Cryptocurrency News

Binance to Support Bitcoin Miners With $500M in Loans, Intends to Launch Cloud Mining Products

By October 17, 2022 No Comments
Bitcoin (BTC) cryptocurrency image cover

Key takeaways:

  • Binance Pool has launched a $500 million lending program for Bitcoin miners
  • The company will charge between 5% and 10% interest rates for loans that will be collateralized with physical or digital securities
  • The move comes at a time when Bitcoin mining difficulty is at its ATH, leading to slim margins for miners

Binance’s mining subsidiary launches a $500 million lending fund

Binance crypto exchange announced on Friday the launch of a new financing program designed to support the Bitcoin mining industry via medium-term loans. Binance Pool, the exchange’s mining subsidiary, will reportedly make $500 million available for eligible borrowers. 

According to a blog post, interested parties will have the option to decide between 18 and 24-month loan terms. Interest rates will vary between 5% and 10%, while borrowers will have to offer security, either physical or digital assets, as collateral.

A Binance spokesperson told Cointelegraph that the eligibility criteria for borrowers entail Binance VIP status and the requirement to “connect at least 500 PH/s to the Binance Pool for a minimum of 24 months after the loan is issued.”

In addition to the lending program, Binance Pool is reportedly also intending to launch cloud mining products. The company said they are currently looking for cloud mining vendors that are open for collaboration.

Profit margins get slimmer as BTC mining difficulty reaches an all-time high

Due to the rising cost of electricity and the poor market performance of Bitcoin this year, the mining profits have gotten very slim. Add to that the all-time high BTC mining difficulty, and we have the recipe for a very competitive and cutthroat environment.

Bitcoin mining difficulty over time: Image source:

For context, an online Bitcoin mining calculator shows that using a popular and one of the most capable Bitcoin mining machines, Bitmain’s Antminer S19 XP, nets about $2 in daily profits if we take a $0.10 per kWh electricity rate as an example. Keep in mind that the Antminer costs almost $18,000.