Massachusetts-based BankProv has stopped offering loans secured by crypto mining machines and seen its digital asset loan portfolio fall by 50% in Q4 2022.
The bank held $41.2 million in digital asset-related loans at the end of December, with $26.7 million being collateralized with crypto mining machines, which “will continue to decline” as the bank is no longer originating this type of loan, according to holding company Provident Bancorp.
The decline in the crypto mining industry and the bear market in cryptocurrencies led to a decrease in mining machine prices by 85%, resulting in margin calls and collateral seizures.
BankProv wrote off $47.9 million in net charge-offs, mostly from mining rig-collateralized loans, and repossessed mining machines in exchange for forgiving $27.4 million of debt for undisclosed parties. BankProv had a total of $1.42 billion in net loans at the end of December.