Cryptocurrency-related lending has become a black smudge for the industry these days and according to a recent report, bitcoin’s low price has put billions in mining loans under stress. The report, which quotes the co-founder of mining company Luxor Technologies, Ethan Vera, says that roughly $4 billion in loans backed by crypto mining rigs are extremely close to running a risk of default.
Luxor’s Ethan Vera estimates that around $4 billion in loans backed by mining rigs are under stress. “They are nervous about their loan books, especially those with high collateral ratios,” Vera explained to Bloomberg’s David Pan.
“Bitcoin miners, broadly speaking, are feeling pain,” Luka Jankovic, head of lending at Galaxy Digital detailed in the report. “A lot of operations have become net IRR negative at these levels. Machine values have plummeted and are still in price discovery mode, which is compounded by volatile energy prices and limited supply for rack space,” Jankovic added.
During the past few weeks, a handful of crypto lenders have also been under severe stress and some are dealing with liquidations. The crypto lender Celsius has been under the crypto community’s scrutiny for alleged liquidations and rumors about restructuring and insolvency.
What do you think about the pressure bitcoin miners are feeling from the lower bitcoin price? Let us know what you think about this subject in the comments section below.