Altcoins Talks - Cryptocurrency Forum
Cryptocurrency Ecosystem => Binance Smart Chain + Ecosystem => Topic started by: Adams-Richard on October 18, 2022, 06:28:07 AM
-
(https://miro.medium.com/max/720/0*fvFyedJ9SkxHpwJX)
Image from Medium
Binance Hopes to Ease the Pain for Bitcoin Miners With a $500 Million Lending Pool, according to crypto exchange Binance's recent blog post.
Its initiatives to support the mining sector come when miners are being badly impacted by the recent decline in cryptocurrency prices and Ethereum (ETH-USD) switch from the Proof-of-Work model to the Proof-of-Stake consensus mechanism. "Blue-chip" Bitcoin miners who could support their bids with actual or digital assets will be given the loans.
According to an official blog post dated October 14, the Binance Pool, a mining division of Binance, will grant access to a $500 million loan fund subject to a number of requirements, including an 18- to a 24-month term, interest rates ranging from 5% to 10%, and the use of certain real-world or digital assets as collateral. For the purpose of determining the borrower's creditworthiness, the firm will consider a wide variety of factors, including current performance, mining power, and security quantity.
The Struggles of Bitcoin Miners in the Face of a Volatile Market
During a significant decline in the price of bitcoin in 2022, market circumstances for bitcoin miners were quite difficult. When compared to its all-time high of nearly $68,000 in November last year, the cryptocurrency's value dropped by more than 70%, to around $20,000.
Many cryptocurrency mining operations have experienced additional declines in revenues as a result of rising energy costs. PoW mining requires a lot of energy, therefore when energy prices climb, the cost to mine bitcoin also rises. Significant losses have also been seen in the equities of mining businesses that are listed publicly. Riot Blockchain, a mining business, has lost 70% of its value so far this year, while Marathon Digital Holdings has lost 65%.
Several cryptocurrency miners have started to reduce their output or have gone bankrupt during the previous several months. In September, Compass Mining shut down its Georgia operations, Poolin, a bitcoin mining pool, halted withdrawals, and mining hosting business Compute North declared bankruptcy owing creditors $500 million in assets.
Bottom Line
It is comforting to know that there are other companies that have provided safe debt financing services to Bitcoin miners in the middle of the market downturn besides Binance. Another cryptocurrency company, Maple Financial, a decentralized finance platform, has developed a lending pool with a 10% interest rate, and other cryptocurrency companies have also started to offer loans to miners. Jihan Wu, the creator of the dominant cryptocurrency mining company Bitmain, has established a $250 million fund to acquire assets from the faltering mining business at a discount.