Top Bitcoin Mining Exec Refutes Miner Lending Data
Jiang Zhuoer, former CEO of BTC.Top, says the number of risky lending by bitcoin miners is much lower than reported. He claims that low liquidity and lack of institutional support for mining rigs has caused only a limited number of rigs that can be used for mortgages and the amount of loans.
However, a recent report by Bloomberg revealed that falling Bitcoin prices have made it difficult for Bitcoin miners to repay their $4 billion in loans secured by mining hardware as collateral. Additionally, mining rigs are selling at a discount as the market continues to decline.
Jiang Zhuoer Says Bitcoin Miner Lending Data Is Overstated
Colin Wu in a Tweeter Monday reported that Jiang Zhuoer believed the data on the amount of loans to bitcoin miners was overestimated. In fact, Bitcoin miners have never received loans on all mining platforms. Only a few mining rigs were eligible for loans due to lack of companies to monitor or assess mining rigs. This has prevented many crypto miners from receiving loans from lenders.
Cryptocurrency investment firms such as Galaxy Digital, NYDIG, and BlockFi offer loans. These loans are secured by mining equipment, as the institutions refrain from lending to upgrade mining equipment.
Ethan Vera, co-founder of Seattle-based mining company Luxor Technologies, estimated around $4 billion in loans secured by mining rigs. According to Vera, loans backed by mining equipment are more important than the token-backed loans popularized by lenders like Babel Finance.
In addition, the drop in revenue and the fall of Bitcoin have an impact on miners. Some of the bitcoin miners have loans to repay and collateral to post for bitcoin mining equipment purchases.
According to a recent report by JPMorgan, publicly traded bitcoin miners account for 20% of all reported bitcoin sales in May and June. Thus, the current rate of bitcoin sales will likely invalidate a rally in bitcoin price anytime soon.
Bitcoin mining difficulty continues to decline
Bitcoin mining difficulty has decreased slightly since mid-May and again in June due to the crypto market crash. Moreover, the hashrate also dropped from a maximum of 266 PE/s on June 8 to less than 200 PE/s on June 26. The drop in the hash rate directly contributes to the sudden drop in demand for electricity. This means that the miners may have turned off the mining rigs or sold their mining rigs.
The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.