Not Only Overleveraged BTC Miners But The Halving May Put Some Lenders May Out of Business

10x Bitcoin price 1-2 yrs after the halving, as per the S2F model.

The crypto lending firm, BlockFi is now extending credit to miners as the market loses some of its risk appetites because of the coronavirus crisis. “We’re starting to establish relationships with miners for the first time now,” said BlockFi CEO, Zac Prince.

Before this crisis that led the crypto prices to crash and hash rate to decline, the competition was high and competitors were willing to take bigger risks than the company was comfortable with. Prince told Coindesk,

“Two months ago, lots of lenders were accepting miner equipment as collateral, and this isn’t happening anymore. Now, the risk tolerance on the market [has] declined.”

Crypto lenders Nexo and Celsius are still lending to miners but they do not accept mining equipment as collateral. However, not just the miner capitulation but depreciation and physical need to store the equipment make it a risky option. Bitfinex Bitcoin whale Joe007 said,

“Accepting mining equipment as loan collateral is some special kind of stupid.”

“Here I thought that only overleveraged/inefficient miners will go out of business come halving but seems like some hapless lenders will follow them as well.”

With hash rate surging yet again, close to reaching its ATH yet again and an “epic” positive difficulty adjustment coming in next few days with price still around $7,000, miners’ profitability could yet again take a hit especially with halving coming in 25 days. However, popular analyst PlanB known for the Stock-to-Flow model thinks,

“Bitcoin 2020 halving will be like 2012 & 2016. As per S2F model I expect 10x price (order of magnitude, not precise) 1-2 yrs after the halving. Halving will be make-or-break for S2F model.”

Continued growth

Meanwhile, even during the ongoing chaos, BlockFi has had its monthly revenue “more than double” with institutional clients growing as well.

Despite the market turmoil, the crypto lending firm has been seeing continued growth. Starting April 1st, it started offering an increased percent of interest rate on Bitcoin and Ethereum accounts. Those with 5 BTC in their savings account are now earning 6% APY and those with up to 500 ETH have their interest rates rose to 4.5% APY.

The company offers both loans and interest accounts to its users and even during these hard times, they have been able to increase their margins which they then use to improve the interest.

According to Prince, they remained a “source of liquidity” during the volatile weeks that enabled them to withstand the massive sell-off. They actually saw “an increased level of activity and a lot of reshuffling as clients evaluated the market and restructured their assets,” during this time of increased volatility.

The company also announced the addition of a cash-to-crypto onramp on its platform to boost liquidity. Its crypto trading option, added in December, has become quite popular which is growing by “3-5x every month.”

Earlier this year, the company raised $30 million in a funding round led by Peter Theil’s Valar Ventures. Hong Kong-based Three Arrow Capital also joined BlockFi’s list of investors.

The company is now planning to reach out to those who don’t own any crypto as in the backdrop of central banks printing money at unprecedented levels, “bitcoin is a compelling investing story.”

Another company, Grayscale reported record growth in 1Q20, the “strongest” quarter saw 83% of total capital raised in all of 2019 in just one quarter.

Get Free Email Updates!

*Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

I will never give away, trade or sell your email address. You can unsubscribe at any time.

AnTy
AnTy
AnTy has been involved in the crypto space full-time for over two years now. Before her blockchain beginnings, she worked with the NGO, Doctor Without Borders as a fundraiser and since then exploring, reading, and creating for different industry segments.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

LEAVE A REPLY

Please enter your comment!
Please enter your name here

3,440FansLike
2,795FollowersFollow
4,189FollowersFollow

Live Bitcoin Price & Latest BTC Charts

Today's Latest Crypto News

Venezuela Changes Policy to Enable Paying For Fuel With Petro Cryptocurrency

Venezuela has made a major change to its policy which offered subsidized fuels to its citizen amid a shortage of fuel across the country...

‘Big Buys' on Bitfinex Exchange has Bitcoin Trading at a Premium

The world’s leading cryptocurrency shot past $10,000 yesterday in a strong move only to fall to $9,150 on Bitfinex and $8,600 on BitMEX in...

Russia to Prohibit Crypto Circulation, Mining, and Ads Under New Draft Law For Digital Assets

Cryptocurrency regulations are quite tricky and up until now, only a few countries can boast of finding the right mix of existing new laws...

China’s Largest Mining Chip Maker, SMIC, Gains Regulator’s Approval On $2.8B IPO

One of China’s biggest semiconductor manufacturer, SMIC, announces plans to raise a $2.8 billion public sale IPO on the Sci-Tech Board of the...

Bitcoin Flash Crashes to $8,600 with BitMEX Shenanigans at Play Again

Bitcoin doing bitcoin things! Today, Bitcoin had yet another moment like March 12, although the price didn’t crash that low. https://twitter.com/100trillionUSD/status/1267835341987340288 Yesterday, Bitcoin jumped as high as...

BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.

Start Using Crypto Today