- The borrowers will have access to loans on an 18- to 24-month term, with interest rates ranging from 5% to 10%.
- Miners have been dealing with rising ming difficulty rates caused by weak bitcoin prices and higher energy costs.
Leading cryptocurrency exchange Binance has launched a $500 million lending pool for Bitcoin miners. The firm states that the mining pool was designed to provide “secure debt financing services to both public and private blue-chip Bitcoin mining and digital asset infrastructure companies globally.”
“As one of the world’s leading crypto mining pools, Binance Pool has a responsibility to help maintain a healthy digital asset ecosystem. In light of current market conditions, Binance Pool is launching a $500million lending project to support crypto miners and digital infrastructure providers”, the announcement reads.
As per the official statement, the borrowers will have access to loans on an 18- to a 24-month term, with interest rates ranging from 5% to 10%. The Borrowers are also asked to offer collateral in the form of mining hardware or cryptocurrencies that will have to be deemed “satisfactory to Binance.”
Apart from Binance, crypto mining rig-maker Bitmain has also recently set up a $250 million fund to purchase distressed assets from mining firms. The latest move comes amid miners dealing with immense pressure owing to the mining difficulty increased by over 13% in the two weeks, setting a new high record.
Rising difficulty makes it extremely difficult for miners to sustain who are already dealing with problems caused by weak bitcoin prices and higher energy costs. Experts note that more efficient mining machines and cooler weather are among the reasons for the sharp increase in the Bitcoin network’s hash rate.
Earlier this summer, miners across the U.S. were curtailing their operations to cope with heatwaves, contributing to lower difficulty and network hash rate. Several mining platforms have borne the brunt of increasing Mining difficulty rates. Falling cryptocurrency prices coupled with soaring energy costs have dented miners’ profits, with a closely-watched gauge of Bitcoin mining revenue dropping to a two-year low last month.
Recently, Iris Energy sold $100 million in equity to deal with its liquidity issues while Compass Mining closed its Georgia operations. Poolin, one of the largest Bitcoin mining pools, froze withdrawals as part of a defensive move designed to navigate a “dull crypto market”. Bitcoin Mining Data Center Firm Compute North also filed for Chapter 11 bankruptcy in September.