After eliminating $47.9 million in loans that were mostly secured by cryptocurrency mining rigs through 2022, crypto-friendly bank holding company BankProv announced that it would no longer make loans secured by cryptocurrency mining rigs. cryptocurrencies.

As of September 30, 2022, BankProv, according to a document that was filed with the United States Securities and Exchange Commission (SEC) on January 31, 2019, the percentage of its digital asset portfolio that is comprised of debt guaranteed by platform has practically been cut in half.

As of December 30 of the prior year, the bank had a total of $41.2 million in loans related to digital assets. Of this total, USD 26.7 million corresponded to loans guaranteed by cryptomining platforms. However, this amount “will continue to decrease as the Bank is no longer originating this type of loan.”

During the 2021 bull market, the cryptocurrency mining industry took on huge debts, and miners often offered mining equipment they owned as collateral to lower their interest rates and save money.

The resulting bear market that began in 2022 resulted in difficult circumstances for miners. As a consequence, many miners were forced to sell the Bitcoin (BTC) mining rigs they owned to finance their operating expenses, resulting in a precipitous drop in the price of mining equipment.

Despite the price cut, several financial institutions that had issued debt collateralized by mining rigs were forced to call back some of the miners they had pledged as collateral.

An earlier filing with the SEC indicates that on September 30, 2022, BankProv seized mining rigs in exchange for forgiveness of $27.4 million in loans. As a consequence of this transaction, the company was forced to amortize an amount equivalent to $11.3 million.

According to Carol Houle, CFO of its parent company, Provident Bancorp, “Looking forward to 2022, we are eager to absorb its lessons and emerge as a better and stronger bank.” The company’s decision to stop providing these types of loans was probably heavily influenced by the losses. Despite the losses we incurred in 2022, we entered 2023 in a strong financial position and with a diverse clientele.