• Massachusetts-based Bankprov has announced that it will no longer offer loans secured by cryptocurrency mining rigs.
• Bankprov holds approximately $41.2 million in cryptocurrency-collateralized loans, with about $26.7 million of the debt backed by crypto-mining equipment.
• Several crypto-mining companies have sought bankruptcy protection or reorganized tens of millions in debt due to the crypto winter.
Bankprov, a subsidiary of Provident Bancorp based in Amesbury, Massachusetts, has announced that it will no longer offer loans secured by cryptocurrency mining rigs. Bankprov revealed in a filing with the US Securities and Exchange Commission (EX-99.1) that revenue from its digital asset loan portfolio has been decreasing and that new loan originations backed by mining equipment have been discontinued.
Bankprov holds approximately $41.2 million in cryptocurrency-collateralized loans, with about $26.7 million of the debt backed by crypto-mining equipment. This type of loan became popular in 2021, but the crypto winter created significant pressure on the industry. According to Luxor executive Ethan Vera, by the end of June 2022, around $4 billion in loans backed by mining machines were under financial strain.
A number of crypto-mining companies have either sought bankruptcy protection or reorganized tens of millions in debt. In September 2022, Compute North filed for bankruptcy. Two months later, Core Scientific also filed for bankruptcy. Other mining operations are attempting to restructure debt. Greenidge Generation announced Tuesday that it has reorganized $11 million in debt with B. Riley. Bankprov stated that it repossessed ASIC mining equipment from undisclosed crypto-mining operations in September.
The decision to no longer offer loans secured by cryptocurrency mining rigs is part of Bankprov’s overall strategy to reduce its digital asset lending portfolio. Bankprov is committed to providing customers with innovative financial services while managing risk and maintaining a sound capital structure.