© Reuters. Crypto Exchange Binance Launches $500 Million Bitcoin Mining Loan Pool
Cryptocurrency exchange Binance has announced a $500 million loan pool for miners (CRYPTO:BTC) as the industry is suffocated by energy costs, low Bitcoin prices and mining struggles higher than ever.
The goal of the Binance Pool initiative is “to provide secure debt financing services to public and private bitcoin (BTC) mining and digital asset infrastructure companies globally.”
Loans with terms of 18 to 24 months and at an interest rate of 5% to 10% will be offered to the borrowers.
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In addition, they will be required to post collateral in the form of cryptocurrency or mining equipment, which must be deemed “acceptable to Binance”.
The company’s decision comes at a time when the mining industry is facing revenue challenges:
- Compute North declared bankruptcy last month,
- Iris Energy raised $100 million by selling shares
- Compass Mining closes operations in Georgia
- Poolin, one of the largest bitcoin mining pools, has stopped payouts.
See also: What is Bitcoin? How it works?
The difficulty of mining has reached an all-time high, requiring the use of even more resources for miners to remain profitable.
Since Bitcoin still uses an energy-intensive proof-of-work (PoW) validation process, rising energy prices have made it much more expensive to mine the world’s most popular cryptocurrency. Miners have been hit hard by the bear market, with mining revenues down around 60% year-to-date.
Additionally, with Bitcoin trading at an annual low of $19,615.13, miners are increasingly turning to lines of credit in an effort to survive and continue to make money.
With interest rates of up to 20%, earlier this month Maple Finance announced a $300 million financing facility for struggling Bitcoin miners.
See also: Building Trust in the Crypto Ecosystem and Looking to the Future
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