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Binance Pool Starts $500 Million Fund to Support Bitcoin Mining
The entity is the latest to join the growing ranks of alternative lenders looking to provide capital to the distressed mining industry.
By Sam Reynolds
Updated Apr 9, 2024, 11:24 p.m. Published Oct 14, 2022, 5:20 a.m.
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Crypto winter is taking a toll on companies that man the virtual mines, which has led to cryptocurrency exchange Binance starting a lending facility for bitcoin miners.
- Binance Pool has started a $500 million lending project for private and public miners. The miners will need to pledge security in the form of physical or digital assets for the loan, which will have a duration of 18-24 months.
- Binance Pool recently opened a mining pool for ETHW, the forked version of Ethereum that retains the blockchain's original proof-of-work (PoW) underpinnings.
- Binance isn't the only firm that is looking to support the struggling crypto mining industry, Jihan Wu, the founder of crypto mining rig-maker Bitmain, is also setting up a $250 million fund to purchase distressed assets from mining firms.
- Decentralized finance (DeFi) platform Maple Finance has also established a lending pool, with a 20% interest rate to provide miners with working capital. Crypto asset management firm Grayscale has formed its own investment vehicle to help investors take advantage of the low prices of bitcoin mining infrastructures. Grayscale is a subsidiary of Digital Currency Group (DCG), the parent company of CoinDesk.
- The downturn in the crypto market and the transition of Ethereum to proof-of-stake (PoS) has hit miners hard. In late September, crypto miner Compute North filed for bankruptcy, with $500 million in outstanding debt owed to at least 200 creditors.
- Publicly traded mining company Riot Blockchain (RIOT) is down 70% year to date, while Marathon Digital Holdings (MARA) is down 65% for the same period.
Read more: Binance Starts Ethereum Proof-of-Work Mining Pool, Initially With No Fee
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How the ultra-wealthy are using bitcoin to fund their yacht upgrades and Cannes trips
Cometh founder Jerome de Tychey is applying DeFi lending and borrowing on platforms like Aave, Morpho, and Uniswap to structures that help the ultra-wealthy secure loans against their massive crypto fortunes.
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- Wealthy investors who hold much of their fortune in crypto are increasingly turning to decentralized finance platforms to secure flexible credit lines without selling their digital assets.
- Firms like Cometh help family offices and other rich clients navigate complex DeFi tools, using assets such as bitcoin, ether and stablecoins to replicate traditional Lombard-style collateralized loans.
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