Miners turn to loans to stay afloat
Binance offers a way
The largest cryptocurrency exchange has begun its offering of $500 million with a lending pool for Bitcoin miners. Energy costs, low Bitcoin prices, and increasingly high mining difficulties have made mining the coveted crypto straining and unsustainable at the moment.
Binance stated its pool project named the “Binance Pool Project” was created with the goal of “securing debt financing services to public and blue-chip Bitcoin mining and digital assets infrastructure companies globally”
The Nitty Gritty
Borrowers will be able to access the loans for terms up to 18-24 months with interest rates starting at 5%. There will be the need to offer collateral in the form of mining hardware or crypto that will be deemed satisfactory. Binance will make the decision on what is satisfactory or not. The move is considered a good one as turning a profit has become increasingly difficult for Bitcoin miners. Compute North, which provided data centers for crypto miners and blockchain companies filed for Chapter 11 bankruptcy after it owed as much as $500 million to at least 200 creditors. Another company, Iris Energy Sold $100 million in equity to generate cash, Compass Mining in Georgia and British Colombia shut down and Poolin, one of the largest Bitcoin mining pools froze all withdrawals.
Mining the token has become increasingly difficult and energy-intensive with more resources needed just to get the job done. The amount of energy and the costs associated with that energy have cut into the profits of many mining businesses.
The bear market has been hard on the mining business making revenue earned from the practice drop nearly 60%. Add this to the drop in value of the token and sits at a low of $19,615.13 at the time of writing and you have a situation that is difficult for all involved.
Binance is not the only company that is lending to miners as Maple Finance also announced $300 million lending for bitcoin miners as the company hopes to be the “Shopify of crypto lending” The companies both have intentions to offer hope to crypto miners who have been shunned by traditional banks when it comes to getting loans