Amesbury, Massachusetts-based Bankprov, a subsidiary of Provident Bancorp, has declared it will no longer be offering loans secured by cryptocurrency mining rigs. In a filing with the US Securities Exchange Commission (EX-99.1), Bankprov stated that the income from the digital asset lending portfolio will be used to generate revenue. Nevertheless, the company has ceased the origination of hardware-backed loans.

Bankprov revealed that it holds around $41.2 million in crypto-backed loans, with around $26.7 million of the debt supported by ASIC mining machines. The crypto winter caused immense pressure on the business, but loans secured by ASIC mining rigs became a popular funding option in 2021. As of late June 2022, Luxor executive Ethan Vera estimates that $4 billion in mining equipment-backed loans are under financial strain.

Since then, several crypto mining companies have sought Chapter 11 protection and restructured debts ranging from tens to tens of millions. For instance, at the end of September 2022: Compute North filed for Chapter 11. Two months later, Core Scientific also filed for Chapter 11. Other mining companies are aiming to restructure the debt. Greenidge Generation announced Tuesday that it has restructured $11 million of its debt to B. Riley.

Bankprov stated that it has retrieved ASIC mining equipment from undisclosed crypto mining operations. “Our digital asset loan portfolio decreased $79.3 million, or 65.8%, primarily due to outstanding line of credit payments, partial payoffs, and recovery of cryptocurrency mining rigs in exchange to settle a loan relationship of $27.4 million” per Bankprov presentation.

The EX-99.1 filing by the financial institution read:

“The portfolio of loans secured by cryptocurrency mining machines will continue to decrease, as Bank has ceased the origination of this type of loan.”

Another crypto-friendly financial institution, Metropolitan Commercial Bank, announced during the second week of January that it plans to “exit its crypto asset-related business” in 2023. Although the bank does not have any publicity about crypto assets, it does have business relationships with four crypto-focused customers. The bank did not specify a date, but it said that this year will see the end of these relationships as well as the cryptocurrency business.