According to a Jan. 31 filing with the United States SEC, BankProv has nearly halved the proportion of its digital asset portfolio consisting of rig-collateralized debt since Sep. 30, 2022

BankProv, the holding company for the crypto-friendly bank, has announced that it is no longer providing loans secured by crypto currency mining rigs after writing off $47.9 million in loans primarily secured by them during the previous year.

As per its filings with the US Securities and Exchange Commission (SEC) on January 31, the bank has almost halved the proportion of its digital asset portfolio which includes rig-collateralized debt since September 30, 2022.

As of December 30 , 2022, the bank held $41.2 million in digital asset-related loans, consisting of $26.7 million worth of loans collateralized by crypto mining rigs, which ‘will continue to drop as the Bank is no longer originating this type of loan.’

During the bull market of 2021, the crypto mining industry took huge amounts of debt, often offering up mining rigs they own as collateral in order to lower their interest rates.

But the subsequent bear market starting in 2022 resulted in tough conditions for miners, and many were forced to sell the Bitcoin mining rigs they owned to cover operating costs, causing mining hardware prices to dip.

Despite the dropping costs, some banks that had issued mining rig-collateralized debt were forced to repossess some of the rigs used as collateral.

As per a previous filing with the Securities and Exchange Commission, BankProv repossessed mining rigs in exchange for the forgiveness of $27.4 million in loans on September 30, 2022, resulting in an $11.3 million write-off for the firm.

The losses likely contributed heavily to its decision to stop issuing these types of loans, with Carol Houle, the Chief Financial Officer (CFO) of its holding company Provident Bancorp, noting: As we look back at 2022, we are eager to take its lessons and come out as a better, stronger bank. In spite of our losses in the previous year, we begin 2023 well capitalized and well diversified.