American BankProv will not provide loans secured by mining equipment


American BankProv has announced that it will no longer provide loans secured by cryptocurrency mining equipment. The bank has already cancelled such loans totalling $47.9 million.

The US Securities and Exchange Commission (SEC) has been notified by BankProv that it intends to withdraw all credit commitments. At the end of the fourth quarter of 2022, total loans to digital asset-related businesses were down sharply from what they were in the third quarter, amounting to $41.2 million, of which $26.7 million was secured by mining equipment.

In 2021, when the bull market was in full swing, mining companies took a large number of loans to expand their activities. Using its cryptocurrency mining equipment as collateral, Core Scientific's liability was $1.3 billion and Marathon borrowed $851 million from creditors. Since then, however, the value of this equipment has fallen dramatically, and it is therefore only partially collateral for these loans.

Since last autumn, BankProv has been seizing equipment from mining companies to compensate for loan write-offs, which led to a loss of $11.3 million.

Despite such losses, Carol Hole - CFO of Provident Bancorp (which includes BankProv) - is confident that they will continue to thrive:

"We are doing our best to learn from 2022 to become more reliable and successful as we enter 2023 with good capitalisation and a diversified business."

In early January, Core Scientific, a data centre provider, announced the shutdown of 37,000 mining devices owned by Celsius because payment was not received.

Previous Article Did you like the article? 0 Next Article
Comments: 0
Leave a comment
The subscription service is currently at the final stage of development. Sending regular news materials to your email will begin shortly. A re-subscription is not required.
Add more