Cryptocurrency exchange Binance has announced a $500 million lending pool for Bitcoin (CRYPTO: BTC) miners as the industry gets stifled by energy costs, low Bitcoin prices and higher-than-ever mining difficulty.
The goal of the Binance Pool initiative is to “provide secure debt financing services to both public and private blue-chip bitcoin (BTC) mining and digital asset infrastructure companies globally.”
Loans with terms of 18 to 24 months and interest rates of 5% to 10% will be available to borrowers.
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Additionally, they will be required to provide collateral in the form of cryptocurrency or mining equipment that must be judged "acceptable to Binance."
The company’s decision comes at a time when the mining industry faces revenue challenges:
- Compute North declared bankruptcy last month,
- Iris Energy raised $100 million by selling shares
- Compass Mining shut down operations in Georgia
- Poolin, one of the biggest Bitcoin mining pools, halted withdrawals.
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Mining difficulty has reached an all-time high, necessitating 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 running the world's most popular cryptocurrency mining operations much more expensive. Miners have been severely affected by the bear market, with mining revenue down roughly 60% from the year's beginning.
Additionally, with Bitcoin trading at a year low of $19,615.13, miners are increasingly turning to credit lines in an effort to survive and continue to make a profit.
With interest rates of up to 20%, Maple Finance announced at the beginning of the month a $300 million financing facility for struggling Bitcoin miners.
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