BankProv refuses to issue loans secured by mining equipment

Cryptocurrency-friendly American BankProv has announced that it will no longer provide loans secured by cryptocurrency mining equipment.. The bank has already written off similar loans for $47.9 million.

The Bank has filed an official statement with the US Securities and Exchange Commission (SEC) that it is getting rid of such loan obligations.. In the fourth quarter of 2022, the volume of loans secured by BankProv mining equipment almost halved compared to the third quarter. In total, according to the data at the end of the year, the bank issued loans to companies related to digital assets for $41.2 million. At the same time, loans in the amount of $26.7 million are secured by mining equipment.

Mining companies raised enough loans to expand their business during the 2021 bull run. They often used their cryptocurrency mining equipment as collateral.. For example, Core Scientific's liabilities are $1.3 billion, and Marathon owes $851 million to creditors.. The cost of mining equipment has dropped significantly, and now the loans are only partially secured.

BankProv took equipment from mining companies in exchange for writing off loans last fall. This resulted in a loss of $11.3 million.

“We strive to learn from the events of 2022, to become better and stronger. Despite the losses, we are entering 2023 with a well-capitalized and excellent business diversification,” said Carol Houle, CFO of Provident Bancorp, which includes BankProv.

In early January, data center operator Core Scientific announced that 37,000 mining devices of the Celsius crypto lender had been disabled due to lack of payment.