With the bear market taking a heavy toll on the crypto mining industry, Binance has announced a new lending project.
The development follows the founder of Bitmain, Jihan Wu’s announcement of establishing a $250 million fund to purchase distressed assets from mining firms.
Wu is currently spearheading the bitcoin mining rig maker’s spin-off, Bitdeer Technologies, which will initially deploy $50 million to work. The company plans to raise the remaining $200 million from external investors.
Binance Supporting Bitcoin Mining Industry
Initiated by Binance Pool, the $500 million project is designed to provide secure debt financing services to the public as well as private blue-chip BTC mining and digital asset infrastructure companies across the world.
“As one of the world’s leading crypto mining pools, Binance Pool has a responsibility to help maintain a healthy digital asset ecosystem. In light of current market conditions, Binance Pool is launching a $500million lending project to support crypto miners and digital infrastructure providers.”
According to the official announcement, the miners will need to offer security, either physical or digital assets, for the loan, for a period of 18-24 months. The interest rates range from 5% to 10%. Binance also announced plans to roll out cloud mining products and is looking for such vendors.
Amid a weakening Bitcoin price and higher energy costs, miners came under tremendous pressure as difficulty increased by over 13% in the two weeks, setting a new high record. They have been selling their Bitcoin throughout the year to compensate for dwindling profits. There were certain instances when the miners resorted to selling more in a month than they mined.
Several firms have been struggling to keep their heads above water. One such is Compute North which recently filed for Chapter 11 bankruptcy in the US Bankruptcy Court for the Southern District of Texas.
Mining platforms such as Iris Energy sold $100 million in equity to generate some cash. Compass Mining, on the other hand, closed its Georgia operations. Poolin, which happens to be one of the largest Bitcoin mining pools, froze withdrawals as a result of the drawn-out bear market.
Companies such as CleanSpark and Argo, which borrowed millions against their mining equipment, saw severe losses month after month.
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