip of June 2022, Luxor govt Ethan Vera estimated that about $4 billion in loans backed by mining machines had been below monetary pressure.

Since then, a number of crypto-mining firms have both sought chapter safety or reorganized tens of tens of millions in debt. For instance, on the finish of September 2022, the bitcoin mining agency Compute North filed for chapter. Two months later, Core Scientific additionally filed for chapter. Different mining operations are trying to restructure debt. Greenidge Technology announced Tuesday that it has reorganized $11 million in debt with B. Riley.

Bankprov said that it repossessed ASIC mining gear from undisclosed crypto-mining operations in September. “Our digital asset mortgage portfolio declined by $79.3 million, or 65.8%, largely as a consequence of paydowns on excellent traces of credit score, the partial charge-off, and repossession of cryptocurrency mining rigs in alternate for forgiving a $27.4 million mortgage relationship,” in line with Bankprov’s submitting.

The monetary establishment’s EX-99.1 earnings submitting added:

The portfolio of loans secured by cryptocurrency mining rigs will proceed to say no because the Financial institution is not originating this kind of mortgage.

One other crypto-friendly monetary establishment, Metropolitan Industrial Financial institution, announced through the second week of January 2023 that it plans to “exit its crypto-asset-related enterprise.” Metropolitan said that it holds no publicity to crypto belongings, however has enterprise relationships with 4 clients centered on cryptocurrencies. The financial institution didn’t specify an actual date, however stated that these relationships and the crypto enterprise shall be phased out this yr.

What do you assume the long run holds for banks and the cryptocurrency business? Share your ideas within the feedback beneath.