Amesbury, Massachusetts-based Bankprov, a subsidiary of Provident Bancorp, has announced that it will no longer make loans secured by cryptocurrency mining rigs. In a filing with the US Securities and Exchange Commission (EX-99.1), Bankprov stated that revenue from its digital asset lending portfolio will continue to decline as the company has discontinued the origination of new equipment-backed loans. mining.
Bankprov's cryptocurrency-secured loan portfolio decreased by 65%
bank proof revealed which owns approximately $41.2 million in loans collateralized by cryptocurrency, with approximately $26.7 million of the debt backed by crypto mining equipment. Collateralized loans secured by application-specific integrated circuit (ASIC) mining rigs became a popular investment vehicle in 2021, but the crypto winter brought significant pressure on the industry. In late June 2022, Luxor executive Ethan Vera Estimate that about $4 billion in loans backed by mining machines were under financial pressure.
Since then, several crypto mining companies have sought bankruptcy protection or reorganized tens of millions in debt. For example, in late September 2022, bitcoin mining company Compute North archived bankruptcy Two months later, Core Scientific also archived due to bankruptcy Other mining operations are trying to restructure the debt. Greenidge generation Announced Tuesday that he has reorganized $11 million in debt with B. Riley.
Bankprov stated that it recovered ASIC mining equipment from undisclosed crypto mining operations in September. "Our digital asset loan portfolio decreased $79.3 million, or 65.8%, largely due to payments on outstanding credit lines, partial cancellation, and recovery of cryptocurrency mining rigs to change to forgive a loan ratio of $27.4 million," according to Bankprov's presentation.
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 no longer originates this type of loan.
Another crypto-friendly financial institution, Metropolitan Commercial Bank, Announced during the second week of January 2023 that he plans to "exit his crypto-related business." Metropolitan stated that it has no exposure to crypto assets, but does have business relationships with four crypto-focused clients. The bank did not specify an exact date, but said that these relationships and the cryptocurrency business will be phased out this year.
What do you think the future holds for banks and the cryptocurrency industry? Share your thoughts in the comments below.
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