Binance Pool Reveals a $500M Lending Project to Support Bitcoin Mining Industry
Binance, on October 14, 2022, unveiled a $500 million lending pool for Bitcoin miners to help lower the effects of energy costs and the bearish market plaguing the sector.
Mining difficulty levels increased by over 13% in the last two weeks, setting a new record since May 2021. This development is the direct result of Bitcoin’s weakening price and higher energy costs. Hence, it has put tremendous pressure on miners, causing some to sell their Bitcoin to offset decreasing proceeds. There were instances where the miners sold more Bitcoin in a month than they mined.
Several companies and mining platforms have struggled to keep their heads above water. Compute North recently filed a Chapter 11 bankruptcy in the US Bankruptcy Court for the Southern District of Texas. Iris Energy sold $100 million in equity to generate revenue. Compass Mining closed its equipment facilities throughout Georgia.
A prominent Bitcoin mining pool, Poolin, placed restrictions on all crypto asset withdrawals. CleanSpark and Agro bought mining appliances worth millions of dollars taken with loans. Their loss in recent months reached an all-time high, becoming a serious concern for these companies management.
Binance Pool To The Rescue
As a top-ranking cryptocurrency mining pool, Binance Pool is responsible for ensuring a conducive digital environment for the circulation of digital assets. The $500m is meant to assist the affected companies with some more secure debt financing services. Blue-chip BTC mining firms and private digital asset infrastructure companies will also benefit from this fund.
This Binance announcement comes a few weeks after Bitmain Founder, Jihan Wu, declared a fund of $250m to purchase BTC from distressed BTC mining firms. Wu, who owns Bitdeer Technologies, will initially provide funding worth $50 million to these funds. Then, the company would raise the remaining $200 million from external investors.
Borrowers can only be eligible for the loan when they offer adequate security, such as physical or digital assets, and agree to an 18 to 24-month refund period—interest rates range from 5% to 10%. As part of the initiative, Binance plans to launch cloud mining products. Hence, it seeks experienced cloud mining vendors.
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