The Amesbury, Massachusetts-based Bankprov, a subsidiary of Provident Bancorp, has introduced that it’s going to now not present loans secured by cryptocurrency mining rigs. In a submitting with the U.S. Securities and Exchange Commission (EX-99.1), Bankprov acknowledged that income from its digital asset mortgage portfolio will proceed to lower as the corporate has discontinued new mortgage originations backed by mining tools.
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 tools. Collateralized loans secured by application-specific built-in circuit (ASIC) mining rigs turned a preferred funding car in 2021, however the crypto winter resulted in important 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 beneath monetary pressure.
Since then, a number of crypto-mining firms have both sought chapter safety or reorganized tens of thousands and thousands 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. Other mining operations are trying to restructure debt. Greenidge Generation announced Tuesday that it has reorganized $11 million in debt with B. Riley.
Bankprov acknowledged that it repossessed ASIC mining tools from undisclosed crypto-mining operations in September. “Our digital asset loan portfolio declined by $79.3 million, or 65.8%, largely due to paydowns on outstanding lines of credit, the partial charge-off, and repossession of cryptocurrency mining rigs in exchange for forgiving a $27.4 million loan relationship,” in response to 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 Bank is now not originating the sort of mortgage.
Another crypto-friendly monetary establishment, Metropolitan Commercial Bank, announced in the course of the second week of January 2023 that it plans to “exit its crypto-asset-related business.” Metropolitan acknowledged that it holds no publicity to crypto belongings, however has enterprise relationships with 4 prospects centered on cryptocurrencies. The financial institution didn’t specify a precise date, however mentioned that these relationships and the crypto enterprise will likely be phased out this 12 months.
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