- Maple Finance’s platform’s new $300 million loan pool could offer lenders 15% to 20% interest
- Larger miners are more likely to find lower interest rates and longer payback periods, according to Compass Point Research and Trading analysts
There are new options for Bitcoin miners looking for capital, but it remains to be seen if the terms will be attractive to borrowers.
Institutions looking to lend to Bitcoin miners can now earn 15% to 20% annual returns via loan pools launched by Icebreaker Finance through Maple Finance’s DeFi lending marketplace. the companies said on Tuesday.
Maple Finance CEO Sid Powell told Blockworks that previous Maple pools, which target different risk profiles and shorter tenors, lend at interest rates between 8% and 12%. Rising interest rates reflect the recent credit crunch, long-term loans and the overall risk in mining now.
Loans in the pool (with an initial capacity of $300 million) have terms of 12-18 months and are collateralized by assets such as mining rigs, power transformers and digital assets.
The setup targets institutional investors and capital allocators as lenders, including high net worth individuals, digital asset funds, and traditional credit funds.
“Those types of investors are still seen as esoteric investments, but we know they are attracted to strong risk-adjusted returns,” Powell said.
Maple has issued nearly $1.8 billion in loans since launching its first pool in May 2021. Crypto investment firm Maven 11 Launched a $40 million institutional lending pool Via Maple last month.
Is it a good option for miners?
The intended borrowers are mid-sized bitcoin mining and digital asset infrastructure companies in North America, Canada and Australia with “effective financial controls and prudent power strategies,” Maple said in a statement.
“We expect this to be attractive to blue-chip public and private borrowers, and its excellent operational efficiencies and low levels of leverage will allow us to deploy marginal capital in an attractive manner under the Power Purchase Agreement.” Icebreaker Finance CEO Glyn Jones told Blockworks.
But according to Chase White, a senior research and policy analyst at Compass Point Research and Trading, the terms of miners appear to be “pretty onerous.”
“I think the type of miners who accept this offer are likely to be those who need capital to keep their boats afloat at all costs,” White told Blockworks. It doesn’t look like you want it,” he said.
Interest rates range from 15% to 20% and monthly principal payments are on the high end for similar arrangements, White added.
For example, Argo Blockchain signed a $70.6 million equipment-backed loan agreement with NYDIG in May.
“miner is already scaled and a large amount of [bitcoin] Balance sheets that use only debt to fund future growth and have sufficient current income to pay monthly principal and interest payments can get lower interest rates and longer repayment terms. I think you can.
But Matthew Sigel, head of digital asset research at VanEck, said miners’ access to capital has been limited amid the market downturn.
“Public equity capital markets are mostly closed to Bitcoin miners, so decentralized pools like Maple, despite high interest rates, will get some traction from miners trying to survive the next halving. We look forward to getting it,” said Sigel.
Some miners need cash embarked on the sale of its holdings These days, or use Bitcoin as collateral for a loan.
Hut 8 Mining CEO Jaime Leverton said during a panel discussion at Blockworks’ Digital Asset Summit that he expects more companies to use BTC stacks as collateral in the future.
“The infrastructure-backed bond market has been very tight and interest rates have been so high that there has definitely been a decline in activity in the infrastructure bond market,” she added. “From a stock market perspective, [at-the-market offerings] It’s the perfect vehicle for miners with that opportunity. ”
Hive Blockchain Technologies Initial public offering agreement Earlier this month, it plans to sell up to $100 million in company shares in an effort to expand its bitcoin mining capacity.
Hive Executive Chair Frank Holmes told Blockworks last week The company did so to take advantage of a potential big buying opportunity in a down market.
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