Miner Weekly: Why Lending Rates Have Been Declining
Here’s how lending rates have changed in bitcoin mining since early 2020
Chapter 11
First of all, this week’s biggest story is Compute North filing for Chapter 11 bankruptcy protection. We expect this to reverberate through the industry because Compute North is one of the largest, if not the largest, providers of co-location services for cryptocurrency mining. Its hosting customers include Marathon, Compass, Bit Digital, Atlas Mining, BitNile, Sphere 3D, and The9. The9 filed a lawsuit against Compute North last month on a contract-related dispute.
Tracking Lending Rates
Maple Finance, one of the major crypto lending marketplaces within the DeFi space, said in a Bloomberg exclusive this week that it has set up a $300 million credit fund for bitcoin mining companies, charging interest rates between 15% to 20% with a maturity term ranging from 12 to 18 months.
We have been tracking loans received and disclosed by public bitcoin mining companies since early 2020, as we believe it’s an important metric that reflects the market conditions.
We compiled the information of 50 disclosed loans between a dozen public mining companies and 20 institutional lenders since January 2020, including who borrowed how much, from whom, when, at what interest rate, and at what maturity term.
The chart above shows how the increasing competition in the miner financing space has helped reduce interest rates. Most of the loans we analyzed had a maturity term ranging from 24 to 36 months while several were short-term bridge notes, lasting from 1 to 6 months. (In a few deals, the name of the lenders were not disclosed, hence Unknown)
You may notice how a lender offered different rates to different borrowers around the same time, which can be a result of several factors such as the borrower’s liquidity, mining efficiency, maturity terms, etc. Some of the loans also included specific covenants on a borrower’s financial health like coverage ratios, which provided additional color on how TradFi organizations evaluate mining companies.
Regulation News
Digihost crypto mining facility to take over Fortistar power plant
Hardware News
TeraWulf Announces Operation of Nearly 12,000 Miners at Its Lake Mariner Facility
Bitfarms Starts Production in Argentina, Increases Hashrate to 4.1 EH/s
Finance News
Chinese Crypto Tycoon-Backed Bitdeer Buys Asia’s ‘Fort Knox’ Chinese crypto billionaire Jihan Wu is expanding into the physical asset space.
Bitcoin Miner Iris Energy Signs $100M Equity Deal With B. Riley B. Riley previously signed a similar deal with Core Scientific in July.
Marathon Digital Downgraded at BTIG on Headwinds From Compute North’s Bankruptcy
Infrastructure News
Riot Blockchain Sues Northern Data Over Disclosures Related to Texas Bitcoin Mine Acquisition
Applied Blockchain extends Marathon contract by 70 megawatts as it breaks ground in North Dakota
General News & Features
The Quest for Cheaper Bitcoin Mining Power Continues North Miners from Sweden and Norway are heading north of the Arctic Circle in their quest for less expensive energy sources.
Kahnawake to seek energy for crypto-mining
The Mohawk Council of Kahnawake (MCK) has authorized a new entity of its own creation to apply for additional electricity from Hydro Quebec with the intent of exploring crypto-mining opportunities.
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