Binance Pool, a crypto mining pool and subsidiary of the well-known crypto exchange called Binance, has pledged to offer $500 million worth of lending support to Bitcoin miners.
The mining giant, in the blog post, said that the lending support is designed to provide “secure debt financing services to both public and private bluechip Bitcoin mining companies globally.” The loan duration will be 18–24 months, and the applicable rate of interest will be between 5 and 10%. Miners need to provide security, either physical or digital assets, satisfying Binance’s terms and conditions
A drop in the price of cryptos, and increasing energy costs and Bitcoin mining difficulty rate have resulted in the profit margin of crypto miners dropping significantly. The Bitcoin mining difficulty rate, for instance, has hit an all-time high level of 35.61 trillion hashes, a 13% spike compared to the last revision. This is the biggest jump it has had since May 2021. As a result, crypto mining revenue dropped by 81%, from its October 2021 peak. The gross margin too has dropped by 30 to 40%—a significant fall from the 80 to 90% area it was in before.
Further, uncertainty in the crypto market due to steeper rate hike cycles and the ongoing crypto winter have also fuelled the worries of miners. All of that has led to this point where Binance finally decided to step up in support of miners.
Besides, this is not the first instance of Binance braving the crypto winter. Earlier, too, Binance had continued to invest heavily to maintain the stability of the crypto market, but more recently, the exchange has expanded its presence in Kazakhstan and opened up offices in Brazil.
During an interview with Cointelegraph, a Binance spokesperson also offered some clarity on what the development means for bluechip miners. To be classified as a bluechip miners, the miner must be a Binance VIP user and should be able to connect at least 500 PH/s to the Binance mining pool for a minimum of 24 hours after the loan is issued.
Binance Pool also announced that it intended to launch cloud mining products, directly purchasing the cloud mining hashing power from Bitcoin mining and digital infrastructure providers.