Former BTC.Top CEO Jiang Zhuoer claims that the number of loans to bitcoin miners that are at risk is much lower than what has been reported. He argues that there are only a finite number of mining rigs that can be used for mortgages and a finite number of loans due to a lack of institutional support and poor liquidity.
Although the Bitcoin price crash has made it difficult for mining companies to repay their $4 billion in loans backed by mining equipment as collateral, a recent Bloomberg report stated that this is the case. As the market continues to decline, mining rigs are being sold at a discount.
It was revealed by Colin Wu in a tweet on Monday that Jiang Zhuoer thinks the data on bitcoin miner loans is exaggerated, according to Colin Wu. On the other hand, no loans were ever made to Bitcoin miners for any of their rigs at all. Due to a lack of companies that could control or evaluate mining rigs, only a small number of mining rigs were eligible for loans. A large number of cryptocurrency miners were unable to obtain loans as a result of the issue.
Loans are available from cryptocurrency investment firms like Galaxy Digital, NYDIG, and BlockFi. Because banks won’t loan money to upgrade mining equipment, these loans are secured by mining equipment.
Ethan Vera, a co-founder of Luxor Technologies in Seattle, estimated that mining rigs were collateral for $4 billion in loans. Lenders like Babel Finance have made token-backed loans popular, but Vera says mining equipment is a better security.
Additionally, the decline in Bitcoin’s value is hurting miners. Some Bitcoin miners must pay back loans and put up collateral to cover equipment purchases they made with Bitcoin.
According to a JPMorgan report from May and June, 20 percent of all reported Bitcoin sales came from publicly listed Bitcoin miners. As a result, the current rate of Bitcoin sell-offs is likely to scupper any hopes of a rebound in the Bitcoin price.
Since mid-May and again in June, the difficulty of mining Bitcoin has decreased due to the crypto market crash. On the other hand, the hashrate dropped from 266 EH/s on June 8 to under 200 EH/s on June 26. The sudden drop in power demand is directly related to the decline in hash rate. Mines may have been shut down or sold because of this.