In the U.S. they started confiscating mining equipment due to loan debts

On the wave of rising profitability of cryptocurrency mining, U.S. miners took loans to buy equipment. But now lenders have begun confiscating hardware due to debts.

Here's What We Know

At a time when the profitability of cryptocurrency mining was as high as 90%, the total amount of loans taken out to buy equipment reached $4 billion. After the bankruptcy of the FTX exchange, a liquidity shortage arose in the market. Lenders are trying to get back what they lost by confiscating mining equipment, but its value has plummeted in recent months. It's down 85 percent, according to data compiled by Bloomberg.

Iris Energy expects to default on $108 million in loans with limited recourse. That means the creditor will be entitled to rely solely on the sale of the mining units and will not be able to make additional demands on the debtor to repay the entire amount owed.

NYDIG issued a loan of nearly $71 million this year alone, secured by 19,800 cryptocurrency mining rigs. Stronghold Digital Mining returned more than 26,000 units to it in late summer to pay off $67 million in debt.

Lenders now have thousands of cryptocurrency mining rigs on their hands, the value of which, as noted above, has fallen by 85%. Now they need to figure out how to use the equipment for maximum benefit. They can find data centers and start mining Bitcoin on their own or sell the installations at a big discount.

Source: Bloomberg

Image: Zipmex