BlockFi to Sell $160M in Bitcoin-Miner Backed Loans Amid Sector Struggles

• BlockFi is selling approximately $160 million worth of Bitcoin miner-backed loans.
• The loans are collateralized by 68,000 BTC mining machines, which have seen a sharp decline in price over the past year.
• This is following the bankruptcy of FTX, and other major players in the mining sector struggling with liquidity.

Crypto lender BlockFi has recently announced plans to sell $160 million worth of Bitcoin (BTC) miner-backed loans. These loans are collateralized by approximately 68,000 BTC mining machines, as per a report by Bloomberg, which cited anonymous sources. This news follows the bankruptcy of FTX and other major players in the mining sector struggling with liquidity.

The price of BTC miners has seen a sharp decline over the past year, according to Hashrate Index Data. This combined with the fall in BTC prices in 2022 and the rising cost of power has squeezed the margins of miners, leading to a decrease in demand for the BTC mining rigs. As a result, some of the loans have already defaulted and some have become under-collateralized.

BlockFi, a major lender in the embattled mining sector, has been forced to sell these loans due to the circumstances. This follows the bankruptcy of FTX and other major players in the mining sector struggling with liquidity. For example, Core Scientific filed for Chapter 11 bankruptcy in December 2022, and Argo Blockchain sold its Texas mining facility to Galaxy Digital for $65 million and secured a $35 million loan from the firm in late December 2022.

The sale of these loans is therefore an attempt to regain some of the liquidity lost in the mining sector. BlockFi’s announcement of the sale is also a warning to the industry that the current market conditions are vulnerable and that miners need to be more cautious when taking out loans. This news could also lead to other lenders in the sector to also try and offload their loans to regain liquidity.