Crypto mining is an energy-intensive process by which Bitcoin and other digital assets are entered into circulation and transactions are verified.
Rising energy prices, as well as the drop in Bitcoin value, have led to bankruptcies and consolidation in the sector.
“The space is distressed,” Lucas Pipes, managing director at B. Riley Securities told Blockworks. “There’s no other way of putting it.
That distress, in conjunction with a partial write-down on cryptocurrency mining rigs that BankProv repossessed in exchange for the forgiveness of a $27.4 million loan relationship, triggered the firm to undergo a review of its portfolio of similarly collateralized loans, the bank said.
Following the loan forgiveness, the bank’s digital-asset mining loan portfolio totaled $76.5 million at the end of September, the bank said.
BankProv said it estimates a majority of that loan portfolio will be impaired and placed on non-accrual status with significant related specific reserves.
BankProv launched a deposit operation for crypto companies and expanded into business loans to crypto firms several years ago in effort to serve an underserved market, according to the Financial Brand.
The $1.7 billion-asset bank issued its first Bitcoin-secured crypto business credit line in late 2020, and rolled out an Ethereum-secured credit line the following year, the publication reported.
“We’d love to be the primary bank, but some of these firms are multibillion-dollar companies,” BankProv CEO Paul Mansfield told the Financial Brand in November 2021. “However, they need a lot of support from banking and so it’s not a winner-take-all proposition on the loan side of things.”
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The retailer has scale, brand recognition and a pedigree in an ex-Marcus CEO. The proof may come when the company turns its beta test loose on customers.
Established and up-and-coming challengers show how they embrace new business silos such as cannabis, BaaS and the metaverse — or connect “ingredients” to stimulate growth.
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