Amesbury, Massachusetts-based Bankprov, a subsidiary of Provident Bancorp, has announced that it will no longer issue loans secured by cryptocurrency mining rigs. In a filing with the US Securities and Exchange Commission (EX-99.1), Bankprov said revenue from its digital asset loan portfolio will continue to decline as the company has stopped issuing new loans secured by mining equipment. Bankprov's Portfolio of Cryptocurrency-Backed Loans Down 65% Bankprov disclosed that it holds approximately $41.2 million in cryptocurrency-backed loans, with approximately $26.7 million of the debt secured by crypto mining equipment. Collateralized loans made by mining rigs…
Amesbury, Massachusetts-based Bankprov, a subsidiary of Provident Bancorp, has announced that it will no longer issue loans secured by cryptocurrency mining rigs. In a filing with the US Securities and Exchange Commission (EX-99.1), Bankprov said revenue from its digital asset loan portfolio will continue to decline as the company has stopped issuing new loans secured by mining equipment.
Bank Prov disclosed that it holds approximately $41.2 million in cryptocurrency-collateralized loans, with approximately $26.7 million of the debt secured by crypto mining equipment. Collateralized loans backed by application-specific integrated circuit (ASIC) mining rigs became a popular investment vehicle in 2021, but the crypto winter resulted in significant pressure on the industry. Until the end of June 2022, Luxor Managing Director Ethan Vera appreciated that about $4 billion in loans secured by miners were under financial stress.
Since then, several crypto mining companies have either filed for bankruptcy protection or reorganized tens of millions of dollars in debt. For example, at the end of September 2022, the Bitcoin mining company Compute North filed for bankruptcy. Two months later, so did Core Scientific filed for bankruptcy. Other miners are trying to restructure debt. Greenidge generation announced Tuesday that it restructured $11 million in debt at B. Riley.
Bankprov said it seized ASIC mining equipment from undisclosed crypto mining operations in September. “Our digital asset loan portfolio decreased by $79.3 million, or 65.8%, primarily due to repayments on outstanding credit lines, partial charge-offs and redemptions of cryptocurrency mining rigs in exchange for forgiveness of a $27.4 million loan relationship,” Bankprov’s filing said.
Added Financial Institution EX-99.1 Result Filing:
The portfolio of loans secured by cryptocurrency mining rigs will continue to decline as the bank no longer issues these types of loans.
Another crypto-friendly financial institution, Metropolitan Commercial Bank, announced in the second week of January 2023 that it plans to “exit its crypto asset-related business.” Metropolitan said it has no exposure to crypto assets, but has business relationships with four clients focused on cryptocurrencies. The bank did not give an exact date but said these relationships and the crypto business will expire 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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