Jiang Zhuoer, former CEO of BTC.Top, claims the number of bitcoin miners’ loans under risks are far less than reported. He asserts that poor liquidity and lack of institutional support for mining rigs 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 the Bitcoin price crash has made it difficult for bitcoin miners to repay their $4 billion in loans backed by mining equipment as collateral. Moreover, mining rigs are selling at a discount as the market continues to fall.
Jiang Zhuoer Claims Bitcoin Miners Loans Data Is Overstated
Colin Wu in a tweet on Monday reported that Jiang Zhuoer believes the data on the amount of bitcoin miner loans is overstated. Actually, Bitcoin miners never received loans on all mining rigs. Only few mining rigs were eligible for loans due to a lack of companies to control or evaluate mining rigs. It prevented many crypto miners to receive loans from lenders.
Cryptocurrency investment companies such as Galaxy Digital, NYDIG, and BlockFi offer loans. These loans are backed by mining equipment, as 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 backed by mining rigs. According to Vera, mining equipment-backed loans a larger than token-backed loans popularized by lenders like Babel Finance.
Moreover, reduced income and Bitcoin fall are impacting 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 listed Bitcoin miners account for 20% of all reported Bitcoin sales in May and June. Thus, the current rate of bitcoin sell-offs will likely invalidate a recovery in Bitcoin price any time soon.
Bitcoin Mining Difficulty Continues to Decline
Bitcoin mining difficulty has slightly decreased since mid-May and further again in June due to the crypto market crash. Moreover, the hashrate has also fallen from a high of 266 EH/s on June 8 to below 200 EH/s on June 26. The fall in the hash rate directly contributes to the sudden fall in power demand. It means miners may have switched off mining rigs or sold their mining rigs.