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

The Amesbury, Massachusetts-based Bankprov, a subsidiary of Provident Bancorp, has announced that it volition nary longer supply loans secured by cryptocurrency mining rigs. In a filing with the U.S. Securities and Exchange Commission (EX-99.1), Bankprov stated that gross from its integer plus indebtedness portfolio volition proceed to alteration arsenic the institution has discontinued caller indebtedness originations backed by mining equipment.

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

Bankprov disclosed that it holds astir $41.2 cardinal successful cryptocurrency-collateralized loans, with astir $26.7 cardinal of the indebtedness backed by crypto-mining equipment. Collateralized loans secured by application-specific integrated circuit (ASIC) mining rigs became a fashionable concern conveyance successful 2021, but the crypto wintertime resulted successful important unit connected the industry. By the extremity of June 2022, Luxor enforcement Ethan Vera estimated that astir $4 cardinal successful loans backed by mining machines were nether fiscal strain.

Since then, respective crypto-mining companies person either sought bankruptcy extortion oregon reorganized tens of millions successful debt. For example, astatine the extremity of September 2022, the bitcoin mining steadfast Compute North filed for bankruptcy. Two months later, Core Scientific besides filed for bankruptcy. Other mining operations are attempting to restructure debt. Greenidge Generation announced Tuesday that it has reorganized $11 cardinal successful indebtedness with B. Riley.

Bankprov stated that it repossessed ASIC mining instrumentality from undisclosed crypto-mining operations successful September. “Our integer plus indebtedness portfolio declined by $79.3 million, oregon 65.8%, mostly owed to paydowns connected outstanding lines of credit, the partial charge-off, and repossession of cryptocurrency mining rigs successful speech for forgiving a $27.4 cardinal indebtedness relationship,” according to Bankprov’s filing.

The fiscal institution’s EX-99.1 net filing added:

The portfolio of loans secured by cryptocurrency mining rigs volition proceed to diminution arsenic the Bank is nary longer originating this benignant of loan.

Another crypto-friendly fiscal institution, Metropolitan Commercial Bank, announced during the 2nd week of January 2023 that it plans to “exit its crypto-asset-related business.” Metropolitan stated that it holds nary vulnerability to crypto assets, but has concern relationships with 4 customers focused connected cryptocurrencies. The slope did not specify an nonstop date, but said that these relationships and the crypto concern volition beryllium phased retired this year.

What bash you deliberation the aboriginal holds for banks and the cryptocurrency industry? Share your thoughts successful the comments below.

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